Liquidmetal Technologies Inc (OTCMKTS:LQMT) has seen its prospects in the market turn from bad worse, ever since it clocked record highs of $0.44 a share. A surge in selling pressure has since plunged the stock to the $0.20 handle, from where it is trying to make a comeback.
In our last update, we made the case on why the company needed to translate its technology into revenues if it was to survive the onslaught.
Fast forward, nothing much has changed even though the stock has shown signs of spiking higher amidst waning selling pressure. However, it still faces an uphill task to bottom out, given that it is still trading in a downtrend.
A close above the $0.26 handle, which happens to be a key resistance level should reinvigorate hopes of trading the stock as a bounce-back play. On the downside, the stock faces immediate support at the $0.21 handle, below which the underlying sell-off could persist.
What Does Liquidmetal Do
Liquidmetal bills itself as a materials technology and manufacturing company. The company develops and commercializes products made from amorphous alloys. Its product line consists of a range of bulk alloys and composites that utilize the amorphous alloy technology.
The company also partners with third-party manufacturers and licensees to develop and commercialize Liquidmetal alloy products. The alloys are commonly used to produce components for non-consumer electronic devices.
The company also provides alloys for use in the aerospace automotive and defense industries. Its products related to medical devices include specialized blades, claps, and tissue storing components.
Inventors Sentiments on Liquidmetal
Investor’s sentiments on Liquidmetal has taken a hit in recent months on the company failing to provide updates on how its core business is doing. A lack of updates has left many investors in the dark on how to evaluate its long-term prospects.
The result has been waning trading volumes in the market.
In 2010, the company entered into a license business deal with Apple Inc. (NASDAQ:AAPL). Pursuant to the agreement, the amorphous alloy company gave the tech giant global exclusive license for all its intellectual property in the field of consumer electronics products.
The company received a $20 million licensing fee from the deal, which it used to reduce its debt capital. Fast forward, there is no update on how the partnership is going on and whether the company has been able to generate any value over the years.
Lack of Amorphous Alloy Deals: Impact
Early last year, Liquidmetal received two hot crucible amorphous metal molding machines. The machines paved way for the production of amorphous alloy parts, which are up to three times larger, at a third of the costs of established technologies.
The new technology was expected to strengthen the company’s cold crucible systems to meet requirements for medical and automotive applications.
“We are making excellent progress on our plans to significantly expand our market reach and the scale of our operations. Our hot-crucible machines provide the benefits of amorphous alloy technology to price-sensitive applications that were previously beyond our reach,” said Dr. Bruce Bromage, Liquidmetal’s EVP of Business Development and Operations.
It has since emerged that potential clients in the medical automotive, aerospace and industrial markets turned down an opportunity to integrate Liquidmetal into their manufacturing processes.
Failure to ink deals has gone a long way in spooking investors, which to some extent has led to the underperformance of the stock in recent months.
Late last year, the company held an open house event at its Lake Forest facility, where it paid host to 180 investors as well as customers and partners. On display were the company’s three product lines made up of medical-grade amorphous metal molding, Industrial-grade amorphous metal molding.
It is still unclear whether the company inked deals with customers and investors in attendance at the open house event.
During the third quarter, the company achieved major milestones as it moved a step closer to commencing volume production in medical and automotive markets. During the quarter, the company generated revenues of $36,000.
Selling and marketing expenses in the quarter totaled $1.7 million as Research and Development expenses came in at $500,000. Liquidmetal exited the third quarter with cash and restricted cash of $43.3 million, compared to $58.9 million as of December 31, 2016.
A report on the company’s fourth-quarter financial results should shed more light on the company’s operational efficiency as well as revenue generation abilities.
What Next for Liquidmetal After the recent sell-off?
Liquidmetal finds itself in a precarious position given the strength of the sell-off wave that has pushed it to current lows. For quite some time it has traded as a speculative stock as it remains unclear whether it will break up or down.
It remains to be seen the financial results the company will post for its fourth quarter as they will paint a clear picture on whether the company is ready to bottom out or will continue to trade in a downtrend.
Until the company provides an update on its past performance and what to expect in 2018, it may be time to take a pause on any investments in the stock.
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Disclosure: We have no position in LQMT and have not been compensated for this article.