Is FOBI stock a buy?

Artificial intelligence is definitely top of mind for many investors these days, as AI’s impact on practically every industry is already being felt and tech giants like Microsoft and Google scramble to keep ahead of the curve.

Which brings us to Vancouver-based data intelligence company Fobi Ai (Fobi Ai Stock Quote, Charts, News, Analysts, Financials TSXV:FOBI), whose share price has been a disappointment recently after posting some big gains earlier on.

Fobi started out as AI-powered and automated marketing platform Loop Insights, which debuted on the TSX junior board in June 2019 through an RTO. As it developed, Loop and its customer activation and engagement tech did well in scoring partnerships with companies like Amazon Web Services, TELUS and Shopify, while its Internet of Things (IoT) device, Fobi, was emerging as a real-time data analytics tool employed by Loop clients across industries like telecom, gaming, sports, hospitality and retail.

Then in May 2021, Loop rebranded as Fobi Ai to mark a shift from startup to enterprise-level platform with a global reach.

“With the company completing two key strategic acquisitions [in 2021], the need for a unified brand became quickly apparent and had to happen sooner than later. We believe that Fobi is now well-positioned to become a recognizable enterprise leader in real-time data and digital wallet applications,” said CEO Rob Anson in a press release.

The market certainly responded well, with the stock rising from about $0.15 per share in 2020 to as high as $3.50 by September 2021, after which FOBI started dropping — all the way back to sub-$0.50 territory where it’s been trading for the past year.

But tech companies of all stripes have been hammered over the past year and a half, with a special distaste shown for companies who while maybe showing strong growth rates are still without positive earnings. Unfortunately, that fits the bill for Fobi, which last year saw revenue balloon from $157K in fiscal 2021 to $2.0 million over fiscal 2022. A huge leap, no doubt, but it came as it usually does for scaling companies with mounting losses — Fobi’s net loss for 2022 was $19 million compared to a loss of $11 million a year earlier.

Yet, investors might want to keep an eye on this name, as Fobi just released a quarterly report showing, again, a big leap in revenue but also diminishing losses. For the three months ended March 31, representing the company’s fiscal Q3 2023, Fobi hit revenue of $1.3 million compared to $315K a year earlier but its net loss from continuing operations went from $5.4 million a year ago to now $3.8 million. It seems to be a trend, too, as the company’s losses for the past nine months were $10.4 million compared to $15.0 million for the previous year’s nine-month period. 

“We are seeing strong demand for our products and services as Fobi works to digitally transform and leverage automation to help businesses gain a competitive edge,” said Anson in a statement on Monday.