Ideonomics Is a Lot of Things, but It Is Not an Investment
Ideonomics (NASDAQ:IDEX), which has had a variety of strategies over the last 20 years, is now trying to get into electric vehicles. Investing in IDEX stock means buying the story that this latest pivot is the real deal.
It can be hard to find a theme in IDEX stock history. It includes stakes in China’s internet boom, fintech, and (now) electric motorcycles.
The theme seems to be that IDEX follows the brainwaves of whoever is running it. In the past, that meant Shane McMahon, who is now focused on his family business, World Wrestling Entertainment (NYSE:WWE). Later it meant Bruno Wu, a Chinese investor who has become chairman emeritus.
The new strategy belongs to CEO Alf Poor. Two years ago Poor was promoting an “entrepreneur campus” in West Hartford, Conn. His Twitter feed says he’s in the “Greater New York” area. That area may include California.
A Closer Look at IDEX Stock
Poor is building a strategy around the fringes of the electric vehicle craze and selling stock. IDEX recently bought a wireless charging provider called WAVE and began to import electric mopeds. Head of investor relations Tony Sklar is promoting the company’s investment in an Italian electric bike company, Energica Motor.
Poor also has some fintech assets, run as Ideanomics Capital. These include a now-shuttered penny stock market and a financial group called Intelligenta filled with buzzwords like AI and blockchain to make you swoon.
The capital unit, with offices in both New York and Beijing, recently closed on a real estate transaction services company called Timios.
Questions Abound
Our Vince Martin recently covered the company’s history. It was a “dodgy penny stock” until it got into the electric vehicle craze.
Short-seller Alex Cho called Ideanomics a “borderline fraud” in February 2020. Hindenburg Research followed up, charging its Chinese “MEG Center” was just a set of photos. Ideanomics responded, describing what it said were real orders.
Poor’s latest moves sent the shares as high as $4.95 each in early February. They have since run back to below $3, about where they started the year.
This gives IDEX stock a market cap of $1.07 billion on revenue of about $16 million through the first three quarters of 2020.
In addition to its history and Timios, what you’re getting with IDEX stock today is Medici Motor Works, selling electric and hydrogen vehicles.
A bullish analyst sees other assets, including a tractor outfit called Solectrac, an electric car company called SilkEV and the Energica motorbike unit. But he also sees $150 million in new shares and new convertible debt. If the $150 million is spent well, our Will Ashworth writes, buying IDEX stock may not be “as terrible an idea as you think.”
The Bottom Line
Our Louis Navillier writes that IDEX’ decision to report vehicle sales quarterly instead of monthly means there is now real risk this could become a penny stock again.
I’ve seen dozens of companies like this over my 43-year reporting career. They’re money looking for profit, rather than product looking for markets. You can speculate on the parlor trick, but eventually it all comes down like a house of cards.
In the case of IDEX stock this has already happened, several times, but the house keeps getting built again, around the next set of buzzwords and the next “sure thing.”
If you’re a young speculator, willing to read tea leaves every day, getting in and out of shares on a hunch, you can play IDEX. If you’re an investor you’re better off elsewhere, even if the latest play turns out to be a good one.
At the time of publication, Dana Blankenhorn owned no shares, directly or indirectly, in any companies mentioned in this article.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack https://danafblankenhorn.substack.com/.
