With the recent IPO of Knightscope ($KSCP) and its shares becoming publicly listed on January 27th, AITX investors have been watching closely how the market reacts. This IPO has some pretty significant implications for AITX and the wild ride of the KSCP share price has AITX investors both concerned and excited at the same time.
Today’s article will get into the KSCP IPO and what implications it may have for AITX going forward. Let’s get started!
Just as some quick background, KSCP is AITX’s primary competitor. They basically offer (currently) a solution similar to a ROAMEO in stationary and mobile forms.
They’ve been private for a long time and have been pushing their products for more than five years. You can even find old videos on YouTube of them going on Mad Money promoting their company. They originally relied on private investment and some “unique” crowdfunding initiatives through private channels.
KSCP then decided to move into the full public view and filed for an IPO a few months ago, with the hope of raising $40 million. All in all, they raised about $22 million at a share price of about $10 per share and the company started publicly trading on the NASDAQ on January 27th.
KSCP Share Price Performance
We’ve now had a few trading days under our belt… and let’s just say this stock has gone a bit crazy. On day one, the share price plummeted around 40%, reaching a low of about $6 per share. Now, as of January 31st, as I’m writing this the share price has already rocketed up to $22.
My Take on KSCP
I never, ever, invest in IPO’s within a year of the initial listing. This is why. Generally, as a company IPO’s, the market has a hard time properly valuing a company. Sure, there’s past filings investors can look at thanks to the good old SEC, but even so almost all IPO’s experience wild fluctuations in price for months after their listing date.
That level of risk is unacceptable for me, so I just choose to let that pitch go by.
That being said, I am also not a fan of KSCP from a fundamental perspective based on its pre-IPO filings which I’ve already written about. I am holding off on writing a new article on KSCP because I haven’t seen more up-to-date filings since then, and the most recent financials they’ve released are as of June 30, 2021.
So those two things coupled together have me firmly avoiding KSCP. If you’ve made a ton of money on KSCP, good for you and power to you for taking the risk. But it is currently not something I want to long-term hold, because that’s the only investing I do. I might be wrong, and I’ll own that mistake. But like I always tell my readers, if you don’t believe in it, you cannot invest in it. You might be wrong, but at least it was because of you and not because of someone else’s opinion.
Implications for AITX
Now, extreme volatility aside for KSCP, the stock has been making waves throughout the community due to its wild share price. The company also spent a hefty sum (I’d have to assume based on the number of ads I saw) promoting the company in this funding round.
In general, though I don’t like KSCP in its current form, the level of publicity and general awareness to the industry is definitely a good thing for AITX. Although KSCP is a competitor, the market potential for this industry is so incredibly massive that even the flood of notoriety for KSCP and any subsequent market gains are even a remote risk for AITX.
If anything, I think this helps AITX with their problem of acceptance and inertia in the security industry. With such a large and untapped market out there, what AITX needs is more people thinking about innovation within this sphere. It’s not even a bad thing, in my opinion, that it’s due to its primary competitor’s IPO.
The more this concept of automated security permeates through the security industry, the more that companies will accept the fact that this innovation is inevitable. So, it is helpful for KSCP that this is happening as well as any other security automation companies. But if you believe in AITX’s fundamentals (i.e. its products, vision, etc.), these will always win out versus its competitors.
AITX – Implications for NASDAQ Uplist
Clearly investors on the NASDAQ are interested in this technology. Sure, there’s probably quite a few day traders trying to momentum trade on KSCP, but this level of public notoriety should signal something to AITX. Assuming AITX keeps up its growth trajectory, the NASDAQ is a clear goal for the company and definitely attainable.
If KSCP can see this level of investor engagement with what I think are poorer business fundamentals, I’m really excited to see what AITX could do with that level of investor engagement. A new influx of investors outside of the OTC is great, it will make raising funds much more effective and greatly assist AITX with general credibility versus trading on the OTC. It isn’t a golden ticket to company success, but it definitely helps.
But, alas, we are still some time away from a NASDAQ uplist. Presumably the goal is a NASDAQ uplist within a few years. But I know Steve just mentioned over the weekend that AITX would consider accelerating a NASDAQ uplist depending on KSCP’s performance over the next few months. So, who knows, could be sooner!
All in all, I’d sum up my thoughts like this. I’m not a fan of KSCP from a fundamental perspective, but the IPO notoriety is good for the industry and therefore good for AITX. A NASDAQ uplist for AITX may be more beneficial than previously thought (assuming KSCP maintains momentum).
But like I always say, an uplist isn’t what defines success for a company. There are plenty of garbage companies on the NASDAQ. It can help a company, but in the end, a company’s success comes from its fundamentals and actual performance, not its stock exchange.
Either way, exciting stuff on the horizon!
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DISCLAIMER – I CURRENTLY HOLD A LONG POSITION IN $AITX AND I DO NOT HAVE A FINANCIAL INTEREST, LONG OR SHORT, IN $KSCP. THIS ARTICLE IS NOT FINANCIAL ADVICE AND IS INTENDED ONLY FOR EDUCATIONAL PURPOSES. I AM NOT A FINANCIAL ADVISOR. AT THE TIME OF WRITING THIS ARTICLE, PERSONS AFFILIATED WITH THE COMPANY ANALYZED ABOVE MAY BE PROVIDING MONETARY COMPENSATION AS MONTHLY PATRONS THROUGH MY PATREON. THIS COMPENSATION IS NOT PROVIDED IN RETURN FOR ANY SERVICE, WRITING ABOUT A PARTICULAR TOPIC, AND/OR FAVORABLE OR UNFAVORABLE OPINIONS. MY PATREON SUPPORTERS HAVE NO INFLUENCE ON THE CONTENT OF MY ARTICLES.