EDNT: A Tiny Float Innovation Engine with Clear Fireworks Ahead

Date : September 23, 2019

 

New Opportunity:  Edison Nation Inc. (NASDAQ:EDNT)

 

  • EDNT is wholly unique on the Nasdaq as a pure-play “inventor’s platform” and ecommerce services play
  • 2019 is turning into a banner year for the company, with a 36% increase in revenue and a 61% jump in gross profitability
  • 1H 2019 saw significant top-line growth of 49.7%, to $11.7 million
  • EDNT is trading in front of the highly visible return of its Emmy winning TV show with execution in place.. there could be fireworks ahead as the stock’s tiny 2.48M share float is subjected to a shift in perception

We normally like to introduce a new investment idea in terms relating it to a larger market context. We could do that with EDNT, talking about the size of the global retail market – “the global retail industry was valued at $23.46 trillion in 2017, and is expected to reach $31.88 trillion by 2023 on a CAGR of 5.3%, according to Mordor Intelligence.”

We could do that. But it doesn’t really accomplish a whole lot. EDNT is a unique idea. And one that is rapidly gaining traction right now.

Think of EDNT as the mainstreaming of the Silicon Valley model into the form of a publicly traded stock on the Nasdaq. In Silicon Valley, inventors and entrepreneurs take their best ideas to people (Venture Capital firms) with capital and an infrastructure of relationships designed to help make those ideas a success in the real world. The entrepreneur gets the product out there, and the VC firm gets its pound of flesh in the process.

EDNT has positioned itself in a similar role with a platform to help inventors with ideas find market success. And it’s working in a very tangible manner.

At this point, shares have pulled back into a possible sweet spot in terms of value/bargain investment in high-growth-potential Nasdaq stocks. The pullback has happened despite a 36% increase in revenue and a 61% jump in gross profitability. In fact, during the 1H 2019, EDNT saw significant top-line growth of 49.7%, to $11.7 million, driven by continued IP success and scaling its consumer branding operations.

And all of that is wrapped into a chart that has been showing strong signs of a potential bottom trading on a tiny 2.48 million share float.

We would urge interested investors and traders to check it out quickly because there are some very big telegraphed catalysts on the horizon for this name, and the opportunity at current prices may not last much longer.

 

Symbol:  EDNT
Company:  Edison Nation Inc.
Quote:  http://finance.yahoo.com/q?s=EDNT
Latest News: 
http://finance.yahoo.com/q/h?s=EDNT+Headlines

Websites: https://edisonnation.com/

Who is EDNT

Edison Nation Inc. (NASDAQ:EDNT) has been building a highly unique platform and model and that work is finally starting to show serious financial growth and traction.

The company is something like a publicly traded venture capital firm: If you have a great idea, they provide an easy-to-use platform to help take it from “raw idea” to “major market success”, extracting their cut along the way.

In other words, this is an ecommerce services play.

EDNT shares have pulled back into a possible sweet spot in terms of value/bargain investment in high-growth-potential Nasdaq stocks: the pullback has happened despite a 36% increase in revenue and a 61% jump in gross profitability. In fact, during the 1H 2019, EDNT saw significant top-line growth of 49.7%, to $11.7 million, driven by continued IP success and scaling its consumer branding operations.

The root of all of this growth is its process of sourcing the most innovative new product ideas, mostly through its proprietary “Edison Nation Innovation Platform”, which finds the most compelling new inventions and product ideas through proprietary algorithms, and then harnesses a pre-built infrastructure of go-to-market resources to get these products in front of consumers through a rapid process.

The company is also moving toward a huge catalyst in the form of the re-launch of its Emmy winning TV show, “Everyday Edisons”, which will be accompanied by a new app. The drumbeat toward that event could spark a process of market discounting in the meantime. And, given the very limited float in play, the prospect of a scramble for shares amid a breakout higher is not unrealistic as we analyze the situation.

The big point in all of this is as follows: It’s a unique solution that is showing very tangible signs of serious financial performance, and that has very significant identifiable catalysts ahead.

Interestingly, and completely unrelated to this larger narrative, the company also recently announced that it is entering the health and wellness industry with its new brand, Sol & Salud, which will introduce a number of hemp and essential oil products starting in December in partnership with Amazon.com. The big point here is that the Health and wellness industry is a booming $4.2 trillion industry. That’s never a bad element to add into the equation.

Recent Catalysts

The most important recent catalyst is unquestionably the company’s recent strong financial report.

For the three months ended June 30, 2019, revenue increased 36.0% to $5.97 million, compared to $4.39 million in the same period in 2018. The increase in revenue was primarily attributed to successful product launches and scaling of EDNT’s acquired brands throughout 2018.

Gross profit increased 61.8% to $2.04 million in the second quarter of 2019, compared to $1.26 million in the second quarter of 2018. Gross profit margin was 34.2% in the second quarter of 2019, compared to 28.8%, in the same period in 2018. The increase is primarily a result of a favorable product mix of goods sold to customers.

“During the first half of 2019, EDNT achieved significant revenue growth of 49.7%, to $11.7 million, for the six months ended June 30, 2019, driven by the continued success of our IP and the scale of our consumer brands ,” said Chris Ferguson, Chief Executive Officer of Edison Nation. “The company continues to aggressively source innovative ideas via our proprietary Edison Nation Innovation Platform, which selects the ‘best-of-the-best’ inventions utilizing proprietary algorithms, and brings them to market quickly. EDNT’s intellectual property, media, and consumer product launch engine will continue to drive growth in 2019 and beyond. Simultaneously, we are leveraging our combined platform to achieve significant operational and cost efficiencies”.

Apart from the strong execution, the company is also riding an explosive string of catalysts, including announcements detailing:

  • An expansion of the company’s core inventor platform, highlighted by the addition of two new features – “Edison’s Design Challenge” and Entrepreneur Partnership;
  • The licensing of the Ezy Dose Medi-Spout, a pill assisting bottle cap that utilizes patented technology to ease the swallowing of medication and vitamins, from Apothecary Products, a global leader in consumer wellness;
  • The launch of a new product line targeting its theme park and entertainment customers – a list that includes the likes of Disney and Universal Studios, among others;
  • The launch of the “911 Help Now” pendant in March, which drove $800K in initial purchase orders from Audio America, a leading consumer electronics distributor, in conjunction with a strategic sales and marketing association with Stealth Technologies;
  • Expanded sales for its Goodie Gusher party product line in the North American marketplace, driving growth in footprint to nearly 650 retail locations across the region;
  • The introduction of two new products in the toy and infant-sleep category – Lullaplayer and My Buddy Bernie, a children’s MP3 player designed to look and feel like a classic portable record player, and a voice activated, interactive playmate for kids that requires no set-up and works right out of the box, respectively;
  • Successful entrance into the eyewear market in January with Smarter Specs, the first patented glasses with concave lenses, enabling consumers to wear the glasses higher up on the nose bridge, allowing them to look over the glasses without having to tilt their head down, easing neck strain;
  • Its announcement of the relaunch of the Emmy award-winning TV show, “Everyday Edisons”, an inspirational reality TV series produced under license by Edison Nation, chronicling the stories of first-time inventors as they launch their unique products into the marketplace in conjunction with the Edison Nation product development platform;
  • Partnerships with multiple Fortune 500 companies, including Walmart, Target, Rite-Aid, Disney, Home Depot, and Amazon.

The company’s move into the monster health and wellness opportunity described above is also key in this narrative.

But perhaps most importantly, the big catalyst is still to come as the company prepares to relaunch its Emmy winning TV show, which will act as an enormous marketing push for the core business.

Technical Analysis

EDNT shares are trading on a truly tiny float of 2.48M shares. 6% of that float is currently held short (as of last month). That’s a powder keg of upside potential in terms of the supply/demand dynamic (shortage of shares) that could get traction on any sharp rip fueled by fresh buzz in the market.

The stock is also now trading above its 50-day MA for the first time in months, suggesting a large time frame shift in direction of trend may have already taken place under the surface. In line with that, we have seen a series of higher highs and a higher lows – the definition of uptrend – since June. A break above the $3/share level could be a major catalyst for upside momentum.

About EDNT

EDNT (Edison Nation Inc.) is an inventor ecosystem driving IP, media, and innovative consumer products.

 

Edison offers innovation sourcing, design, sales, fulfillment and shipping services. Edison Nation’s model is to source innovative ideas for internal launch or license to brand partners.

 

Throughout 2019 and beyond, Edison Nation looks to establish prominence in the media space through its television show “Everyday Edisons” and additional properties such as Edison Academy.

 

For more information, please visit www.edisonnation.com.

Key Points

 

  • EDNT is a uniquely positioned business forging a new path to capitalize on the crowdfunding, start-up, and democratization-of-invention trends, with a first-rate media asset already in place to drive its marketing strategy.
  • EDNT has a small trading float of just 2.5M, which suggests the stock could launch higher on any additional influx of interest.
  • EDNT is making real money, with trailing revs already coming in at $20.4M.
  • EDNT is starting to see major topline growth, with quarterly y/y revs increasing at 36%.
  • EDNT is coming off an RSI trough under 40, pointing to a massively oversold stock now heading back the other way.
  • EDNT just recorded a MACD Bullish reversal, suggesting a technical change in trend.
  • EDNT is executing well, and has a stable of Fortune 500 partnerships to draw from as it pushes for new and accelerating growth.

Conclusion

The story for EDNT is clear: the company is starting to see powerful growth, and yet the stock has been dipping over the past year. That year has been the best in the company’s history, which suggests a major disconnect that could be rectified by a powerful appreciation in shares.

To augment this story, the stock trades on a truly tiny float of just 2.5 million shares with 6% of that float held short. In other words, it’s ripe for a squeeze of potentially epic proportions.

To help catalyze that move, the company is barreling towards a series of powerful catalysts including the relaunching of its Emmy winning TV show. That event is sure to be surrounded (and preceded) by a ton of fanfare, helping to rocket market interest higher. Given the shortage of shares, we suspect the fanfare might be visible on the charts well in advance of this process.

Get it before it’s hot.

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