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Make No Mistake, Ideanomics Is a 1-Trick Pony
Nearly all of IDEX stock revenues comes from its business that handles electric vehicles
By Louis Navellier and the InvestorPlace Research Staff, Editor, Growth Investor Feb 17, 2021, 9:50 am EST
Ideanomics (NASDAQ:IDEX) promotes itself as both a fintech company and an electric vehicle play. Both are popular investment ideas on Wall Street these days, but IDEX stock is only seeing revenue from one side of the coin right now.
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More than anything, Ideanomics’ best and most profitable ideas land squarely in the EV space.
IDEX stock is enjoying a solid 2021 so far, gaining more than 130% year-to-date, roughly 40% over the last month. It’s considered to be a penny stock, with a price just less than $5.
I recently identified Ideanomics as one of the best cheap tech stocks to buy now. Considering its performance over the last several weeks, it’s a good idea to take a closer look at IDEX stock.
Ideanomics at a Glance
Ideanomics is a New York-based venture capital firm that provides capital to fledging tech companies. It has two divisions. The first has a focus on electric vehicles, including commercial EV funding, batteries and energy storage. The second provides financial services using blockchain and artificial intelligence technologies.
The company has been active in recent weeks. It announced:
- An agreement valued at $35 million to purchase 2,000 units of the ride-hailing vehicle BYD D1 from Meihao Chuxing, which is a joint venture between BYD(OTCMKTS:BYDDF) and Didi. The BYD D1 was launched in November as the globe’s first custom-built, fully electric care for ride-hailing. The vehicles are being deployed already in several Chinese cities.
- An agreement valued at $50 million to purchase a privately held Utah company, Wireless Advanced Vehicle Electrification, or Wave. Wave is a provider of wireless charging stations for medium and heavy-duty EVs. The stations include charging pads that can be embedded into roadways for in-route charging.
- It completed an agreement to purchase another privately held company, Timios Holdings. Timios is a nationwide title and settlement solutions provider that is being folded into Ideanomics.
In addition, Ideanomics has its footprint in Malaysia as the majority owner of Treeletric, an approved EV manufacturer and distributor there.
And to top it off, it invested in Solectrac, a manufacturer of electric tractors, in October. And it increased its investment in November.
A Look at IDEX Stock
Third-quarter earnings posted in November showed the company with revenues of $10.6 million, compared to $3.1 million in the same quarter a year ago. It was also more than 2x the revenue the company earned in Q2.
The vast majority ($10.1 million) of the company’s revenue for the quarter came from its Mobile Energy Global (MEG) business unit. The MEG unit uses a full-service sales-to-financing-to-charging model, what it calls S2F2C, to ease the transfer for fleet operators to electric vehicles.
The full-service approach will ideally make it easier for companies to convert their fleets to EV because they’ll be dealing with a single company in Ideanomics, rather than a series of manufacturers that handle individual pieces of the puzzle.
Earnings fell to $700 million, compared to $2.9 million in the same quarter a year ago.
The company says it delivered 706 total units in the fourth quarter, with 439 of them coming in December as it ramped up production. That also doesn’t include any units from the previously discussed BYD-Didi purchase.
While the company’s EV efforts are strongest in China right now, Ideanomics is planning to launch its heavy truck and specialty EV unit in the North America this year.
Ideanomics Lags as Fintech Play
While IDEX stock is getting most of its performance right now from EVs, the company promotes itself as also being a strong fintech play.
Ideanomics Capital, the company’s fintech division, doesn’t bring in a fraction of the revenue that its MEG unit enjoys.
No doubt, fintech is in high demand. Peer-to-peer lending systems, digital wallets, alternative credit solutions and asset management are all made possible or easier with fintech.
Ideanomics’ investment into Timios, which works with real estate transactions, is a positive step to growing out that side of the business. Its Intelligenta business also has potential by bringing AI and machine learning to banks and regulators.
But if you’re looking at a fintech investment, Ideanomics hasn’t shown to date that it’s capable of turning a consistent profit or even bringing in meaningful revenue.
The Bottom Line
Theoretically, Ideanomics has a hand in two hot markets: fintech and electric vehicles. But its revenues are coming almost exclusively from its Mobile Energy Global unit, leaving the fintech side of the business in the dust.
While IDEX stock is a penny stock, the EV business is picking up steam. Sales will only increase with its BYD-Didi transaction, making it likely that revenue numbers in 2021 will continue to grow.
IDEX stock has an “A” rating and a buy recommendation in my Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
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