Liquidmetal Technologies Inc (OTCMKTS: LQMT) looks to have hit a bottom and due for a correction higher, going by recent price action activity. After a long period of consolidation at the $0.09 level, the stock is once again showing signs of renewed investor interest.
Liquidmetal price analysis
The unveiling of a restructuring plan is one of the developments that appear to be driving the stock’s price action activity. In addition, a second-quarter earnings result affirming that a transition into a revenue-generating entity is gaining momentum continues to excite investors; thus, the recent bounce back.
Price action activity indicates that Liquidmetal could be on its way to the $0.14 level, which happens to be the immediate resistance level, standing in the way of the emerging bull trend.
Conversely, a spike-followed by a close above the $0.14 technical level should reaffirm Liquidmetal breakout credentials as a bounce-back play. Above the critical resistance levels, bulls still on the fence could be swayed to join the fray and help in pushing the stock back to this year’s highs of $0.18.
What Does Liquidmetal Do?
Liquidmetal bills itself as a material technology and manufacturing company. The company designs develop and manufacture products and parts from bulk amorphous alloys for use in various industries. The company also develops Liquidmetal alloys for use in medical as well as dental and automotive industries.
Liquidmetal Restructuring Plan
Liquidmetal has embarked on a restructuring plan as it seeks to reduce its operating costs and reinvigorate its growth metrics. In addition to reducing operating costs, the company is planning to focus most of its resources on sales, marketing, and industry development. As part of the restructuring drive, the company is to shift its manufacturing operations to a facility in Lake Forest California.
In addition, Liquidmetal is to focus on developing domestic and international manufacturing partnerships. This is part of an effort of leveraging the operations of established manufacturers in a bid to reduce operating costs. Similarly, the company should be able to come up with more efficient and cost-effective structures, focused on sales as well as marketing and project development.
“Liquidmetal Technologies is a world leader in developing and manufacturing amorphous metal applications. Our Restructuring Plan allows the Company to focus on commercializing its unique technology and developing its markets while closely managing costs. This is a critical step toward pursuing growth and profitability,” explained CEO Lugee Li.
Liquidmetal financial results
Liquidmetal hopes the restructuring plan will allow it to improve on its financial position. The second-quarter financial report indicates the company is gaining traction on the sale of its amorphous products. For starters, the company reported $132,000 in Q2 in revenues. Most of the revenues came from early production orders from medical and retail customers. The company also benefited from product development efforts on continued commercialization of the underlying technology.
Selling, marketing, general, and administrative expense dropped to $1.3 million from $1.5 million thanks to a reduction in costs associated with employee compensation. Research and development expenses were also down to $0.4 million from $0.6 million, attributed to a decline in employee compensation. Liquidmetal exited the quarter with cash and restricted cash amounting to $32.2 million.
According to management, revenue growth should continue to gather pace. This is in part because the company has received orders from current customers for the production of buffer inventories. Liquidmetal should be able to furnish the orders before the end of the third quarter. The company has also attracted new development projects from Dongguan Yihao Metal Materials Technology.
Liquidmetal has experienced its fair share of negative market sentiments since the start of the year. However, the stock appears to have finally bottomed as investors take note of its restructuring plan that has the potential to strengthen the bottom line.
The company embarking on a commercialization drive of its amorphous products and curtailing operating costs is welcome news. A combination of cost cuts as well as enhanced commercialization efforts of amorphous products should continue to excite investors. That said the stock looks set to continue climbing up the charts.
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Disclosure: We have no position in LQMT and have not been compensated for this article.