There is a little ‘penny stock’ that is running hot during last month by rising over 1,500%, Sealsq Corporation (LAES), and that is our choice for today’s analysis of a penny stock .Starting with the usual background when analysing stocks, Sealsq Corporation (NASDAQ: LAES) is a cutting-edge technology company specialising in the provision of advanced security solutions, particularly in the field of semiconductors and Internet of Things (IoT) security. The company is headquartered in Switzerland, Sealsq is a subsidiary of the larger technology conglomerate, WiseKey International Holding Ltd. The company focuses on addressing the growing demand for secure microcontrollers and semiconductors that facilitate data protection in a hyper-connected world. Their mission is to offer end-to-end solutions to ensure the integrity, confidentiality, and authenticity of data in a rapidly evolving digital landscape.
What Does Sealsq Do?
Sealsq is renowned for its innovative offerings in the semiconductor industry, particularly secure hardware solutions for IoT devices, which is a very large market. The company’s products are integral to a wide range of applications, from smart home devices to critical infrastructure. Sealsq’s expertise lies in providing:
- Secure Microcontrollers: Advanced chips that ensure data encryption and authentication.
- Public Key Infrastructure (PKI) Solutions: Enabling secure device communication.
- Post-Quantum Cryptography (PQC): Preparing for a quantum-safe future, a critical area as quantum computing becomes more mainstream.
Sealsq’s technological edge has earned it a reputable position in sectors that demand high security, including healthcare, automotive, and telecommunications.
Recent Earnings Report
That is how the sell themselves but we want to have a look as well on its most recent earnings report released on September 25, 2024. Sealsq reported a loss per share of $0.40, missing analysts’ expectations. In the revenue side, for the same period was $4.8 million, surpassing estimates. The company’s revenue for the trailing 12 months stands at $20.14 million, with a net loss of $13.15 million.
On the operational front, Sealsq announced several key advancements in its post-quantum cryptography initiatives, positioning itself as a leader in this emerging field. Analysts were particularly impressed by the increase in new client acquisitions, which grew during the quarter and that is explaining maybe the surge on its stock price.
Stock Performance
Stock performance has been absolutely magic in the last month. Sealsq’s stock (ticker: LAES) has experienced significant volatility. As of December 31, 2024, LAES is priced at $7.09 per share, nearly 18% down today but with a solid 42% over a week. Their 52-week low was $0.29, so it has recovered substantially, although still down from its peak of $11.00. The stock’s market capitalisation currently stands at approximately $837 million, based on approximately 90.21 million shares outstanding.
Trading volume for LAES remains robust, with an average of 1 million shares exchanged daily. Analysts attribute the recent price fluctuations to broader market concerns and the company’s announcements regarding capital raises.
Valuation: Is Sealsq a Good Value?
To assess whether Sealsq is a good value, we will be using its price-to-sales (P/S) ratio and revenue growth. With annual revenues projected to hit $20 million, the company’s P/S ratio stands at approximately 41.85. As we said in other growth stocks that we have analysed, this high valuation is not uncommon for high-growth companies but raises concerns for value-focused investors.
However, the main concern is the lack of profitability, which makes it a high risk stock. The company’s commitment to heavy R&D spending, while a positive sign for long-term growth, continues to put pressure on near-term earnings.
Analyst Price Targets and Future Projections
We just giving information of what we have found in our research, but to give a better picture of the stock we like to see as well what professional in finances that have access to more information think about stocks. Currently Sealsq Analyst’s coverage is limited at is just a small company. The average one-year price target is $1.75, indicating a potential big downside from the current trading price. Revenue is expected to grow at a compound annual growth rate (CAGR) of 30% over the next five years, with estimates projecting revenues of $150 million by 2027. Earnings per share (EPS) are anticipated to turn positive by 2025, with a projected EPS of $0.50 for that year. So the numbers look good, but not enough analysts to have confidence on the estimates.
Key Deals and Partnerships
Looking at the clients for Sealsq and its more recent deals is another way to see in which direction is going the company. Sealsq recently announced several strategic deals that could significantly impact its growth trajectory:
- Partnership with a Leading Automotive Manufacturer: The company secured a multi-year contract to supply secure microcontrollers for electric vehicles, a rapidly expanding market.
- Collaboration with a Global Telecom Giant: Sealsq will provide secure chips for next-generation 5G devices, further solidifying its foothold in the telecommunications sector.
- Government Contracts for Quantum-Safe Solutions: Sealsq’s PQC technology was selected for a pilot programme with a European government, demonstrating its relevance in critical national security applications.
These deals not only validate Sealsq’s technology but also pave the way for recurring revenue streams in the years to come.
Should You Buy or Sell Sealsq?
After analysing the available data and the company’s trajectory, Sealsq is a speculative buy for investors with a high-risk tolerance and a long-term outlook. The company operates in high-growth sectors with significant potential, such as IoT and post-quantum cryptography. Its recent partnerships and advancements indicate promising future revenue streams.
However, the high valuation and lack of profitability make it unsuitable for risk-averse investors. For those seeking stability, it may be wise to observe the company’s performance over the next few quarters before making a commitment.
In our opinion Sealsq is a fascinating player in the semiconductor industry, bringing cutting-edge solutions to some of the most pressing security challenges of our time. While its growth trajectory is impressive, potential investors must weigh the risks associated with its lack of profitability and high valuation. As always, conducting thorough due diligence and aligning your investment strategy with your financial goals is crucial before making a decision on Sealsq. Remember, you are the only responsible of your money, so ensure you have made enough research and evaluate your risk profile before investing any money.
