Moving iMages Technologies (NYSE: MITQ) stock is up near 50% this morning premarket on the back of the announcement of a strategic tie-up with SNDBX. Perhaps this will be a turning of the corner for MITQ, for the stock has been an appalling investment since the IPO last summer.
Moving iMage Technologies stock is down 95% on a one-year basis – ever since the IPO back last summer in fact. In one sense, this might not be all that much of a surprise. The company provides premium sound and vision equipment to movie theaters. Movie theaters haven’t been having a good time of it through lockdown, the major chains are near collapsing under the weight of debt built up over the pandemic.
Selling to cinema chains might not be quite where we want to be in such circumstances.
True, Q2 fiscal 2022 revenue growth was up 113% on a year-on-year basis. There’s a substantial – $11.1 million – backlog of borders to deliver upon. But as the decline in hte stock price shows expectations were much higher than that. In fact, given that market background it’s difficult to understand why the decision to go for an IPO was even made. But there we are.
Clearly, given that market background, Moving iMage needs to find something else to do. We don’t expect the debt problems in that movie theater business to disappear overnight after all.
Which is what leads to the current excitement about the strategic tie-up with SNDBX.
SNDBX is a leading promoter of amateur gaming and e-Sports league events which then take place in cinema auditoriums. Why not, after all, they’re already there, they have seating all facing the stage and so on. But obviously a certain amount of new gear needs to be installed to make the cinema suitable for the events. Which is where MiT comes in – they can now provide those.
The deal also rather neatly gets around the investment problem for the movie theater owners. For the kit – an integrated mobile cart – is, as it says, mobile. So, the kit follows the arrangement of the vents, rather than a cinema having to invest on the off chance that an event will turn up. It could be expected that the ability to host an even without substantial further investment will increase the number willing to host events. It is, after all, accretive revenue for the site host.
All of which is what has led to that 50% price jump premarket. The proof will, of course, be in the pudding. How many movie theaters will be convionced by this, how big is that market for e-Sports events going to become? Trading positions need to be built upon estimations of that market.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage . 68 % of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money .
Tim Worstall is a freelance writer specialising in economics and the financial markets.