Ideanomics (NASDAQ:IDEX) Stock Continues to Underperform: A Sell or Hold?
Ideanomics (NASDAQ:IDEX), a company which is focused on facilitating the adoption of electric vehicles and on fintech solutions, recently announced that it would acquire the remaining stake of Solectrac. However, this announcement too did not help much to Ideanomics which is struggling with its stock trading between $2.50 and $3. In fact, since it first fell below $3 in 2021 in early March, its stock has closed between $2.50 and $3 inclusive on 56 of 99 trading days through July 26.
The cent percent acquisition of Solectrac also did not lure the investors. The stock remains speculative. And here’s why. The deal to acquire 78.6% of Solectrac cost the company $18.1 million in cash making the value the entire business at $23 million. In addition to this, the company’s commitment to provide $12 million in growth capital for Solectrac to invest in its business over the next three years along with the expenses incurred in the management of the three earnouts of Solectrac would be a burn to Ideanomics monetarily. Further, the earnout mentions targets of $6.03 million in 2021, $16.23 million in 2022, and $27.72 million in 2023, the fulfilment of which seem a fairy tale currently.
The weight of scaling the business of Solectrac rests on the shoulder of the newly appointed Chief Executive Officer of the Company, Mr. Mani Iyer who has his forte in agricultural and construction industries. Iyer was earlier associated with Mahindra Agriculture Americas where he served the office as the CEO. Despite, Solectrac being an exorbitant start-up, Iyer’s expertise may bear success to Ideanomics. But then, the stock of Ideanomics still remains a risky proposition.
