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Even before the world first learned about COVID-19, the movie theater industry was suffering its own pandemic. In this case, though, the culprit was not a coronavirus but rather popular content streaming services such as Netflix (NASDAQ: NFLX). Further, Hollywood had to compete with the entire internet as anyone can stream TV, movies and live events.
Naturally, this backdrop poses a severe challenge to Moving iMage Technologies’ motion picture equipment business. However, the unusual dynamics stemming from the public health crisis presents an interesting narrative for the company.
Moving iMage Technologies Financial History
Although virtually all business categories endured steep declines during the initial onslaught of the pandemic, few bore the magnitude of pain that the broader cinema industry experienced. From A-list Hollywood celebrities who found their projects canceled or delayed to the box office attendant trying to build on their first real-world job experience, COVID-19 indiscriminately imposed a dark cloud on the entire cinematic supply chain.
Therefore, it shouldn’t shock you that key partners in the cineplex business incurred sharp declines in revenue. For instance, during the fiscal year ended June 30, 2020, Moving iMage generated top-line sales of $16.4 million, down more than 21% compared to the year-ago comparison. Also, for the 9 months ended March 31, 2021, the company rang up sales of only $5.01 million, a staggering 67% loss from the same period one year earlier.
Just as concerning, Moving iMage’s operating loss amounted to $953 million for the 9 months ended March 31, 2021. Net loss came out to $1.15 million. To be fair, the cinema equipment provider was also in the red in the year-ago comparison, with an operating loss of $203 million and a net loss of $386 million. While COVID-19 contributed to the crimsoned financials, it’s not the only explanation for the negative profitability.
Still, once society fully normalizes, MITQ stock could be an investment to watch. Consider that in 2020, Cinemark (NYSE: CNK) saw a 79% implosion in its annual revenue from 2019 sales. Given the unprecedented collapse of Hollywood, Moving iMage contextually performed as well as you could expect.
Moving iMage Technologies Potential
While there’s no question that MITQ stock would represent one of the most speculative IPOs this year, it also offers contrarians tremendous upside potential should the return-to-the-box-office storyline play out like your typical summer blockbuster. For starters, the consumer sentiment index has been steadily rising, indicating growing confidence in the broader push to normalization. Between April 2020 and May 2021, the sentiment index jumped by over 15%.
Second, a study conducted by Showcase Cinemas — a privately held movie theater chain — demonstrated that 90% of moviegoers rated their experience as either excellent or very good, compared to only 55% of home viewers who shared the same opinion. This dynamic confirms that the box office delivers a social ambiance that streaming services can’t breach. Logically, Moving iMage is well positioned to capitalize on a possible return to the movies.
And this argument segues into a third catalyst for MITQ stock: pent-up demand. Similar to the concept of retail revenge, millions of Americans found themselves locked out of their social networks and favorite activities. To make up for this lost time, many consumers are willing to spend much more than they normally would. It also doesn’t hurt that statistically, a record number of Americans saved money during this crisis. Combined with government-funded stimulus checks, Hollywood offers an attractive place to spend those greenbacks.
How to Buy Moving iMage Technologies (MITQ) Stock
Under a traditional IPO process, underwriters have a limited number of shares for which to find homes. Because of this restriction, they will dole out pre-IPO shares — almost always discounted relative to what they might fetch in the public market — only to their choicest clients, meaning institutional investors.
Sadly, retail investors often find that they are shut out from purchasing stocks at their initial offering price. By acquiring shares at the open, they may end up on the business end of an IPO pop, or the speculative pricing burst that new shares often receive.
That said, as a retail buyer, you can choose without undue pressure which public market debut you want to participate in. As well, the process is easy if you already know how to buy stocks. If not, follow these steps.
Step 1: Pick a brokerage.
Back during the advent of the internet, online brokerages first broke through the digital barrier, providing unprecedented convenience and access to everyday individuals. But you had to pay a price for that benefit. Fast forward to the present time and the mass proliferation of mobile trading apps forced the brokerage industry to standardize most financial incentives, such as commission-free trading.
Essentially, your choice of platform largely comes down to personal needs and preferences. Below is a list of best brokers to consider.
- Best ForInternational Trading
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Step 2: Decide how many shares you want.
An oft overlooked but important step is to handle your share count, which ultimately represents your risk-reward profile. A higher share count allows you to accrue more profitability if your target stock increases in value. Conversely, downside action will expose you to steeper losses. Thus, you should choose a share count that you’re comfortable with.
Step 3: Choose your order type.
Make sure to understand the below concepts before placing your first trade.
- Bid: A bid is an offer placed by the buyer, theoretically the highest on tap. It is always lower than the ask.
- Ask: In contrast, the ask is the minimum price a seller will accept. It is always higher than the bid.
- Spread: Simply the difference between the bid and ask, the spread also signifies market liquidity and risk. Narrower spreads suggest higher liquidity and reduced risk due to buyer availability for sellers. On the contrary, wider spreads suggest lower liquidity and greater risk.
- Limit order: Use a limit order to trade stock at a specific price. However, there is no guarantee that your order will be fulfilled.
- Market order: To trade shares immediately at the prevailing rate, use a market order. Buy orders execute on the ask and sell orders on the bid.
- Stop-loss order: Designed to mitigate portfolio damage, a stop-loss order exits your position at a predetermined (requested) price or the next available price, whichever comes first. Watch out for gap-down sessions, which may cause your stop-loss order to fill well below your requested price.
- Stop-limit order: To control your mitigation profile, use a stop-limit order to facilitate automated exits only at the predetermined price. However, there is no fulfillment guarantee.
Step 4: Execute your trade.
To execute a market order, follow these steps:
- Select action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Limit orders follow the same sequence, except you must enter your desired execution price.
It’s Showtime for this Contrarian IPO
Without the impact of COVID-19, Moving iMage Technologies would probably have been an ordinary public market debut. But because the film entertainment industry attracts so much attention, you’ll want to pay close attention to MITQ stock, if only as a barometer.
If the post-COVID environment is as bullish as economic optimists hope, the bump in demand for the box office should help Moving iMage’s bottom line. If not, MITQ’s price action could provide an early warning indicator.