Is Wearable Devices Ltd. Stock a Good Buy?

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Contributor, Benzinga
July 27, 2023
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Key takeaways:

  • Wearable Devices is a neural input technology provider focusing on the enhancement of consumer products.
  • Wearable Devices’ machine learning protocol can help drive greater engagement and immersion for the metaverse.
  • While the sky may be the limit for WLDS stock, the underlying growth company is tethered to a very small revenue profile.

While connected smart devices continue to get smaller, the average human hand size has been relatively stable over the years, if extrapolation from historical trends in height across international communities is anything to go by. In other words, devices can only get so compact before the impugned lack of practicality generates negative returns on investment for manufacturers. Fortunately, Wearable Devices Ltd. may help save the day.

A non-invasive neural input technology provider, Wearable Devices (NASDAQ: WLDS) focuses on enhancing the everyday functionality of compact connected devices, such as smartphones, smartwatches, fitness trackers and other portable platforms. Rather than forcing users to convey commands via a traditional tactile paradigm, Wearable Devices enables interactions through hand signals and movements. Subsequently, integrated sensors and machine learning (artificial intelligence) protocols interpret the motions, driving quick and accurate engagements.

To succinctly describe the growth company’s relevance, its advanced technology – called Mudra – helps eliminate the “fat-finger problem” or the ever-troubling derriere-dialing dilemma. Further, the innovation received rave reviews, with Forbes’ Dave Johnson stating that the “Mudra Band seems like something out of science fiction.”

Buying stock in Wearable Devices, like any other new tech company, requires extensive research. Primarily, while the business is a fast-growing one, it’s nominally very small. Therefore, it presents longer-term resilience and fiscal viability concerns.

In addition, competition in the broader tech space is never too far away. Should rival firms leverage current or future innovations to build superior products, Wearable Devices could fall out of favor with investors. In addition, consumers might prefer the direct tactile approach as opposed to neural-signal-based interactions.

With so many factors involved, here are the key pros and cons to consider.

What Does Wearable Devices Do?

Officially, Wearable Devices bills itself as a growth firm developing “a non-invasive neural input interface in the form of a wrist wearable band for controlling digital devices using subtle finger movements.”

According to the growth company’s marketing brochure, Wearable Devices seeks to transform thoughts and intentions into digital actions, naturally and intuitively. To be more direct, the company’s Mudra platform enables the user’s hand to become the universal input device for modern smart devices.

While such innovations seemingly occupy the fantastical domain of science-fiction films, Wearable already amassed years of research and development experience. According to Wearable’s Form F-1 prospectus filed with the U.S. Securities and Exchange Commission (SEC), the company introduced its technology to the market in 2014, working with both business-to-business (B2B) and business-to-consumer (B2C) clients as part of its push-pull strategy.

Most significantly, Wearable reports that it is in the final stage of manufacturing its first B2C product, the Mudra Band. In partnership with consumer tech giant Apple Inc. (NASDAQ: AAPL), the Mudra Band represents an aftermarket accessory band for the Apple Watch, facilitating touchless operation and control of the watch and iPhone.

While an impressive achievement, Wearable’s ultimate goal is to promote seamless interactions between humans and technology without the constraints and inefficiencies of direct physical contact. What this looks like in practical terms is Wearable becoming the standard input interface for the metaverse, a catch-all term to describe the next evolution of connectivity, often through immersive devices such as virtual reality (VR) headsets.

Per Wearable’s F-1 document, the Mudra platform can integrate with and improve the functionality of “consumer electronics, smartwatches, smartphones, augmented reality, or AR glasses, virtual reality, or VR headsets, televisions, personal computers and laptop computers, drones, robots, etc.”

Further, in its prospectus, Wearable lists the following growth strategy components.

  • Offer a broad range of platform devices
  • Introduce new features, use-cases, software applications and services
  • Integrate Mudra technology into existing devices
  • Penetrate additional markets
  • Expand brand awareness and global distribution to drive sales of products and services
  • Monetize data

Nevertheless, every business – particularly a tech startup – features risks. According to Wearable’s leadership team, the factors to watch out for include the following.

  • No assurances that its Mudra platform will become the dominant input method for wearable products
  • Possible risks in successfully developing and introducing products in a timely manner
  • Competitive risks with the possibility that rivals could leverage current or new technologies to promote superior platforms

When Was the Wearable Devices IPO Date?

Wearable Devices inked its name on the IPO calendar on Aug. 25, 2022. Shares trade on the Nasdaq exchange under the ticker symbol WLDS. Aegis Capital Corp. represented the sole bookrunner for the listing.

According to the terms of the deal set in February of this year, Israel-based Wearable Devices planned to raise $18 million through the distribution of 3.6 million shares. The estimated stock price spectrum was between $4 and $6. At the midpoint of this range, the company would have commanded a fully diluted market value of $79 million.

Per data from FactSet, 2022 has not been kind to public market debuts: “There were 57 IPOs in the first quarter, down 73.1% from the fourth quarter of 2021 and an 87.6% decline from Q1 2021. Activity slowed even more in the second quarter, with just 35 IPOs for the quarter, down 38.6% compared to the first quarter and down 82.5% year over year.”

What Analysts are Saying About Wearable Devices

As exciting as Wearable Devices’ deep learning protocol is, it remains a speculative venture. Few analysts have weighed in on the upcoming new listing.

Wearable distinguishes itself from other aspirational startups by delivering substantive developments for market participants to chew on. Top of the order is the Mudra Band receiving an award as the best wearable device at the Consumer Electronics Show (CES) in 2021.

Second, Wearable may command an enviable total addressable market. While the current excitement stems from the Apple Watch partnership, Mudra can control household electronics, smart watches, smartphones, AR glasses, VR headsets, TVs, drones and other devices. Therefore, it could become the standard for touchless inputs and interactions.

At the same time, RoboMarkets.com notes some concerns with the company as well. Mainly, Wearable has not generated any net profit. To be fair, a tech firm not generating net income doesn’t automatically constitute a future failed business. For innovative firms, a common argument exists that the company should develop its core tech; once functional and commercialized, the money should pour in, which was the case with Meta Platforms Inc. (NASDAQ: META), formerly trading under the Facebook brand.

However, the key distinguisher at this juncture is inflation. With broader economic viability concerns weighing on investor sentiment, not leveraging a proven track record of profitability could be a distraction.

Wearable Devices Financial History

Although the underlying tech for Wearable Devices will likely draw intense interest, the investment thesis presents significant challenges. Mostly, the concern rests on viability issues. In 2021, the company did grow revenue by 149% against the prior year. The problem, though, is that the sales tally was a mere $142,000.

If that wasn’t distracting enough, the net loss for 2021 was $2.61 million, expanded from a net loss of $1.26 million a year prior according to their balance sheet.

Wearable Devices Potential

According to Grand View Research, the global wearable technology market reached a valuation of $40.65 billion. Experts project that by 2028, this sector will generate revenue of $118.2 billion. Although this forecast presents an optimistic picture for WLDS stock, keep in mind that other tech firms won’t stop innovating. Therefore, it’s anyone’s guess as to which company will prevail in the burgeoning neural-input segment.

Where to Buy Wearable Devices Stock

To buy Wearable Devices stock, you’ll need to know how to buy stocks. But before you take that step, you must sign up for a brokerage account. Below is a list of the best brokers to consider.

Competitive Landscape

Investors considering Wearable Devices Ltd. should carefully evaluate the company's neural input technology and its applications in consumer products. While the technology has potential in the metaverse, investors should be cautious of the company's limited revenue and competition in the tech industry. Thorough research and analysis are advised before investing in WLDS stock.

Frequently Asked Questions

Q

What does Wearable Devices do?

A

Wearable Devices Ltd. is one of many consumer electronics companies that specializes in creating and manufacturing wearable technology products. They design and produce devices such as smartwatches, fitness trackers, and other wearable gadgets that are designed to enhance the user’s daily life and provide convenient and innovative features.

Q

Where to buy Wearable Devices stock?

A

To buy Wearable Devices stock, you can use a brokerage firm or online trading platform. It’s important to choose a reputable platform and do research on the company before investing. Consulting with a financial advisor is also advisable.

Q

Should I buy the Wearable Devices stock?

A

It is impossible to answer this question as it requires individual analysis of your specific situation, risk tolerance, investment goals, and more. You should consider evaluating the market conditions, the macroeconomic environment, and company financials for Wearable Devices before deciding whether or not to purchase the stock.

About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.