It’s been a wild couple of weeks for technology stocks to say the least. It’s not unusual to see 5%-10% (or more) daily moves in some of the biggest names in the stock market. That can be a little unsettling unless you have tremendous conviction in the equities you hold. And it gets even harder to stomach if you are participating in the leading edge (often called the bleeding edge) of disruptive or innovative companies. To have confidence in your holdings, such that you can weather the market gyrations and sleep at night, it helps if your equities are on firm footing.
With that in mind, today we are going to discuss a global company that is driving the sustainability transformation, but has the luxury of already generating revenue, churning out a quarterly gross profit and already had US$256 million in cash at the end of Q3/21. That’s the kind of cushion that should let an investor rest relatively easy while they await the promise of a greener, cleaner future. The company is Ideanomics, Inc. (NASDAQ: IDEX) and it is focused on the convergence of financial services and industries experiencing technological disruption. The Ideanomics Mobility division is a service provider which facilitates the adoption of electric vehicles by commercial fleet operators through offering vehicle procurement, finance and leasing, and energy management solutions under an innovative sale to financing to charging (S2F2C) business model. Ideanomics Capital is focused on disruptive fintech solutions for the financial services industry.
Ideanomics has a lot of irons in the fire, and an attempt to review them all would result in a small (but interesting) novel. So today we are going to focus on a business segment that is generating a lot news of late – US Hybrid. Ideanomics acquired the privately held manufacturer and distributor of electric powertrain components and fuel cell engines for medium and heavy-duty commercial fleet applications in May, 2021. Since that time US Hybrid has delivered EV power electronics components to several OEMs, including CAT, Pratt & Miller, FEV, and Nova Bus, as well as several powertrain kits for battery electric street sweepers deployed nation-wide. The latest news came out Wednesday as US Hybrid was awarded an order for 19 ADA (Americans with Disabilities Act) compliant electric, long-range, transit vans from AVTA (Antelope Valley Transit Authority, which is just North of Los Angeles) to expand their electric fleet. The zero-emission vans can be impactful game-changers in moving towards a fully electrified world with each electric van displacing the need for over 10,000 gallons of fossil fuel each year.
It’s always good to see any of your business segments get traction in the market, but where investors should pay attention to this deal is in the synergies developing among different operating companies within the Ideanomics family. In 2017, AVTA started working with WAVE, another wholly owned subsidiary of Ideanomics, to implement high-power wireless charging pads both in-route and at the bus depot. As of today, AVTA now powers the largest electric bus fleet in the U.S. powered by 12 WAVE wireless charging pads located in their four transit centers.
I find the WAVE technology fascinating. WAVE delivers near-instantaneous, safe, high power from charging pads embedded in the roadway within seconds of scheduled stops. Medium- and heavy-duty electric vehicles gain substantial range and operation time without manual plug-in operations or mechanical contact. But beyond the interesting technology we are starting to see how the various Ideanomic brands are starting to lever off each other which could generate ever improving sales and revenue for the company.
Without writing that novel about other Ideanomics businesses, other mobility brands include:
Energica – The world’s leading manufacturer of high-performance 100% battery-powered motorbikes
Silk-FAW – Attracting top industry talent to produce fully electric, luxury vehicles for the Chinese and global auto markets from the heart of Italy’s Motor Valley
Solectrac – North America’s first manufacturer and distributor of 100% battery-powered, all-electric tractors
Treeletrik – The first Malaysian company to locally manufacture a fully electric bike, pioneering innovative electric vehicle technologies for the Malaysian market, and beyond
And that’s not even all of the Mobility divisions, let alone the Capital side of the business that includes a real estate transaction tool and a commodity trading platform. This seems like a lot of company for its US$492 million market cap when you consider that as of Sept 30, 2021, over 50% of that value was cash. Q4 and 2021-year end results are being released March 1st at which point in time we can reassess the cash position and the progress being made from the various synergies. It should make for an interesting read.