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Quick summary: Ideanomics has been and remains involved in a multitude of different business lines, but currently seems to be placing most of its bets in niche electric vehicle businesses including electric tractors and bikes. The stock has been a godsend for active penny stock day traders looking to play “pump and dump” patterns, but has not delivered for long-term, “buy and hold” shareholders. Read our full overview below.
Ideanomics (IDEX): Key Metrics & Data
- CEO: Alf Poor
- Stock ticker: IDEX
- Location: New York, NY
- Sector: Automotive, Financial technology
- Exchange: NASDAQ
- Market Cap: $1.07 billion (small-cap)
- Investor relations link: investors.ideanomics.com
- Robinhood categories: 100 Most Popular, Automotive, New York
What is Ideanomics?
The better question is: “what isn’t Ideanomics?” The company has a history of involving itself in many different sectors ranging from the production of electric tractors, electric vehicle charging stations, blockchain and other fintech solutions to various real estate interests and technology platforms. Ideanomics describes itself as “a global company that is driving the sustainability transformation.”
The company currently has two main areas of focus: Ideanomics Mobility, designed to “help commercial fleets navigate the barriers of electrification across vehicles, charging and energy.”
The second part of the company, Ideanomics Capital, is focused on “leveraging technology and innovation to improve efficiency, transparency, and profitability for the financial services industry. “
This all sounds good, but what does it mean in practice?
Similar to the current state of Sundial Growers, Ideanomics investors have to be comfortable with owning two companies: one that operates as a holding company making investments and acquisitions, while the other Ideanomics is an operator, primarily now focused on the electric vehicle space. That means the company can both benefit and be hindered by its various investments and acquisitions and it’s important for prospective investors to understand all of the moving parts of the company before investing in it.
Ideanomics Stock History
As for Ideanomics’ stock, not to be confused with IDEXX Laboratories (IDXX), which is a primary competitor of Zomedica in the veterinary science space, it has had a long history as a penny stock trading favorite.
A quick glance at the five year chart of IDEX reveals why. The stock has consistently traded at the $2 per share level or less during this period (and most of its history), qualifying it as a penny stock. However, the reason active traders have loved the stock is its propensity for huge “pumps” upward, followed by equally sharp declines. Active penny stock traders can make profits by anticipating these pumps upward and then quickly will shift their positions short to profit as the stock price collapses.
We count five major pumps since 2017 where the stock made supernova surges up, only to come back down to earth relatively quickly thereafter. While the “pump and dump” nature of the stock makes for wonderful trading opportunities by the likes of Tim Sykes and company, it’s questionable if this type of performance suits buy and hold investors.
If you held IDEX stock throughout those five years and did not have the agility to sell any during those big run-ups, your return would have been about 7% annualized, far below both the sector and index during that time, according to Morningstar data. For reference, the Russell 2000 small-cap index, of which IDEX is now a component of, returned 14.23% during the same time period, almost double that of IDEX—and with far less volatility.
For those who have held IDEX over even longer time periods and were not actively trading in and out of the stock, the story is far worse. The stock had somewhat unfortunate timing debuting right before the start of the Great Financial Crisis in 2007 that Steve Eisman profited so handsomely from by shorting mortgage backed securities.
The stock traded as high as $339 (!) in January 2008, before beginning what can only be described as an epic meltdown. Less than 12 months later, the stock traded for well under $1 per share and has been a penny stock ever since. While it’s unlikely that many investors would have been unlucky enough to hold the stock since inception, if you had stuck with IDEX since its IPO you would have lost 99% of your investment as of the time of writing.
Just because the past has been rough on IDEX, that doesn’t necessarily mean the future will be. Like many other troubled small-cap penny stocks, including MicroVision and Ocugen, the company has become a fan favorite of Reddit and Robinhood investors. This sustained support could provide the company with opportunities to improve its financial position and also increases the chances of rallies on any positive news.
We look at specific potential catalysts for the stock below.
Ideanomics: Strategy & Potential Catalysts
Ideanomics continues to pursue a multi-pronged strategy between its two main business lines, Ideanomics Mobility and Ideanomcis Capital. Both strategies seem heavily dependent on acquiring businesses which comes with its own risks and the various disparate components of the business makes it somewhat difficult for analysts and investors to gain full confidence in the company.
However, Ideanomics has enough different bets on the table in high-growth areas that investors with a high risk tolerance could find of interest. Below we outline some of the more notable potential catalysts for the stock.
- Scaling of Solectrac acquisition – Ideanomics recently completed acquiring 100% of the electric tractor startup Solectrac. According to Investorplace, Solectrac produced revenues of under $100,000 in 2019, but earn-out targets for the current executive team suggest revenue targets as high as $6 million for the electric tractor company by the end of 2021. If these targets are successfully met, this could be a notable boost and vote of confidence in the wisdom of the acquisition.
- Treelektrik: growth in emerging markets – Another electric vehicle subsidiary, Treelektrik is focused on developing electric bikes for use in Southeast Asia markets including Indonesia and Malaysia. The company reported a substantial 200,000 unit order with an Indonesian company according to Seeking Alpha, suggesting the potential for actual revenues. If the deal is fulfilled at these levels it could potentially open more throughout the promising emerging markets in this region.
- Ideanomics Capital acquisitions – While the company continues to focus on its niche electric vehicle businesses, Ideanomics Capital continues to make acquisitions in other areas, including a notable purchase of real estate technology platform Timios. This acquisition has added significant positive revenue and actually equates for more than 80% revenues generated in Q1 2021, according to a Seeking Alpha analysis. If Ideanomics can continue to find attractive revenue generating businesses it can buy time for the company’s main bets on electric vehicle startups it has acquired to continue to mature and generate more revenues for the company.
IDEX Stock Analysis
Below we collect a number of recent opinions on OGI stock from analysts, journalists and others who follow the stock to give you a broad overview between the bulls and the bears. Lean Investments has no affiliation with any of the below commentators and the information below should be considered a starting point for your own research and not a recommendation of any kind. Keep in mind that the commentary below may not reflect the latest developments with the company and the stock price can move quickly based on new headlines.
We have watched $IDEX’s stock pump and dump on a never-ending stream of press releases over the last 5 years and we expect this time will be no different, resulting in major shareholder losses or regulatory intervention. Buyer beware.
IDEX Stock: Competitors and Alternatives on Robinhood
As we have previously covered, Robinhood investors tend to favor low-priced, small cap stocks in much greater numbers compared to other investors. While at times this can be appropriate, especially for deep value investors, there are alternative options to buying only very low-priced stocks if your account is relatively small.
One great alternative to buying low priced stocks is buying fractional shares in larger companies, a feature Robinhood and many other brokers now support.
If you are interested in electric vehicles there are many larger and more established companies including Tesla, NIO and Lucid Motors (not to mention traditional automakers such as Ford) that could be worth investigating for a potential fractional share purchase.
If you are interested in fintech and prefer to invest in a larger and more established company, you may want to research the likes of PayPal, Square or Coinbase.
Investors who want to participate directly in IDEX’s potential but with the added benefit of diversification can buy an exchange traded fund, such as one that tracks the Russell 2000 index, of which IDEX is a small part. One of the most well-known options is the iShares Russell 2000 Index ETF (ticker: IWM), which is also available on the Robinhood app.
We hope you found value in our overview of IDEX stock; we will update this article with more current analysis in the wake of the company’s recent earnings report when it becomes available.