With more than 100% stock returns recently delivered, Ideanomics, Inc. (IDEX) appears to be receiving a lot of attention from investors. The team at Stockmarketrevolution.com studied the company’s business divisions and potential business growth. We believe that the company operates in a growing industry, which investors will most likely appreciate. In our opinion, the M&A activity of IDEX offers valuable trading opportunities for investors. If the company continues to successfully obtain cash from investors and the acquisitions continue, we expect the share price to rise even further.
Business Model of IDEX
First of all, let’s understand the company’s business model.
Idex is a US-based entity operating both in the United States as well as Asia. With two business segments, the Mobile Energy Group (“MEG”) and Ideanomics Capital, Idex appears very diversified. The company’s MEG division offers exposure to the electric vehicle industry revolution. Besides, IDEX also operates in the fintech industry:
MEG’s mission is to use electronic vehicles (“EVs”) and EV battery sales and financing to attract commercial fleet operators that will generate large scale demand for energy, energy storage systems, and energy management contracts. MEG operates as an end-to-end solutions provider for the procurement, financing, charging and energy management needs of fleet operators of commercial EVs.
Ideanomics Capital is involved with areas of capital markets such as financial products advisory and creation, with specific focus on the application of blockchain and artificial intelligence in Fintech.
If we take into account these two business segments, it appears very clear that the company’s business growth will be significant in the next five years. The EV sector is currently growing at a double digit because of multiple governmental initiatives. Blockchain and everything related to Bitcoin are also receiving a lot of attention in the media. Some experts expect the blockchain market size to grow at 67.3% in the next five years. It is very impressive:
The global blockchain market size is expected to grow from USD 3.0 billion in 2020 to USD 39.7 billion by 2025, at an impressive Compound Annual Growth Rate (CAGR) of 67.3% during 2020–2025. The increasing need for simplifying the business processes and need for supply chain management applications integrated with the blockchain technology will drive the overall blockchain market.
Follow The Company’s Transactions To Understand The Share Price Dynamics
In my opinion, IDEX traders will adopt the following strategy in the future. The company reports a significant amount of acquisitions. Every time a new acquisition is reported, the expected business growth of IDEX increases. As a result, when the market gets to know the new company acquired, IDEX share price increases. Hence, the trading strategy appears very simple. We acquire new positions when the company releases a new acquisition.
The number of businesses acquired in the past is significant. In my opinion, if the M&A activity continues, new opportunities will appear. Read about some of the most relevant transactions in the lines below:
- On June 30, 2019, the Company entered into an agreement with BCC Technology Company Limited and Tekang Holdings Technology Co., Ltd pursuant to which Tekang will inject certain assets in the robotics and electronic internet industry and Internet of Things business consisting of manufacturing data, supply chain management and financing, and lease financing of industrial robotics into Amer in exchange for 71.8% of ownership interest in Amer.
- On December 26, 2019, the Company completed the acquisition of a 51.0% interest in Tree Technologies, a Malaysian company engaged in the EV market.
- On November 11, 2020, Ideanomics, Inc. (“Ideanomics”) entered into a stock purchase agreement (the “Agreement”) with Timios Holding Corp. for approximately $40 million.
Study The Amount Of Cash in Hand, And The Sale Of Equity
I don’t believe that studying the company’s financials will provide a lot of valuable information about the future. Take into account that in the future, sales growth and profitability may be a bit volatile. In my opinion, what matters here is mostly the amount of cash received from investors. If IDEX can convince more and more investors, the management will have more cash to acquire businesses. In this regard, I believe that the company is currently very successful. Read the lines below for more information on the last sale of equity:
In the nine months ended September 30, 2020, the Company improved its liquidity position by raising a total of $48.2 million: $39.1 million through the issuance of common stock and exercise of warrants, $7.1 million from noncontrolling interest shareholders, and $2.0 million through the issuance of senior secured convertible notes.
With divisions operating in the fintech industry and the EV sector, I would expect IDEX to obtain massive business growth in the near future. In my opinion, investors can profit from the company’s growth. The share price usually increases when IDEX reports new acquisitions. A trader buying shares when the company delivers new M&A activity will most likely make money. Remember that we also need to study the sale of equity and the level of cash in hand. Notice that IDEX needs liquidity to acquire new positions in other companies.
Disclosure: We Don’t Have IDEX Shares