Is Mobilicom Ltd IPO a Good Investment?

• A high-risk, high-reward opportunity, the upcoming new listing for Mobilicom could be intriguing as it provides cybersecurity solutions for drones, robotics and automated platforms.
• The use of drones has become a powerful tool in Ukraine’s defense of its homeland against Russian aggression and thus Mobilicom may benefit from fortuitous downwind developments.
• However, investors must recognize that this niche cybersecurity player is an attempt to swing for the fences and should only be engaged with money you can afford to lose.

Following the dangerous and destabilizing decision that Russia made to invade neighboring Ukraine, global observers marveled at the unexpectedly fierce resistance that the outgunned and outmanned Ukrainians delivered. In particular, the resourceful use of drones both as surveillance and offensive systems brought unmanned aerial vehicles (UAVs) into a new light.

Amid the favorable spotlight that drones garner lies a darker element: UAVs, like any other connected devices, are vulnerable to cyberattacks, potentially leading to myriad devastating consequences. To address this underappreciated but rapidly burgeoning gap, specialized cybersecurity firm Mobilicom Ltd provides comprehensive end-to-end solutions for drones, robotics and similar automated platforms.

Though an intriguing niche industry that may expand into the mainstream, investors must realize upfront that the new listing for Mobilicom is a high-risk, high-reward venture. Certainly, it will not be appropriate for every market participant. Still, you ought to consider the key pros and cons before you make your final decision.

What Does Mobilicom do?

Mobilicom is a cybersecurity firm, carving out market share in a niche segment geared toward the protection of drones and other robotic and automated devices and equipment. Specifically, the company designs, develops and manufactures hardware, software and cybersecurity applications that are integrated into small drones — known as SUAVs — and robotics.

Based in Shoham, Israel, Mobilicom has a clientele list that covers the U.S. and Europe along with its home nation. Primarily, the company generates revenue through hardware sales. In addition, it pads the top line with licensing fees and support services related to its cybersecurity systems.

Per its website, Mobilicom holds patented technologies along with critical acumen regarding its digital network. As well, its international consumer base spans corporations, government agencies and military departments. The latter is an avenue that will likely spark interest within the investment community as Mobilicom’s products are resilient, capable of high performance even under harsh environmental conditions.

For most investors, the concept of cybersecurity revolves around PCs and data breaches of cloud-based networks. However, the digital compromising of drones is rapidly becoming a serious threat, which may involve vulnerabilities.

• Connectivity: Essentially, any device that is digitally connected to a wider network is vulnerable to nefarious activity. In particular, civilian drones only have access to a limited data band, which are not encrypted or authenticated. This security risk enables hackers to illicitly commandeer private drones, posing potentially severe repercussions.
• Denial of service: What many consumers fail to realize is that a drone is basically a flying computer, subjecting it to the same risks as any internet-connected PC. One such risk is denial of service (DOS), which may allow a sophisticated hacker to damage the drone or the network to which it is connected.
• De-authentication attacks: In one of the scarier security threats, a hacker can target a drone operating in mid-flight and essentially disconnect the communication between the device and the user, hence the term de-authentication. From there, the malicious actor can take over the compromised drone — and the worst part is that such attacks don’t require sophisticated knowledge.

With drones becoming more popular — in part because they offer fantastic views that previously were denied common households because of inaccessibly high costs — government agencies must devise frameworks for safe operation. However, a cyberattack can occur anytime, anywhere, thus drawing interest for the niche drone-cybersecurity industry.

When is the Mobilicom IPO Date?

One of the few new listings of this month, Mobilicom has scheduled its U.S. initial public offering (IPO) — the first time a private enterprise distributes its equity shares to retail investors — for June 23, 2022. Shares will trade on the Nasdaq exchange under the ticker symbol MOB.

Please note that Mobilicom shares are currently traded on the Australian Securities Exchange (ASX), also under the ticker symbol MOB. Therefore, this IPO is not a pure new listing since international investors have already had a chance to bid on shares.

The specialized cybersecurity firm intends to raise $10 million through the distribution of 2.2 million shares at $4.65. Under these terms, Mobilicom would command a market value of $20 million. ThinkEquity represents the sole bookrunner for this IPO.

Immediately, one of the main concerns for MOB stock is its diminutive capitalization. Typically, analysts won’t cover public listings that have a valuation below $50 million, which is already a subterranean demarcation. Therefore, investors must have strong conviction that MOB will eventually rank among the best nano-cap stocks.

At the same time, nano-cap stocks may present a mathematical advantage. For the big blue chips, investors benefit from stable businesses that feature a high probability of profitability. However, the magnitude of profitability could be small, perhaps even smaller than the rate of inflation. This circumstance explains why financial advisors recommend young investors take greater risks.

On the flipside, nano-cap stocks feature a very low probability of profitability. However, when you find one that hits, it usually hits big. Further, you don’t need to spend as much nominally to accrue large gains. For instance, a 100% gain on $1,000 equates to $2,000, whereas to gain that much in profitability from a 10% gain requires one to invest $10,000.

Of course, from the above example, you could end up throwing away $1,000. Indeed, this is the more probable outcome for nano-cap stocks, so you must only invest money you are willing to lose.

The other administrative factor to consider regarding MOB stock is the currently barren IPO calendar. Because of myriad disruptions — mainly the economic shock along with the Ukraine crisis — companies with public ambitions have suddenly become gun shy. This dynamic also suggests that investors are unwilling to put their capital at risk.

The contrasting viewpoint, though, is that a dearth in fresh listings may inspire pent-up demand for IPOs. Marketing wise, MOB stock may receive coverage that it might not get under normal circumstances.

What Analysts are Saying About Mobilicom IPO

Wall Street analysts have little interest in nano-cap IPOs. However, it’s arguable that Mobilicom should make for an exception because of the extraordinary relevance of the underlying business.

According to data compiled by Statista.com, sales of U.S. consumer drones to dealers surpassed $1.25 billion in 2020. Further, analysts at Goldman Sachs forecast that the total drone market size could be worth $100 billion based on demand from commercial and government sectors.

Another voice in the segment is Grand View Research, which estimates that the worldwide market for drones amounted to $13.44 billion in 2020. However, its analysts estimate that the industry will expand by a staggering compound annual growth rate (CAGR) of 57.5% between 2021 and 2028, culminating in a total valuation of $501.4 billion by the end of the forecasted period.

While a positive in terms of consumer sentiment, that many drones in the sky presents severe cybersecurity risks. Therefore, Mobilicom is poised to take advantage as one of the few specialists in the drone security field.

Although a compelling sector, the harsh reality is that Mobilicom has been trading in the ASX since the spring of 2017. Throughout its journey, the stock has lost more than 82% of market value, thus drawing serious questions about its viability.

Mobilicom Financial History

Unlike completely speculative firms, Mobilicom offers some encouraging data in its financials. For instance, in 2021, the company posted about $2.49 billion in sales, up about 73% against the prior year.

However, investors must also recognize that Mobilicom reported a net loss of approximately $1.9 million in 2021, which is roughly equal to the amount it lost in the prior year. While it’s not unusual for technology-centric firms to lose money, under the current paradigm, growth-only companies are problematic.

Mobilicom Potential

Fundamentally, the upside narrative for Mobilicom centers on the increasing wave of drone technology and integration. Aside from the unique dynamics of the COVID-19 pandemic, tech costs decline over time, making drones much more accessible to everyday households. But that increased accessibility opens doors to security risks.

In addition, the ability for hackers to illicitly commandeer private drones poses threats to identify integrity and reputation. Put simply, nefarious actors can frame innocent people for crimes and acts of terror.

Still, investors must realize that MOB is a nano-cap stock, bringing extraordinary risks. And frankly, it hasn’t performed well in the international markets so some rightful skepticism exists.

Where to Buy Mobilicom IPO Stock

If you want to participate in Mobilicom’s IPO, you’ll need to know how to buy stocks. But before you take that step, you must sign up for a brokerage account. Below is a list of best brokers to consider.

MOB Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.

MOB Pre-IPO

Unfortunately, no pre-IPO access is available for MOB stock. However, those interested in early bird opportunities should consider opening an account with Freedom Finance.