Down More Than 15% YTD, is OLB Group a Good Buy?
OLB Group (OLB) shares have slumped more than 15% in price year-to-date. However, the stock has gained momentum lately due to OLB’s recent positive operational updates. The company expects to...
OLB Group (OLB) shares have slumped more than 15% in price year-to-date. However, the stock has gained momentum lately due to OLB's recent positive operational updates. The company expects to make significant progress in its crypto venture in the coming months. So, is it the right time to scoop OLB shares? Read on to learn our view.
The OLB Group, Inc. (OLB) in New York City provides cloud-based omni-commerce and payment acceptance solutions for small- and mid-sized merchants in the United States. Shares of the crowdfunding platform operator have slumped 17.4% in price year-to-date. OLB shares have declined 62.4% over the past year and 67.6% over the past three months to close yesterday's trading session at $2.19. The stock hit its 52-week low of $1.61 on January 28.
However, the stock rallied on its recent positive updates earlier this month. OLB announced that the company's merchant services annual transaction volume run rate had reached $1.35 billion in transaction volume on 28.5 million transactions, bolstered by the acquisition of a portfolio of CBD merchant accounts in the last quarter. The company's eCommerce merchant services business is tracking at an anticipated annual revenue run rate exceeding $36 million for 2022. "Our CBD merchant portfolio acquisition is expected to add $25 million to our revenue this year and is anticipated to contribute up to $5 million in incremental EBITDA," said Ronny Yakov, President and CEO of OLB.
But, although the CBD market is expected to grow in the long term, supply chain issues and regulatory challenges remain.
So, here is what could shape OLB's performance in the near term:
Venturing into the Crypto Space
Last year, OLB announced that DMint, Inc., a wholly owned subsidiary of OLB, initiated Bitcoin mining with its first one hundred (100) Antminer S19j Pro cryptocurrency mining computers. According to the company's recent update, it was expecting to take delivery of the first of four hundred (400) additional Antminer S19j PRO Bitcoin mining machines, which would bring its total cryptocurrency mining machine count to 1,000 last month. DMint plans to increase its total mining capacity to 24,000 mining computers over the next 24 months.
However, the crypto market seems to be downtrend. The market has shed substantial value since bitcoin's all-time high in November 2021. Nobel Prize-winning economist Paul Krugman warned about the volatile cryptocurrency market, comparing it to the subprime mortgage crisis of the late 2000s. Also, some experts believe a "crypto winter," a phrase referring to major bear markets in the young digital currency market's history, has arrived. The crypto crash and the increased regulation in the crypto space could limit OLB's near-term growth in the crypto industry.
Bleak Bottom Line
For the three months ended Sept. 30, 2021, OLB's total revenues increased 22.4% year-over-year to $2.82 million. Its total operating expenses increased 36.2% from its year-ago value to $3.72 million, while its loss from operations came in at $900,364, indicating a 111.6% increase year-over-year. Its net loss rose 37% from the prior-year quarter to $900,354. The company's net loss per share came in at $0.11. In addition, its cash balance stood at $1.16 million, compared to the $4.12 million year-ago value in the nine months ended September 30.
POWR Ratings Reflect This Bleak Prospects
OLB has an overall F rating, which translates to Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a D grade for Sentiment. This is justified because analysts expect its EPS to decline 12.9% in fiscal 2021.
OLB has an F grade for Quality, which is consistent with its negative net profit margin.
Of the 169 stocks in the F-rated Software – Application industry, OLB is ranked #165.
Beyond what I have stated above, you can view OLB's grades for Momentum, Growth, Value, and Stability here.
View the top-rated stocks in the Software – Application industry here.
OLB is investing significantly to expand its crypto space capabilities and strengthen its position in fintech. However, the company's growing expenses led to a weak bottom line and reduced shareholder returns. Thus, we think the stock is best avoided now.
How Does the OLB Group, Inc. (OLB) Stack Up Against its Peers?
While OLB has an overall POWR Rating of F, one might want to consider investing in the following Software – Application stocks with an A (Strong Buy) rating: Rimini Street, Inc. (RMNI), Commvault Systems, Inc. (CVLT), and Synopsys, Inc. (SNPS).
OLB shares fell $0.14 (-6.39%) in premarket trading Tuesday. Year-to-date, OLB has declined -22.64%, versus a -5.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree's keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master's degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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