Resonant Is an Intriguing Early-Stage Mobile Technology Play
The technology space continues to power ahead this year, with the Nasdaq looking to defend its title from 2017.
Much of the momentum in technology has been driven by the large brand-name technology stocks. But hidden in the background are numerous little-known stocks with high-risk/high-reward prospects.
An early-stage micro-cap technology company that offers speculators an aggressive opportunity is Resonant Inc (NASDAQ:RESN). It has a mere $116.8 million in market cap.
Resonant, which only began to record revenue in 2016—and with less than $1.0 million in revenue in 2017—is not for those who loathe risk.
RESN stock is down by more than 50% from its high of $8.55 in December 2017, but it’s worth a look for traders.
Resonant is developing software, intellectual property, and a services platform that is being tested by three foundry operators. Resonant aims to help manufacturers of the filters used in the radio frequency front-ends in the mobile device sector.
The objective of the testing is to improve the design of the product, reduce the time to market, and cut costs.
Keep in mind that the early-stage nature of the product makes Resonant stock high-risk.
The RESN stock chart displays a “V” shape rally in early 2016 that led to a surge above $8.00. The stock has since retrenched to a sideways channel between $4.00 and $5.50.
Chart courtesy of StockCharts.com
If the Resonant stock price can hold around the support level, and the company can deliver some positive news, it wouldn’t surprise me to see the stock pop.
Why RESN Stock Appears to Be Heading in Right Direction
Resonant is years away from turning a profit, but the company is rapidly accelerating its revenue growth, which should rocket as more clients come on board.
After reporting a mere $653,000 in revenue in 2017, the company is estimated to see its revenue surge by 235.4% to $2.2 million (or as high as $3.0 million) in 2018. (Source: “Resonant Inc. (RESN),” Yahoo! Finance, last accessed September 21, 2018)
For 2019, revenue growth could be five times the high estimate of 2018, with a revenue forecast of as high as $15.0 million.
Resonant is spending heavily on research and development, but with the higher expected revenues, its losses should narrow.
|Research & Development Spending|
(Source: “Resonant Inc.” MarketWatch, last accessed September 21, 2018.)
For 2018, Resonant is expected to report an adjusted loss of $0.69 per diluted share, versus $1.26 per diluted share in 2017. In 2019, the loss is estimated to fall to as low as $0.29 per diluted share. (Source: Ibid.)
Furthermore, Resonant has no long-term debt, which should allow the company time to grow without the fear of a cash crunch.
For a small company, Resonant has 53 institutions holding its stock—about 41.9% of the outstanding shares. (Source: Yahoo! Finance, op cit.)
RESN stock has also been attracting insider buying, with insiders purchasing 213,960 shares over 18 transactions during the last four months and insiders selling only 18,400 shares in that period. (Source: MarketWatch, op cit.)
As is the case with many emerging technology start-ups, Resonant stock has added risk, but it may be worth a look with risk capital.