American Virtual Cloud Technologies, Inc. (AVCT) is a pure-play cloud communications and collaboration company providing cloud-based enterprise services worldwide. The company's Kandy cloud communications platform is a cloud-based, real-time communications platform.
AVCT is currently trading near its 52-week low of $0.13, which it hit on August 23, 2022. It is trading 95.6% below its 52-week high of $3.79, which it hit on September 10, 2021. Over the past month, the stock has gained marginally to close the last trading session at $0.17.
However, it has lost 95.2% over the past year and 93.1% year-to-date. AVCT is trading below its 50-day moving average of $0.23 and its 200-day moving average of $0.84.
Here is what could shape AVCT's performance in the near term:
Fed's Persistent Hawkish Stance
After two consecutive 75-bps rate hikes, the odds of another similar raise this month are rapidly increasing. According to the CME Group's FedWatch tracker, the probability of a three-quarter point hike soared to 82%.
The interest rate-sensitive and tech-heavy NASDAQ Composite has lost 24.2% year to date. The Fed's monetary tightening could cause further turmoil, and fundamentally weak stocks in the tech industry might incur substantial losses.
Weak Topline Performance
For the second quarter ended June 30, 2022, AVCT's total revenues came in at $3.72 million, down 24.8% year-over-year, while its cloud subscription and software revenues came in at $3.62 million, down 10.8% year-over-year.
Moreover, its gross loss came in at $1.55 million, compared to a gross profit of $1.38 million in the year-ago period. Also, its loss from continuing operations came in at $24.01 million, up 105.6% year-over-year.
POWR Ratings Reflect Bleak Prospects
AVCT has an overall rating of D, equating to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
AVCT has a D grade for Sentiment. Analysts expect its revenue to decline 11.5% year-over-year to $103.59 million in 2022. In addition, it has a D grade for Stability, in sync with its beta of 1.32.
In the 81-stock Technology – Services industry, AVCT is ranked #73. The industry is rated C.
Click here for the additional POWR Ratings for AVCT (Growth, Value, Momentum, Quality). View all the top stocks in the Technology – Services industry here.
Bottom Line
AVCT has witnessed weak momentum amid the broader market sell-off. Moreover, its deteriorating top line is concerning. Given the stock's grim growth estimates, I think AVCT might be best avoided now.
How Does American Virtual Cloud Technologies, Inc. (AVCT) Stack Up Against its Peers?
While AVCT has an overall POWR Rating of D, one might consider looking at its industry peers, Celestica Inc. (CLS), Issuer Direct Corporation (ISDR), and Box, Inc. (BOX), which have an overall A (Strong Buy) rating.
AVCT shares were trading at $0.18 per share on Friday morning, up $0.01 (+5.67%). Year-to-date, AVCT has declined -92.59%, versus a -14.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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