BTL Group Ltd (OTCMKTS:BTLLF)’s bounce back after a steep decline in share price has been dealt a big blow. Disappointing financial results for FY2017 appears to have rattled investors. Given the recent sell-off in the cryptocurrency space, the stock could come under immense short selling pressure going forward.
The stock is already down by more than 80% for the year and trading in a downtrend. After initially bouncing back from the $3 handle back to the $5 mark, the stock has started showing signs of trading lower in response to the not so good financial results.
For the stock to continue powering high, it needs to rise and stabilize above the $6 a share mark. However, given the long-term bear trend, the stock remains susceptible to further declines on continued trading below the $6 a share mark.
Immediate support on any sell-off is at the $3 a share mark, below which the stock faces the risk of plummeting to its 52-week low.
What Does BTL Group Do?
BTL Group casts itself as enterprise technology platform developer. The company is currently developing a proprietary third generation blockchain platform dubbed, Interbit. The platform is designed to reduce risks and costs by streamlining IT infrastructures.
After initially coming under pressure from short sellers, BTL Group bounced back to the $5 a share handle, on announcing plans to launch Interbit on April 23, 2018. According to the company, the next generation blockchain platform has the capacity to interconnect thousands of Interbit blockchains per solution, in a private secure and scalable manner.
The launch of the platform according to the enterprise company will address privacy and scalability issue associated with other blockchain platforms.
“Interbit is a token free blockchain platform, and its release will further highlight the distinction between blockchain technology and the cryptocurrency markets. Furthermore, Interbit’s unique chain joining technology is designed to allow users to keep all metadata private in a design framework that is familiar and easy to use,“ said Tom Thompson, CTO of BTL.
While the launch will mark a significant milestone in the company’s evolution, concerns about the company’s ability to generate profits continue to spook investors especially on the filling of a wider than expected net loss.
Surging Net Loss
Full-year net loss of $5.8 million in 2017 compared to $1.9 million reported in 2016 has not gone well with investors. The surge in net loss raises concerns about the company’s ability to generate positive free cash flow, a key to creating shareholder value.
A decline in revenues from $410,670 in 2016 to $372,927 is another headwind that continues to deal the stock’s sentiments among investors, a big blow. The company ended the fiscal year with a cash position of $17.99 million. As of March 30, 2018, the cash position had dropped to $16.7 million.
BTL Group has sought to downplay the disappointing financial results by touting milestones achieved over the past 12 months. Adoption of Interbit by a consortium of large European energy companies to track gas trades in the region, according to the company, affirms its product line ability to generate value going forward.
The company has also touted its robust patent portfolio, which it maintains has the potential to generate long-term value.
BTL Group 2018 Outlook
BTL Group has since set its attention on releasing Interbit this year, which it insists will benefit a great deal from the existing and growing customer base as well as extensive partner community. In addition, the company is expanding its sales team in pursuit of revenues after years of investments.
“The Company continues to build its professional sales and delivery teams to support commercial opportunities with customers in financial services, natural resource, and supply chain verticals,” BTL Group in a statement.
What Next For BTL Group
BTL Group sentiments on Wall Street hang in the balance after the disappointing financial results. A wider than expected net loss is the last thing that investors wanted to see, considering that most small-cap stocks trade on speculation.
There is no doubt about the blockchain platform’s capability given that it boasts of better abilities when it comes to addressing privacy and scalability issues associated with other blockchain platforms. However, it remains to be seen if its launch will help avert investors’ concerns about the company’s growth prospects at the back of the disappointing financial results.
The launch of the Interbit blockchain platform has the ability to ease negative sentiment that has rocked the stock in recent trading sessions. However, the company needs to do more especially on affirming how it intends to turn the page on net loss generation if the stock is to bounce back from the current lows.
Falling share price and dwindling revenues is something that any investor should pay close watch to, before making any investment decision. It may be wise to wait a little bit longer for further confirmation before taking positions on BTL Group.
Disclosure: We have no position in BTLLF and have not been compensated for this article.