Atomos Ltd Share Price Hints at Recover. Is It Now a Buy? (ASX:AMS)

Atomos Ltd Share Price Hints at Recover. Is It Now a Buy? (ASX:AMS)

Atomos Ltd [ASX:AMS] was a hot stock in 2019. It seemed like everyone wanted a piece of it.

And over the year, the price almost tripled from its January 2019 low.

It was easy money for those early buyers. Well, that’s they way it seemed.

Today, the Atomos share price is trading more than 61% lower year-on-year.

ASX AMS Share Price Chart 1- Atomos Shares

Source: Tradingview

Which may make you wonder. Is now a good time to buy it?

Well, that’s what we’re going to look at today.

But first…

Market expert Shae Russell predicts five knock-on effects of the recent market crash that could be even bigger threats to the average investor’s wealth than the crash itself. Find out more…

Who is Atomos Ltd?

Atomos is a global software and hardware technology company. It specialises in video monitoring and recorders for the rapidly growing content creation market.

Think YouTube, Twitch or even high-end independent documentary creators.

With only 100 employees in 10 countries, Atomos would appear to be a micro business.

Though it is pumping a market cap of over $100 million.

And with the recent influx on online content, thanks to coronavirus lockdown, there is a lot of upside potential for AMS.

Atomos may have a new target market…that’s coaches and teachers. Guess we’ll wait to find out on that.

Anyway, let’s take a look at what’s happening with the share price months after the market crash.

On 30 March, Atomos provided a market update. It was the company’s first response to the COVID-19 situation.

The company did use this opportunity to withdraw its 2020 profit guidance. This may only happen if they are taking a hit to their revenue.

Though the company did say it expects to maintain strong revenue growth in FY20, compared to FY19.

Where is the AMS share price headed?

With an early rally in late March, extending to early April, AMS shares tracked the 50-cent mark until late August.

Before breaking resistance to claim a level around 65–70 cents per share.

Atomos Share Price Chart 2

Source: Tradingview

Despite expectations of revenue growth in FY20, AMS posted a retraction of 17% to $44.4 million (released 27 August).

Which hit earnings hard.

Earnings before interest, tax, depreciation and amortisation came in at a loss of $7.1 million.

Recording a 1H profit of $1 million and H2 loss of $8.1 million.

So, why the recent rally?

It could be that investors see a return in potential for AMS.

July and August revenue is up 50%-plus and 60%-plus, respectively, on H2 2020’s run rate.

AMS said they anticipate returning to pre-COVID-19 revenue levels at the start of calendar year 2021.

And with a more streamlined and cost-effective operating base.

If you found this analysis insightful, our publication The Daily Reckoning Australia is a fantastic place to start your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here.


Lachlann Tierney

For The Daily Reckoning Australia