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As drones and other robotic-based devices become part of everyday use, ensuring their safety is more important than ever. That’s what drives the core narrative behind it Mobilcom (NASDAQ:MOB). The device-specific cybersecurity company completed its initial public offering (IPO) yesterday, which caused MOB stock to surge in double digits this afternoon.
Interestingly, Mobilicom underwent several revisions to its new listing terms. The company originally intended to raise $10 million through the distribution of 2.2 million shares at an IPO price of $4.65. However, terms were later improved to raise $12 million through the distribution of 1.6 million units at $7.43. Then another adjustment asked Mobilicom to post gross proceeds of $11.8 million at $4.13.
When the dust finally settled, the company eventually raised $13.3 million before deducting subscription discounts and offering costs. Mobilicom also distributed 3.22 million units. The IPO price of MOB stock was the same as the previous adjustment at $4.13, while each unit consisted of one American Depository Share (ADS) and a warrant to purchase an ADS.
ThinkEquity acted as “sole accounting manager for the offering”. According to its press release, Mobilicom “intends to use the proceeds from the offering to expand its sales and marketing activities, research and development, and working capital.”
MOB stocks are fascinating, but mostly for speculators
While MOB stock’s performance today is impressive — up 25% at the time of this writing — ground floor investors may not believe it. That’s because the stock has fallen well below the IPO price with shares currently trading around $3.
Longtime investors shouldn’t be too surprised. Under the original terms, Mobilicom would have achieved a market value of $20 million. Despite the various adjustments, the company remains a nano-cap game.
At the same time, it’s not shocking that die-hard speculators are targeting MOB stocks. The underlying total addressable market here is huge. For example, experts predict that U.S. drone sales will reach $1.22 billion by the end of 2022. Goldman Sachs has also for years forecast an overall market opportunity for drones of $100 billion, “supported by growing demand from the commercial and civilian government sectors.”
Of course, with so many remotely controlled and automated devices on the road and in the air, cybersecurity concerns are paramount. Government agencies and think tanks have also sounded the alarm that cyber threats are increasingly affecting drones. So it’s only a matter of time before drone cybersecurity becomes mainstream.
Whether MOB stock can become an industry leader remains to be seen. Speculators may be attracted, but due diligence remains Mobilicom’s top priority.
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At the time of publication, Josh Enomoto held no position (neither directly nor indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publicity guidelines.
A former Senior Business Analyst at Sony Electronics, Josh Enomoto helped broker key deals with Fortune Global 500 companies. Over the past several years, he has provided unique, crucial insights for the investment markets as well as various other industries including legal, construction management and healthcare.
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