Mitek Systems, Up 98% This Year, Is On The Verge Of A Nosedive: StreetSweeper

Mitek Systems, Inc. MITK shares are tumbling 10 percent on Thursday morning after TheStreetSweeper released a report describing seven reasons why Mitek’s stock is on the verge of a nosedive.

Here’s a rundown of the full list:

• 1. Since November, Mitek shares are up roughly 170 percent. In that time, company insiders have sold about $9 million in stock.
• 2. Mitek’s decision to drop its patent infringement case against Top Image Systems Ltd. TISA is an indication of how little value Mitek places on its intellectual property.
• 3. The competition has passed Mitek by. In January, USAA became the first major U.S. financial institution to introduce full-scale facial and voice recognition features on its mobile app.
• 4. USAA worked with Doan to develop its product, and other large banks are now working with Doan as well.

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• 5. Mitek’s massive run-up in valuation from $90 million to $292 million was triggered by its acquisition of ID checker, only a $10 million company.
• 6. At its current share price, Mitek’s price/sales ratio and trailing P/E ratios are both more than triple those of the overall industry.
• 7. Finally, while Mitek turned a modest $582,000 in profit for the first time in 2015, the company has accumulated more than $33 million in debt and has paid its top three executives $2.8 million.

“So altogether, we think Mitek stock will bobble and stumble by about 50 percent in the near-term,” TheStreetSweeper concludes.

Even after Thursday morning’s swoon, Mitek’s stock remains up 98.3 percent in 2016.

Disclosure: the author holds no position in the stocks mentioned.