With its stock trading near all-time lows, Crown ElectroKinetics Corp. (NASDAQ: CRKN) may be poised to run this week as the company is expected to release its Q2 earnings on August 14th. In Q2, the company continued gaining contracts at an impressive rate as it currently has a contract backlog of more than $200 million which indicates that it is set to realize the value of these contracts in the future. With investors anticipating updates on the company’s backlog in the Q2 earnings call, CRKN stock may soar from current levels on any positive updates given its history of parabolic runs.
CRKN Stock News
After issuing its shareholder’s letter on April 26th, CRKN stock has been gaining a great deal of hype, climbing as much as 220%, mainly due to the company stating some significant forward-looking statements in its letter.
Intending to commercialize its product, CRKN has indicated that it has completed its first prototype smart window insert. The company believes this accomplishment, alongside other prototype accomplishments, would put it on track to commercialize its product, the Generation 1.0 Smart Window Inserts, at the end of the summer.
CRKN could also benefit from the Inflation Reduction Act that expands the tax incentives for retrofit energy improvements. This might drive demand for its product since CRKN is currently operating in a developing market with few competitors. As a result, CRKN could realize revenues soon by the end of the year.
Moreover, CRKN has gained two more customers increasing its total to three and is expecting approximately $100 million in revenues throughout the contracts. With CRKN having a market cap of around $8.14 million, the company could be massively undervalued in light of its expected revenues.
CRKN was set to report its Q1 earnings on May 15th and provide updated guidance on the revenue and EBITDA for 2022. However, CRKN released an NT 10-Q filing stating it would report its Q1 earnings within 5 days from the original date. CRKN also held an earnings call, where the company stated that it would provide another shareholders letter in the next two or three weeks discussing 2023 guidance.
During its earnings call, CRKN stated that it had secured a three-year contract adding a new third customer to its list. Despite not mentioning how much revenue this contract will generate, CRKN anticipates a purchase order from this contract within a week or so, where it will announce what it will mean to its revenues. With this in mind, investors may want to keep an eye on CRKN as it discloses more information regarding this contract during the coming week or so.
Furthermore, CRKN stated that it was granted an extension from NASDAQ until August 28th to regain compliance. Yet, if the company doesn’t meet the minimum bid price by then, it would perform a up to 1 to 15 reverse split as CRKN already has shareholders’ permission. As a result, CRKN might not face any dilution risks moving forward. Nevertheless, CRKN might not even have to perform a reverse split as it is set to put its product on the market by the end of the summer, which could boost its stock price by then.
*Updated August 14th, 2023
CRKN has been having quite an eventful year in 2023 as it started generating revenue in Q1 and obtained 2 contracts one of which is valued at $30 million and the other for $67 million. After securing these lucrative contracts, the company secured 2 additional contracts in Q2 – jointly worth $135 million. These 4 contracts are worth a whopping $232 million which is a promising sign for a company that is just starting out.
As things stand, due to the vague nature of these deals and the rapid rate by which the company obtains these deals, it would come as no surprise if additional information was released in its Q2 earnings. This information could be in the form of updates regarding the existing deals or even announcements regarding additional deals. Given the stock’s relatively low float of 85.4 million, it may soar on any positive updates – especially with it trading near all-time lows.
In addition to securing deals, CRKN has been working to restructure its balance sheet as it eliminated 95% of its outstanding debt which included highly restrictive covenants preventing it from raising capital under certain circumstances. This restructuring was done through repayment, retirement, or exchange of all of its existing debt notes with a new series of preferred equity, as well as paying off its line of credit.
As things stand, CRKN’s upcoming Q2 earnings will provide investors with their first glimpses of the company’s deleveraged balance sheet which could create a bullish sentiment. In this way, CRKN stock may be poised to run from its current levels which could make the stock a bargain since it is trading near all-time lows.
CRKN Stock Financials
2022 Annual Report
In its 2022 annual report, CRKN reported $6.5 million in assets, including $821 thousand in cash. CRKN witnessed a decline in assets from $9.6 million, including a decrease in its cash from $6.1 million. CRKN’s liabilities grew YoY from $664 thousand to $6 million as its current liabilities increased from $664 thousand to $4.6 million, while the company had a total of $1.3 million in lease liability during 2022.
CRKN is still to report revenues as it awaits product commercialization, however, its operating losses slightly shrank YoY from $16.8 million to $15.1 million, while its net loss also shrank YoY from $16.4 million to $14.3 million.
Q1 2023 Report
According to its Q1 2023 report, CRKN’s assets substantially increased QoQ from $6.5 million to $17.9 million due to deferred debt increasing by more than $8 million, as well as its cash balance increasing from $821 thousand to $2.1 million. On the other hand, the company’s liabilities increased from $6 million to $10.2 million. With that in mind, the company’s liabilities are expected to decline in Q2 as a result of its restructuring.
In terms of revenue, the company generated $22 thousand which marks the first time CRKN generated revenue. Having said that, the cost of revenue in Q1 was $31 thousand which has led the company to report $9 thousand as a gross loss. Meanwhile, operating costs slightly decreased YoY from $4.5 million to $4.1 million due to research and development expenses declining from $1 million to $541 thousand. Based on the company’s cost savings, its net loss decreased YoY from $4.5 million to $2.3 million.
Media Sentiment
@greatstockpicks is anticipating updates on CRKN’s contract backlog in a PR.
@TrySmallBiz is bullish on CRKN near its all-time lows.
Technical Analysis
CRKN stock is in a bearish trend and is trading in a downward channel. Looking at the indicators, the stock is trading below the 200 MA which is a bearish indication, and is trading above the 50 and 21 MAs which is a bullish indication. Meanwhile, the RSI is neutral at 55 and the MACD is neutral as well.
As for the fundamentals, CRKN’s Q2 earnings which are expected to be released on August 14 will act as a major catalyst for the stock since it would provide investors with their first glimpses at the company’s restructured balance sheet. At the same time, investors are anticipating the company’s earnings call for updates on its $200 million contract backlog including details on existing deals or announcements regarding new deals. With the stock trading near its upper trendline, investors could wait for a breakout of the downward channel to go long ahead of the company’s Q2 earnings.
CRKN Stock Forecast
With the company expected to share its Q2 earnings on August 14, CRKN stock may be poised to run given the potential updates it might share with investors. With a contract backlog of more than $200 million, the company may share additional information regarding its existing contracts, or even better, it might share news about additional contracts. Meanwhile, investors should be excited to see the company’s balance sheet after restructuring since the company managed to eliminate 95% of its debt. Given that the company is now capable of raising cash after its restructuring efforts, the outlook may be bullish for CRKN stock.
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