Introduction
There is no substitute for value and quality. As Warren Buffett says:
“Ben Graham taught me that ‘Price is what you pay; value is what you get.’ Whether we are talking about socks or stocks, I like buying quality merchandise when it is marked down.”
This quote will serve us right in the context of the penny stock we are going to analyze today.
As our world transitions from physical to virtual, it is no surprise that evil has transitioned to the virtual world to conduct malicious activities. It’s even worse, because you don’t even notice that harm has been done until it’s too late. One of the examples of such evil practices is ransomware attacks which Nubeva Technologies is here to fight. For anyone with a sheer bit of understanding of the harm some of these ransomware attacks can do, would get the value this company can generate.
So, join us as we dive deep into the financial analysis of Nubeva Technologies where we will discuss whether this penny stock has any potential to be the next stock on your portfolio.
Company Overview
Nubeva Technologies is a software and technology company operating out of its headquarters in San Jose, California. Founded back in 2016, the company develops and licenses cybersecurity solutions with a special focus on ransomware. The company has integrated a very innovative strategy in which instead of putting all the focus on stopping the attack, they use award winning SKI tech to decrypt, reverse, and recover the data from a ransomware attack without paying any ransom.
The company is not very old and is already making a strong name for itself in the industry. All of which can be credited to their solutions that are guaranteed to perform, that too within a very affordable price range.
Financial Performance
Now that we have introduced the company, it’s time to jump into the world of numbers. So, you might want to grab your calculators as we find out if Nubeva could be your partner to financial success.
Stock Price Movement
A peak at Nubeva’s stock price chart for the past 5 years shows a very discouraging picture. The stock has been on a consistent downward trend since December of 2022. You can observe a few surges in the price every few months, however, the overall price trend has been negative. Now, let’s dive in and perform a year-on-year analysis to see what’s been happening.
Nubeva does not operate in a traditional industry as the technology sector across the globe shows a different trend. We can see, when all the industries were affected by COVID-19 pandemic, the stock of Nubeva stayed consistent and did not fluctuate a lot besides a little surge in price from $0.18 to $0.60 in December 2020. However, a major increase in price was observed in the year 2021 where the stock price rose over 260%. The huge surge could be credited to the fact the economies were returning to their normal operations and the market was generally hot.
The year after 2021, the stock started declining, which was strange as many other companies in the same sector were showing a recovering trend. However, Nubeva’s stock kept declining beside one huge one price swell of over 196% in between Oct-2022 and December-2022. Since 2022, the stock has been declining in value and is currently trading at $0.28 with little to no recent fluctuations.
Financial Metrics
Revenue: Analyzing the revenue figures of the company shows a unique trend. There have been a lot of fluctuations in the revenue figures, however, there is one variable which has consistently remained high. In 2020, the revenue took a dive and decreased by up to 81.37% in Y/Y analysis.
The following year, revenue showed a massive recovery and increased to 1.97 million dollars, which was almost a 1,145% Y/Y increase. Much like the stock trend, revenue decreased in 2022 by up to 88%. Past 2022, the revenue figures seem much stable as company reported $2.07 million and $1.79 million revenue in the year 2023 and 2024, respectively. Although the bad revenue situation could be due to several underlying factors, the major factor in the case of Nubeva is that their outlook is highly dependent on the shift in AI strategies, both internal and external.
Net Income:
The Net Income trend of Nubeva technologies makes you think twice about what’s been happening. In the past 5 years, the company has not reported a positive net income figure. There have been fluctuations, but the net income has consistently remained negative. In 2020, the company reported a net loss of $3.78 million. As the revenue increased in 2021, the Y/Y change showed an increase of 79.86%, however, the net income was still negative. Similarly, in the year 2022 and 2023, the company reported a net loss of $3.28 and $1.71 million, respectively. Things are looking better for this ongoing year, however, with the culprit Operational expense still being high, it would be tough for the company to generate any positive income.
Cash Flow:
Analyzing the Cash Flow chart of Nubeva technologies, we can observe that there is not a consistent trend. The company has been generating most of its cash flow through financing activities which have not been consistent over the years. In 2020, the company was able to secure a financing of only $338k. In 2021, the situation got better as the cash from financing increased by 470%. In the past 5 years, 2022 has been the best year when the company secured financing of $4.27 million. Going forward, the financing decreased in 2023, and the cash flow was once again negative. This year, the financing situation has not been at par with the previous years so we will have to see how the graph eventually turns out.
Financial Stability
In order to understand how Nubeva Technologies Ltd. is doing in terms of financial stability, let’s assess some of the variables from balance sheet and find out if there is a chance of bankruptcy in the near future.
First, let’s assess the Current Ratio of the company that will attest for the company’s liquidity situation.
The balance sheet shared by the company on 4/30/2024 shows that the company’s total assets are worth $4,447,611 and total liabilities are worth $625,028. Calculating the current ratio gives us,
Current Ratio = 4,447,611/625,028 = 7.11
This current ratio is great and shows that the company is in a great position in terms of liquidity.
Now, let’s take a look at the Debt-to-Asset Ratio to analyze the solvency situation of the company.
The balance sheet disclosed by the company on 4/30/2024 shows that the company’s total assets are worth $4,447,611 and total debt is worth $35,797. Calculating the Debt to asset ratio gives us,
Debt to Asset Ratio = 35,797/4,447,611 = 0.008 or 0.8%
Anything below 40% is considered good, which shows that Nubeva Technologies is not even close to the threat of bankruptcy as the company is primarily financed by Equity.
Market Potential and Recent News
Considering that AI is already taking over the world and things are looking bright for both startups and people working in the domain. Similar is the case with Nubeva technology, the more people interact virtually, the more cyber attacks we are going to observe. Furthermore, AI is still in its initial phases, which will pose another challenge in the upcoming years.
In this scenario, a startup which is working on improving cyber security and helping organizations from any external attacks does have a potentially promising future. A survey conducted by McKinsey & Company reveals that there is a $2 trillion market opportunity for the cybersecurity technology and service providers. Thus, a very optimistic future waits ahead for the industry Nubeva Technologies operates in.
Investors Perspective
Looking at the price at which the stock is currently trading, it presents an enormous opportunity. Very limited analysis is currently available in the market, however, the stock price hike from 2022 that reached $2.20 shows that the company has a lot of potential to grow. Even if we take $2 as a benchmark price, that’s still a 685% increase from the current trading price of $0.28.
Once again, I’ll remind you of the words of Warren Buffet, who says, “Whether we are talking about socks or stocks, I like buying quality merchandise when it is marked down.” Considering the current trading price, a marked down value does represent a compelling picture in sync with the advice from the legendary investor. There is always a risk, but a calculated one could serve you very well in the long term.
Conclusion
Nubeva Technologies presents a compelling opportunity for investors willing to take calculated risks. Despite its volatility and negative net income in recent years, the company’s innovative approach to cybersecurity in decryption technologies and ransomware recovery positions it as a potential disruptor in a rapidly growing market. Financially, while the stock has seen fluctuations, the company’s solid liquidity and low debt-to-asset ratio indicate strong financial stability. The consistent demand for cybersecurity solutions, coupled with the expanding AI landscape, further bolsters Nubeva’s long-term growth potential.
At its current low trading price, Nubeva may be a hidden gem for value investors. While risks remain, the upside potential is significant, especially if the company continues to improve its financial performance and capitalize on the growing cybersecurity market. This stock may be a smart addition to a diversified portfolio with a long-term outlook.
As Matthew McLennon says, “The vast majority of people compete in a time horizon that’s very near dated. There are many fewer investors who are thinking out a decade and beyond.” If you are someone who can look at the longer horizon, then this penny stock might be a game changer.
Article By: Hamza Bashir. An avid investor and strategic consultant with expertise in stock analysis. He has been investing, analyzing, and writing articles on the stock, cryptocurrency, real-estate, and commodities market for over 3 years.