Sphere 3D Corp (NASDAQ: ANY) is having an overwhelmingly strong start to the trading session this morning. While the stock has seen exceptional gains over the past month, there are some reasons to be concerned here. Today, we’ll talk about:
- Why ANY stock is headed up;
- why you should be cautious with this one;
- what we’re seeing from the stock today; and
- what we’ll be watching for ahead.
Here’s Why ANY Is Climbing
As mentioned above, the past month has been great for Sphere 3D, with the stock providing more than 100% returns to investors. Today, these gains are continuing, but there are two big questions here:
Question #1: Why?
The why is relatively simple. Recently, ANY informed investors that it has met the minimum bid price requirement from the NASDAQ. This moved the stock into compliance with listing rule 5550(a)(2). That news excited investors, leading to a strong run. Moreover, the company announced a divestiture of assets, once again, leading to a strong run.
With the positive news leading to gains in the stock, the technical look of the stock started to get better. Moving averages started moving in the right direction and traders reacted by turning the gains into a revolving door. Gains turn into strong technical data, strong technical data turns into gains. But be careful here.
Question # 2: Can The Stock Sustain The Growth?
While the run in ANY stock is a mix of fundamental and technical moves, and the fundamental data has been positive as of late, there are a few reasons to be concerned here:
- The Company Is Still Threatened By Delisting – Sure, Sphere 3D has met the minimum bid price required by the NASDAQ. However, when it comes to minimum shareholder equity, well, the company is missing the mark. The NASDAQ requires the company to have $2.5 million in minimum shareholder equity. At the end of September, this number was only $707k. Sure, the gains will help with this, but the company still has a long way to go in order to regain compliance, and it only has until December 27th to get there.
- The Asset Sale Wasn’t A Good Thing – Recently, ANY announced that it has divested Overland Storage. The news excited investors, but it shouldn’t have. You see, what the divestiture did was create a transaction that was paid for in shares. Interestingly, these shares are of a privately held company. So, Sphere 3D is going to have a hard time offloading them if they want to turn the shares into cash.
- Debt – In the most recent financial report, ANY said that it had just over $45 million in debt. While this isn’t a huge number for a publicly traded company, for this one, it is. The bottom line is that the company does not have the cash on hand, nor the sales to pay for this debt. That’s a real concern.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves in the market. While recent news on Sphere 3D has been positive, leading to a positive reaction in the market, there are some very real long-term issues to consider here. Nonetheless, traders will trade, and they are loving ANY today. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:24), ANY is trading at $5.20 per share after a gain of $0.86 per share or 19.82% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the iWatch Markets team will continue to keep a close eye on ANY. In particular, we’re interested in following the current run to see just how high traders push the stock. However, we’re also interested in following the company through the many challenges that it faces both in the near and long terms. Nonetheless, we’ll continue to keep a close eye on the news and bring it to you as it breaks!
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