Is Powerbridge Technologies a Buy Under $2?

Headquartered in Zhuhai, China, Powerbridge Technologies Co., Ltd. (PBTS) provides software applications and technology solutions and services to corporate and government customers. On October 8, the company announced that its subsidiary, Powercrypto Holdings, had launched cryptocurrency mining, specifically bitcoin and ethereum, in Hong Kong.

Its shares soared in price at the end of June and early July as a result of Redditors’ interest in it. However, the stock has lost 48.9% in price year-to-date, and 4% over the past month, to close yesterday’s trading session at $1.20.

PBTS received a notice from the NASDAQ Stock Market on May 18, 2021, because its Form 20-F for its fiscal year ended December 31, 2020, had not been filed by its due date and the company was therefore not in compliance with periodic filing requirements for continued listing  at NASDAQ.  PBTS filed the 20-F on July 13, 2021, but its results for its fiscal year 2021 quarters have not yet been released. Furthermore, PBTS could be impacted by the resurgence of COVID-19 cases in China and the country’s recent cryptocurrency ban. So, we think its near-term prospects look bleak.

Click here to check out our Cryptocurrency Industry Report for 2021

Here’s what could influence PBTS’ performance in the coming months:

Cryptocurrency Ban in China

PBTS’ offerings include Powerbridge Blockchain, which consists of bitcoin and ethereum cryptocurrency mining and digital assets, IPFS distributed network services, and industry-specific blockchain applications. However, the company could be negatively impacted by the cryptocurrency ban in China. On September 24, the People's Bank of China said, “Virtual currency-related business activities are illegal financial activities.”

The Resurgence of COVID-19 Cases

According to the 20-F filed by PBTS on July 13,  the company’s business was significantly impacted by the COVID-19 outbreak in China. Its results will depend heavily on future developments regarding the spread of the deadly virus. PBTS said “there is great uncertainty as to the future progress of the disease.” So, the resurgence of the COVID-19 cases in China could significantly impact PBTS’ growth prospects.

Poor Profitability

In terms of trailing-12-month gross profit margin, PBTS’ 35.23% is 28.2% lower than the 49.04% industry average. Similarly,  the stock’s trailing-12-month EBITDA margin and net income margin are negative versus  the 14.72% and 6.20% respective industry averages. Moreover, its trailing-12-month ROCE, ROTC, and ROTA are negative, versus the 8.31%, 4.86%, and 3.59% industry averages.

POWR Ratings Reflect Bleak Prospects

PBTS has an overall D rating, which equates to Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. PBTS has a D grade for Sentiment, which is in sync with unfavorable analyst sentiment.

The stock has a D grade for Stability. Furthermore, it has an F grade for Quality, which is consistent with the company’s lower-than-industry profitability ratios.

PBTS is ranked #121 of 158 stocks in the Software – Application industry. Click here to see the additional POWR Ratings for PBTS (Growth, Value, and Momentum).

Click here to check out our Software Industry Report for 2021

Bottom Line

PBTS has made several developments in the cryptocurrency mining space. However, it could be severely impacted by a recent cryptocurrency ban in China. The stock is currently trading below its 50-day and 200-day moving average of $1.22 and $1.53, respectively, indicating a downtrend. So, we think it could be wise to avoid the stock now.

How Does Powerbridge Technologies (PBTS) Stack Up Against its Peers?

While PBTS has an overall POWR Rating of D, one might want to consider investing in its A-rated (Strong Buy) industry peers, such as Commvault Systems, Inc. (CVLT), Open Text Corporation (OTEX), and National Instruments Corporation (NATI).

Click here to check out our Cryptocurrency Industry Report for 2021

PBTS shares rose $0.01 (+0.83%) in premarket trading Friday. Year-to-date, PBTS has declined -48.51%, versus a 22.52% rise in the benchmark S&P 500 index during the same period.

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.

More...