It’s easy to be bearish in this type of market environment where every stock is dropping like a stone. You know what they say: even a broken clock is right twice a day.
That’s what it is to write a short report right now after the entire stock market has fallen into the bear market territory. It’s salt in the wounds and it is the financial equivalent of kicking a man when he’s already down.
iQSTEL (OTC:IQST) is a well-diversified company that operates in multiple different sectors. While many attribute iQSTEL to a telecom company, it also has segments that operate in the fintech, IoT, and electric vehicle sectors as well. This type of optionality provides iQSTEL with the potential for multiple revenue streams in the future.
In the most recent quarter, iQSTEL reported a 37% year-over-year rise in revenues, although gross profit remained relatively flat. Some will point to a $0.5 million net loss for the quarter, particularly given the fact that the company has a little less than $10 million in assets. A closer look shows that this is a 72% year-over-year reduction in losses, from the same quarter in 2021.
iQSTEL is operating in a more efficient manner but is growing at a much faster pace due to mergers and acquisitions which can be costly. It also tidied up its balance sheet by increasing its total cash position, while reducing its liabilities by 57% year over year. Perhaps most significant to you as an investor is that iQSTEL increased shareholder equity by 410%.
But is iQSTEL Overvalued?
iQSTEL is currently a top-heavy company, there is no denying that. A majority of its revenues come from its Etelix.com and IoT Labs subsidiaries. These two divisions accounted for nearly 90% of iQSTEL’s revenues for the quarter. Much of iQSTEL’s subsidiaries are just breaking ground though, and as investors, it is prudent to look at potential future revenues and profitability, especially for a high-growth company.
There is no doubt that iQSTEL has built several streams that should start generating revenues as soon as later this year. Its Global Money One Fintech platform launched recently and while no revenues were recorded in the most recent quarter, the future of digital payments and wallets is only going to get brighter.
iQSTEL also recently acquired two more brands for its telecom division: Whisl and Smartbiz Telecom. The two new subsidiaries will immediately add over $11 million in annual revenues for iQSTEL, and will certainly lighten the load on Etelix.com and IoT Labs which have been carrying the company until now.
Most recently, iQSTEL has announced a non-binding letter of intent to acquire a company that owns 2,300 miles of a fiber-optic network in the United States. This will immediately catapult iQSTEL into the 5G network space, an industry that is expected to grow to a value of $700 billion by 2025. iQSTEL is aggressively creating the perfect balance between organic growth and growth through acquisitions.
iQSTEL is also looking to enter the electric vehicle market. While it won’t be competing with the likes of Tesla (NASDAQ:TSLA), iQSTEL is diving into the electric motorbike sector. Although we think of flashy, high-tech automobiles when we think of electric vehicles, a vast majority of lower socioeconomic regions of the world utilize motorcycles and scooters as their primary method of transportation. With its EVOSS motorcycle prototype, iQSTEL is looking to enter vast markets like Latin America and has even showcased its model for groups from Africa as well.
As of June 2022, iQSTEL received a takeover offer for its EVOSS electric vehicle division. The company in question made an offer to iQSTEL of an equity stake in its business when it held its IPO on the NASDAQ exchange at some point in the future. While many companies would have jumped at this opportunity, CEO Leandro Iglesias is holding strong with EVOSS and declined the offer. Instead, iQSTEL has now revealed plans to spin off its EVOSS division and file an S1 for a potential IPO on the NASDAQ exchange itself, which will raise an estimated $15 million in investments. Iglesias still firmly believes that iQSTEL will be able to uplist to the NASDAQ as the long-term plan for the company.
The Bottom Line for iQSTEL
It’s been a busy year for iQSTEL so far and for every announcement, CEO Leandro Iglesias has been extremely forthright and transparent with his shareholders. As for its stock, iQSTEL is currently trading at a trailing 12-month price-to-sales ratio of 0.81, and a trailing price-to-earnings ratio of 0.06. Shares are trading at their 52-week low price and are well below both the key 50-day and 200-day moving averages which illustrates the steep downtrend the stock has been on.
In our opinion, iQSTEL’s stock is extremely oversold, particularly on its sales multiples. The last thing to mention is the uplisting of the NASDAQ index. The company was confident this would take place this year, but nobody saw the correction hitting the stock market as hard and as sudden as it did. The stock has dropped in valuation and will likely not meet the NASDAQ’s minimum listing requirements this year. While the uplisting would be nice, iQSTEL has managed all of this growth on its own so far without the need to be included on a major exchange. The NASDAQ listing will likely come in the future, but it really shouldn’t be a reason to be bearish on the stock if it doesn’t happen this year. The potential of the EVOSS spin-off is enticing and gives iQSTEL another solid foundation to raise further capital through the more liquid NASDAQ exchange.
How many telecoms, IoT, fintech, or EV companies trade at a price-to-sales ratio of under one and a price to earnings of 0.06? Well, iQSTEL is building all of these segments and more in what could one day grow to be a sprawling tech conglomerate. Shorting iQSTEL at its 52-week low isn’t advisable, but there are plenty of catalysts that tell us this stock could see healthy gains from here when the bear market is over.
DISCLAIMER: This article is strictly the author’s opinion. All stocks involve risks and the possibility of losing all of your investment. Please consider all risks before investing and consult with an investment advisor if you lack experience. Article paid and provided in part by Strategic Innovations First, Inc. which is paid for by the company for social media and research. The company has not approved or endorsed this article.