As traders look desperately for another short squeeze candidate, some folks have turned their attention to Creatd (NASDAQ:CRTD). However, a closer look could suggest a bleak future for anyone holding CRTD stock, which I give a “D” in my Portfolio Grader.
First of all, trying to predict the next short squeeze stock is a tough game to win. Meme stock traders can sometimes do well, but there’s great risk, and your timing has to be almost impeccable.
More important in the long run is the company’s overall fiscal picture. And when it comes to Creatd, it’s awfully hard to build a bull thesis around this company.
To start off, I’ll focus on the price action of the stock. As we’ll see, it’s difficult to get a good reading on this one, and that makes it much more challenging to predict its future.
CRTD Stock at a Glance
The topping process for CRTD stock took place in March, when it reached a 52-week high of $7.81.
Perhaps some traders were hoping that the short squeeze mob would target Creatd at that point. Unfortunately for the long-side investors, this didn’t turn out to be the case.
CRTD stock slid quickly during the ensuing weeks, reaching $4 in mid-June. Then the price action started to resemble an electrocardiogram during cardiac arrest, wildly oscillating up and down and practically giving the investors whiplash.
All of that volatility didn’t really help the shareholders, though. As of July 26, the stock opened at $3.33.
And here’s where it really gets problematic. Creatd has a negative trailing 12-month earnings per share, which is not good when the stock price is so low.
Right there, we have a convincing reason to just avoid CRTD stock. If you need more reasons, though, then I’m more than happy to oblige.
Not a Lucrative Business
One thing that might bother you about Creatd is how difficult it is to figure out exactly what the company does.
It’s possible to read through the company’s long, wordy “About” page and still have no idea how Creatd makes money.
That’s a really bad sign, since Creatd is supposed to specialize in marketing branded digital content.
You’d think that the company would be proficient in conveying its business strategy to prospective clients and shareholders, right? But Creatd doesn’t do a great job of marketing itself.
The company’s main idea is that it attempts to pair up entertainers/content creators with brands.
That’s all fine and good, but is this a lucrative business? The negative per-share earnings, which we already discussed, should offer some insight into how the entertainment business isn’t always profitable.
A peek at Creatd’s Form 10-Q (for the period ending on March 31, 2021) only paints a darker fiscal picture.
For the specified quarter, Creatd took in $743,913 in un-audited revenues.
During that same period, the company incurred a whopping $6,689,910 in operating expenses.
As a result, Creatd reported a $5,945,997 quarterly loss from operations. That’s a huge loss for a small company like this.
Moreover, the company posted a quarterly net loss of $6,643,237. That’s substantially worse than that $2,985,997 net loss recorded in the year-ago quarter.
The math just looks terrible here.
And not long ago, Creatd completed a public offering of 750,000 shares of its common stock — not necessarily the best way to solve the company’s fiscal issues, as this presents the threat of share dilution.
The Takeaway for CRTD Stock
Clearly, there are problems which would require some serious mental gymnastics for any investor to overcome. I ask you: why even play that game?
Sure, CRTD stock could be the target of a short squeeze.
Anything’s possible, but hoping for the meme stock crowd to target Creatd isn’t a recommended investment strategy.
And a quick look at the math reveals a company that’s having fiscal issues, which no investor should want to deal with.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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