Net Element stock (NASDAQ:NETE) was the top performer across US markets on Friday after rising over $2 to close the higher by 77%. Net Element stock has a history of big moves and is a stock that we have covered on a number of occasions in the past. The last time we covered the company was at the end of 2017 when Net Element stock traded over $33 a share. As you can see from this 5-year chart, the company is now trading at the lower end of a big trading range.
About Net Element Stock
First up, here’s a little background info for those that aren’t familiar with Net Element stock. The company operates a payments-as-a-service transactional and value-added services platform for small to medium enterprise (“SME”) in the U.S. and selected emerging markets.
In the U.S. it aims to grow transactional revenue by innovating SME productivity services using blockchain technology solutions and Aptito, its cloud-based, restaurant, and retail point-of-sale solution. Internationally, Net Element’s strategy is to leverage its omni-channel platform to deliver flexible offerings to emerging markets with diverse banking, regulatory and demographic conditions.
Net Element was ranked as one of the fastest-growing companies in North America on Deloitte’s 2017 Technology Fast 500™. In 2017 the company was recognized by South Florida Business Journal as one of 2016’s fastest-growing technology companies. Further information is available at www.NetElement.com.
Why Did Net Element Stock Run On Friday?
Last month, Net Element issued a press release that its Board of Directors authorized the Company to explore strategic alternatives for its business in order to unlock shareholder value. As part of this process, the Company will evaluate all potential options for its business, including a sale, licensing of technology, spin-offs, or business combinations.
While no news was released, many chat rooms were pumping the stock on Friday that news on a sale was coming. Combine this enthusiasm with algos picking up the chatter along with almost 5% of the float short, and you had the perfect mix to create a big rally in the market.
Latest Earnings Report
Last month, Net Element also issued its Q1 results. Among the highlights:
- Total transaction processing volume increased to $810.7 million, as compared to $786.7 million for the same comparable period
- Net revenue increased to $15.8 million as compared to $15.0 million for the same comparable period
- North American Transactions Solutions revenue increased to $15.2 million as compared to $14.4 million for the same comparable period
- International Transaction Solutions revenue was unchanged at $0.7 million
- Operating expenses were $3.6 million for both periods
- Gross margin decreased to $2.5 million as compared to $2.8 million for the same comparable period in 2019
- Net loss per share increased to ($0.33) from ($0.29) for the same comparable period
As you can see, revenues are growing at a nice pace, but losses continue to mount. A buyer would be purchasing Net Element for its technology and revenue growth.
Any analysis on Net Element stock cannot be complete without discussing its CEO Oleg Firer. When you Google him, the second story that comes up is from the Miami-Herald. While we are not going to debate the article, we will let others decide for themselves its merits.
Driving the price action is the news that Net Element is merging with privately-held Mullen Technologies, Inc., a Southern California-based electric vehicle company in a stock-for-stock reverse merger in which Mullen’s stockholders will receive the majority of the outstanding stock in the post-merger Company. Founded in 2014, Mullen expects to launch the Dragonfly K50, a luxury sports car, in the first half of 2021 through ICI (Independent Commercial Importers). Mullen currently has eight retail locations in California and one in Arizona.
According to Mullen, Mullen also owns several synergistic businesses including Mullen Auto Sales, a fast-growing series of automobile dealerships, and CarHub, a new and unique digital platform that leverages Artificial Intelligence (AI) and offers a complete, easy-to-use solution for buying, selling and owning a car. To assist in the fight against a novel coronavirus pandemic (COVID-19), Mullen’s subsidiary Smart 8 Energy recently began sourcing ventilators, COVID-19 antibody, and virus test kits and Personal Protective Equipment (PPE).
Subsequently, in May 2020, Mullen signed an agreement with Academy Medical, Inc. to sell its products to the U.S. Federal Government, including without limitation the U.S. Department of Defense, Department of Veterans Affairs, Department of Homeland Security, Indian Health Services, and Department of Health and Human Services and their respective sub-agencies and facilities. The company has 15 patents or patents pending related to its electric vehicle technology, including nine in the United States.
The Dragonfly K50 has been featured at the New York International Auto Show in April 2019. The car also won the Governor’s Choice Award at the 2019 Balboa Bay Club’s Classic Auto Show. The K50 has also been the subject of stories in the Wall Street Journal, ABC News, Autoweek, MotorTrend, and Forbes, among many other publications.
Mullen is launching this car in conjunction with a cooperation agreement with Qiantu Motor, a wholly-owned subsidiary of CH-Auto, a leading automotive design and manufacturing company in China. Due to the COVID-19 pandemic, Mullen pushed the targeted date for the ICI release of the Dragonfly K50 for the 2nd quarter of 2021.
Bulls and bears have been going at Net Element stock for many years. During this time, the bears have won most of the battles. However, the bulls have won the war. The merger with Mullen creates the potential for Net Element stock to become the next Nikola or Tesla. Electric vehicles are all the rage and investors are on the hunt for the next big winner. Net Element stock could be the next big winner in the EV space.
As always, good luck to all (except the shorts)!
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Disclosure: We have NO position in NASDAQ:NETE and have NOT been compensated for this article.