Will SOS stock go back up? There’s Little Hope for This Sinking Penny Stock

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SOS' cryptocurrency mining business has failed to set sail. And now, SOS stock faces the risk of delisting as the crypto slump intensifies.


What is the most important news about the stock of SOS LTD (NYSE: SOS)?


The stock of SOS has plummeted in value over the last year, and there have been warning signs for investors along the way. It is presently on the verge of getting removed from the list.


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SOS stock looks like a sinking ship


SOS Limited (NYSE:SOS) is a bitcoin mining firm. sos stock twits, on the other hand, has grown to resemble SOS's popular usage as a distress signal short for the phrase "rescue our ship" for investors. Indeed, sos stock twits has hit an iceberg, with the share price plummeting from $7 last spring to 70 cents currently.


While a 90% drop may appear to be an opportunity, there are several reasons to be cautious even today. For one thing, SOS has had minimal financial success, whether in bitcoin or other endeavors. For another, short sellers have leveled significant charges against the corporation. Furthermore, management choices such as hammering shareholders with a massively dilutive secondary offering haven't helped matters. But don't get too far ahead of ourselves.


What Is SOS Limited?


The website of SOS presents a great ambition of being a far-reaching technology platform. It is said to be a blockchain leader in artificial intelligence. "The SOS cloud emergency rescue service SaaS platform is dominated by three products: basic cloud (medical rescue card, automobile rescue card, financial rescue card, rescue mutual aid card), cooperative cloud (information rescue center, intelligent big data, intelligent software and hardware), and information cloud (news today, e-commerce today" according to SOS.


From my perspective, that sounds more like a collection of buzzwords than a logical company strategy. In any event, SOS has not yet completed the necessary work to turn the majority of the projected regions into viable revenue-generating activities. However, SOS has presented a more precise picture of its business in one area. That is in cryptocurrency.


SOS claims to have entered into an agreement to acquire 15,645 mining equipment in January 2021. The mines would be the "A10 Pro 780M" and "T2T 37T" models, and the business would pay $20 million for them. Given the fact that the price of Bitcoin  was skyrocketing at the moment, this announcement sparked a frenzy in SOS stock.


Short Sellers Raise Alarms


People began to ask questions shortly after SOS stock soared in response to the cryptocurrency announcement. In reality, Culper Research and Hindenburg Research both issued damning assessments on SOS.


The bears emphasized a number of topics, including SOS's past. It was the result of a reverse merger, which is never a good indication. Its former incarnation was known as China Rapid Finance, and that business lost nearly all of its worth before rebranding as SOS. Concerns were also raised concerning the management team and possible insider trading. As if that weren't enough, SOS has had a constant turnover of auditors.


Perhaps most tellingly, Culper discovered that HY International, the purported vendor of SOS' bitcoin mining machines, appeared to be a shell corporation. It operated from a virtual office, showed no signs of existence other than the SOS contract, and appeared to have a related party link to an SOS employee. Furthermore, Culper believes that the bitcoin mining rigs SOS presented in images were not of the same brand as HY claimed to provide, casting suspicion on the legitimacy of SOS' crypto operations.


SOS Has Failed To Demonstrate Credibility


The simplest approach to encourage short sellers to go is to debunk them with data. If SOS produced decent results and began repurchasing stock or paying a dividend, the market would realize that the short claims were bunk.


SOS, on the other hand, has not been able to provide such effects. In fact, SOS struck its stockholders again in November with another stock offering. It was also a sizable one, with the corporation issuing more than 51 million shares to the general public. Following this stock offering, the price of SOS shares plummeted.


It's unclear what SOS's several stock offerings accomplished. Despite obtaining so much capital, the company's quarterly performance continue to disappoint, with significant operating losses.


SOS Stock Verdict


I wouldn't invest in SOS stock right now. Given the current state of the cryptocurrency markets, the company's principal activity, bitcoin mining, would already be a slog.


Add to that the uncertainty around the company's strategy and the short seller claims, and the issue becomes even more complicated. Furthermore, with SOS stock trading for less than a dollar, it is in danger of being delisted. And, just a few months ago, the company slapped shareholders with a large dilutive stock offering, further depressing SOS stock.


Given the low share price and huge short interest, it's clear that traders would pay attention to SOS. However, there is little evidence that SOS is doing any actual quality business. As a result, purchasing the stock is a good idea.


Is SOS Limited Stock a Buy Under $1?


SOS Limited (SOS - Get Rating) is a China-based blockchain and big-data-driven marketing solutions company. To remain at the cutting edge of digital technology innovation, the company has registered 99 software copyrights and three patents.


However, the company's stock has dropped 82.5 percent in the last nine months and 32 percent in the last month, with the stock closing yesterday's trading session at $0.87. The stock is trading close to its 52-week low of $0.8120, set on December 30, 2021.


Investors recently chastised the corporation for a massive stock sale at an 18% discount. Furthermore, China's legislative crackdowns on large digital enterprises, as well as outright prohibitions, have affected investor enthusiasm for Chinese-based crypto miners such as SOS.


Here are some factors that could influence SOS's success in the near future:


SOS signed a securities purchase agreement in November with certain accredited investors to purchase about $90.1 million in American Depositary Shares (ADS) in a registered direct offering. Under the terms of the securities purchase agreement, the business has committed to sell 51,500,000 ADSs for $1.75 per ADS. The sale proceeds will be utilized to grow the company's operations in North America, as well as for working capital and other corporate objectives.


Poor Profitability


The trailing-12-month gross profit margin for SOS is 13.41 percent, which is 54.2 percent lower than the industry average of 29.3 percent. Furthermore, its ROC, net income margin, and ROA are all negative: 1.65 percent, 3.22 percent, and 1.29 percent, respectively. Furthermore, compared to the industry average of $208.50 million, their trailing-12-month cash from operations was negative $383.18 million.


POWR Ratings Reflect Uncertainty


In our patented POWR Ratings methodology, SOS has an overall F rating, which equates to a Strong Sell. The POWR ratings are calculated by taking into account 118 different factors, each of which is weighted to an optimal degree.


In addition, our patented rating methodology assesses each stock in eight key criteria. SOS receives a F for Quality and a D for Momentum. The company's low profit margins correspond to its Quality rating. Furthermore, the stock is currently trading below its 50-day and 200-day moving averages of $1.47 and $2.88, indicating a downward trend. This corresponds to the Momentum grade.


SOS is ranked #120 out of 122 stocks in the D-rated Financial Services (Enterprise) industry.


In addition to everything I've just mentioned, you can examine SOS ratings for Growth, Value, Stability, and Sentiment here.


Bottom Line


SOS's huge private placement to investors pulled down the stock's share price by 30% in November. Furthermore, many investors are concerned about the Chinese ban on cryptocurrency mining, as well as the costs associated with transferring the company's mining activities outside of the country. As a result, we believe SOS is best avoided right now.


How Does SOS Limited (SOS) Stack Up Against its Peers?


While SOS has an overall F rating, its industry counterparts, Forrester Research Inc. (FORR - Get Rating), Donnelley Financial Solutions Inc. (DFIN - Get Rating), and Consumer Portfolio Services Inc. (CPSS - Get Rating), all have an overall A (Strong Buy).


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