Nextech AR Solutions Is a Discount That Won’t Last Forever
Rarely do the markets print a valuation mismatch like what you’re seeing with NEXCF stock
Emerging Growth Report on NexTech AR Solutions (NEXCF)
Easily one of the most paradigm-shifting events that have occurred in the trailing two decades was the advent of e-commerce. With the innovation of connectivity that the internet engendered, it was now possible to facilitate multiple transactions that traditionally occurred face-to-face through online platforms. Moving forward, NexTech AR Solutions(OTCQB: NEXCF) stands poised to fill the opportunity gaps that currently exist in the digitalization ecosystem.
To better understand the potential of NEXCF stock, it helps to consider e-commerce as a multi-phase progression. First, the internet provided the critical ground floor of the digitalization of everything that we’re currently enjoying, enabling among other developments peer-to-peer transactions. However, merely having an infrastructure is not enough – you need to be able to do something with it.
That’s where companies like Amazon (NASDAQ: AMZN) came into the picture. With computers connected to each other, it was then possible to transmit economic value over the world wide web. Early innovations in e-commerce focused on integrating internet technology with traditional “analog” retail channels. Additionally, building robust cybersecurity infrastructures was crucial to establish consumer trust.
Today, we take these pioneering events for granted. For instance, we think nothing of watching a YouTube video, seeing a product that captures our fancy, and heading to a popular e-commerce marketplace to get what we wanted – often delivered the following day.
However, not every retail industry caters to online transactions. For instance, millions of shoppers prefer buying clothing and accessories in person rather than online, simply because we want to determine for sure that they fit us and just as importantly, that they look good on us.
Or what about furniture and appliances? Of course, it’s possible to buy such items online. But you’d like to know how they would present themselves in your house before making the purchase and in many cases, before you spend the time building/configuring them.
Fortunately, NexTech AR Solutions has the perfect answer, leveraging the power of augmented reality to address these opportunity gaps. Essentially, the company provides the information that consumers are looking for in a product – the look, size, proportions and overall fit – but without having to leave their home or office.
Fundamentally and financially, NexTech AR makes a strong argument that it’s one of the most undervalued investments in the digital transformation space. Still, groundbreaking companies like this don’t stay under-the-radar for long, which is why you’ll want to consider NEXCF stock now.
A Quick Rundown on Augmented Reality and Why It’s Important
Before we dive into the valuation argument for NexTech AR relative to the competition in the digital transformation market, we need to have a basic framework of augmented reality and its many powerful applications.
According to the Harvard Business Review, augmented reality is defined as a set of technologies that superimposes digital data and images on the physical world. This is distinct from virtual reality, where such systems project images within an artificially manufactured environment – hence the VR headsets.
With AR, the canvas is the real world, your world – and it’s this distinction that will drive AR to a global, multi-billion-dollar market segment and further enhance the multi-trillion-dollar e-commerce industry.
In fact, we already incorporate AR technologies and may not even realize it. For instance, a typical college or professional football game will feature graphic overlays representing pivotal markers, such as the first down line, the line of scrimmage and the area necessary to get the ball into reasonable field goal range.
Furthermore, these visual markers are proportionately accurate and maintain their proportional integrity relative to the canvas. For example, if you watched the most recent Super Bowl highlights, you would have noticed that the first-down marker didn’t move as the camera moved – that would be incredibly annoying and defeat the purpose of interlaying these digital data points. Instead, the first down marker stayed put, despite the wild action on the field.
It’s this technology of accuracy and stabilization that makes AR platforms so pertinent in our e-commerce landscape. If you’re looking to buy a new sofa, you want to know not only what it looks like but how it will fit in the room you’re targeting. This is an area where real-life shopping presents severe limitations.
Prior to AR technologies, you had to measure the destination space and the product – and on top of that, use your imagination to decipher how a piece of furniture or a large appliance would appear in your home. With AR platforms, all that stuff is automated.
More importantly, this technology brings consumer/product evangelism closer to the point of sale. In the analog days, major sales opportunities could die with the dreaded words, I’ll think about it. By the time the consumer is done thinking, they may have moved onto a competitor product or even a new solution altogether.
By integrating AR platforms with current retail channels, NexTech AR brings comprehensive product evangelism to the transactional edge. With the consumers’ questions and concerns answered, they only need to hit the “buy” button.
It’s no wonder that according to some expert sources, the augmented reality industry could hit $72 billion by 2024 and skyrocket to over $340 billion globally by 2028.
Of course, with so much profitability potential on tap, many large capitalization technology firms are jumping into this sector as it could very well be the next evolution in e-commerce. While such established blue chips offer stability, you may want to consider adding NEXCF stock to the risk-on portion of your portfolio for its attractive valuation.
A Pioneering Tech Play at a Remarkable Discount
One of the hallmark features of the augmented reality market and the broader digital transformation movement is that they embody full-spectrum solutions.
As NexTech AR’s management team puts it, we’re hurtling toward an ecosystem where we can:
- Work from home – Due to the disruptive impact of the novel coronavirus pandemic, millions were forced to operate remotely. Generally speaking, this baptism under fire has functioned remarkably well given the circumstances. And as the Wall Street Journal pointed out, we could see a hybrid home/office work model, further incentivizing development of remote connectivity platforms.
- Learn from home – Amid the usual rancor in Washington, a particular issue has captured the public’s attention and that is student debt forgiveness. This raging debates points to the ultimate fact that for many households, higher education is increasingly out of reach. But with its remote education solutions, NexTech AR can sharply mitigate costs while helping to deliver quality programs and curriculum safely.
- Shop from home – In 2020, e-commerce sales will bring in $3.914 trillion globally. Some experts predict that by 2024, this market will reach $6.3 trillion worldwide. As explained earlier, NexTech’s integrated solutions bring consumer education to the edge of transaction, fostering significantly improved sales for its corporate clients.
Naturally, with so many direct opportunities and derivative markets, the world’s biggest blue chips and most popular growth firms have jumped aboard the digital transformation sector. Irrespective of the unbridled competition, NEXCF stock continues to stand out as the only diversified small-cap company directly participating in this burgeoning industry.
As such, NexTech AR has a favorable valuation profile that should not be ignored. Over the trailing-12-month period, NexTech has delivered $20.2 million in bookings +233% 2019 $6 million total. Moreover, the company has a very low float compared to its rivals, with only 75.2 million shares outstanding and 2.2 million unexercised warrants.
As of the latest data, we’re looking at a revenue per share for NEXCF stock of 0.15, up approximately 67% from the prior year. To see how this stacks up, consider the following stats:
- Amazon’s RPS is 757 times with 503 million shares outstanding
- Spotify (NYSE: SPOT) trades at 51-times revenue with 189.6 million shares outstanding
- Facebook (NASDAQ: FB) trades at 29.8-times revenue with 2.4 billion shares outstanding
- Apple (NASDAQ: AAPL) trades at 15.7-times revenue with 16.8 billion shares outstanding
- Snap (NSNAP) trades at 1.72-times revenue with 1.25 billion shares outstanding
To be fair, you generally want to see a stock trade at some multiple of revenue – of course, the higher this metric, the more sales each unit of equity is tied to. However, having this ratio get too high can turn off many investors, who don’t see as much growth opportunities. For instance, it’s hard to imagine Amazon at 757-times revenue expanding much more until it reaches a maturation point, if it hasn’t done so already.
Also, most of these companies have a much broader base of shares outstanding. Spotify comes the closest to NexTech AR with a little under 200 million shares outstanding. But because of its meteoric financial growth, it’s possible that SPOT shares are getting stretched.
For instance, between 2018 and 2019, revenue per share grew by nearly 26%. But from 2019 to last year, RPS growth slipped to 23%. Plus, Spotify is a well-known entity, accruing significant investor interest. At some point, though, growth investors start to look for much more viable opportunities.
That’s why NEXCF stock is particularly exciting. With a time of writing market cap of only 384 million CAD (approximately $307.6 million USD), you’re really getting into a pure-play AR investment at a fraction of the valuation of the alpha dogs.
And unlike so many other small-cap trades, NexTech AR shares aren’t diluted to the hilt where the price tag is cheap but for a reason. It’s simple supply and demand – too much of something usually degrades its quality. That’s absolutely not the case with NEXCF stock, as it features a much lower float than other AR and digital transformation investments; in some cases, it’s exponentially lower. This is one clue you’re getting a discount, not a “cheap” penny stock.
More importantly, NexTech’s rivals are encumbered with multiple businesses, each bringing their own set of opportunities and possible setbacks. For instance, Facebook has eagerly dived into both AR and VR platforms and applications. However, that’s not the company’s core business – obviously, it’s social media. Thus, arguably most folks are not buying FB stock for its AR division.
The fact of the matter is that roughly 97% of Facebook revenue comes from selling advertisements. Even with Facebook’s push toward AR/VR solutions, it’s merely a drop in the bucket for FB stock.
In contrast, NEXCF stock is geared toward everything AR. Yes, that has its risks – you’ve got to be aware of that. But if you believe in the burgeoning AR and digital transformation market, one that collectively will haul in trillions of dollars, NexTech represents one of the very few plays where you can accrue a windfall, not a pittance, from this industry’s growth trajectory.And on a critical sidenote, NEXCF stock isn’t just undervalued relative to publicly traded companies – or even the AR industry specifically. Due to the terrible Covid-19 pandemic, millions of workers have been forced to work from home. Though new coronavirus cases have declined sharply this year, the Wall Street Journal reports that a mass scale return to the office remains in limbo.
Naturally, this means teleconferencing and virtual event platforms – an area which NexTech also specializes in, offering unique synergies through its AR innovations – still reigns supreme.
This has sparked intense competition in the space, with Hopin being one of the top competitors to NexTech AR. Recently, Hopin announced that it closed a $400 million Series C private funding round, which places its valuation between $5 billion and $6 billion.
Prior to the Series C funding, rumors suggested that Hopin could go public via a special purpose acquisition company or SPAC. However, one of the drawbacks regarding SPACs is that their sponsors typically receive about 20% equity in the eventually combined entity, which is incredibly dilutive for shareholders. Therefore, many companies that go the SPAC route eventually fizzle out.
Now, with significant demand in the private funding space, it’s possible that Hopin will go public via a traditional initial public offering, with a potential target of 2022 or 2023.
However, there are two important factors to keep in mind. First, rumored IPO dates are never a sure thing – frankly, a lot can happen between now and 2022/2023. In sharp contrast, NEXCF stock trades publicly now. Second, Hopin is a fully fleshed out virtual event software. Yet NexTech also offers a comprehensive teleconferencing platform plus the AR synergies that Hopin lacks.
Nevertheless, Hopin has a valuation of up to $6 billion, while NEXCF stock has a market cap of approximately 5% of that figure. This is a valuation mismatch, an extreme irrationality in pricing which investors can advantage right now.
Undervalued But Likely Not for Long
As you’ve undoubtedly heard, one of the hottest trends on Wall Street is the concept of betting on “meme stocks,” or publicly traded companies which have a strong following on social media. This has sparked radical upside moves in previously out-of-favor names in the hopes of catalyzing a short squeeze.
No doubt, the scheme has been successful for a few speculative trades. Typically, though, such fads die out quickly, in large part because extreme boom-bust cycles cause millions of people to lose their money and therefore ruin their appetite for further speculation.
One of the beautiful things about NEXCF stock is that it hasn’t yet absorbed this manic influx of investor dollars. However, it’s very possible that it might. In its recent corporate presentation, management disclosed that it’s awaiting approval for listing NEXCF shares on the Nasdaq exchange. If that goes through, there’s a great chance that more eyeballs will assess this opportunity.
When they do, they’ll likely key in on the AR industry potential and the valuation profile of NexTech AR Solutions, auguring well for NEXCF stock. But you’ll want to consider getting in now before the big wave of buyers do.
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