Stocks to sell

Helbiz Stock Is a Hard Pass for the Smart Investor

Previously obscure Helbiz (NASDAQ:HLBZ) stock suddenly received a lot of attention among traders recently, likely due to a resurgence of the meme-stock movement.

Cautious traders should observe that Helbiz isn’t a profitable company, though, and would be wise to stay out of the trade altogether.

Helbiz’s main business is micro-mobility services, which might sound intriguing. However, this is just a fancy way of saying that Helbiz rents out scooters, bikes and mopeds through an app.

This is a tiny company with a market capitalization of around $40 million and 355 employees. Stocks of small businesses like Helbiz can move higher quickly, especially if they have meme-worthy qualities. However, cautious investors should check Helbiz’s bottom-line financials before jumping into a potentially dangerous trade.

What’s Happening with HLBZ Stock?

It would be difficult to prove that Reddit traders targeted HLBZ stock for a short squeeze, but Helbiz checks all of the right boxes. For one thing, the shares are low-priced, making them more attractive to meme-stock traders.

Also, Helbiz isn’t a blue-chip company by any means, and the Reddit crowd seems to prefer under-the-radar stocks. Plus, Helbiz may be considered an underdog as the company is struggling financially in certain respects. This might give Helbiz a certain sentimental value to meme-stock traders.

Besides, it’s surely not a coincidence that HLBZ stock ran up from 65 cents to more than $2 in early August – right when meme-stock mania 2.0 was in effect.

During this time, a short-squeeze revival reminiscent of 2021 caused a number of low-priced stocks to suddenly shoot higher.

Helbiz has already retraced below $1. It just goes to show that meme-stock trading can backfire if your timing – and your luck, really – is less than perfect.

Helbiz Has a Widening Earnings Loss

Businesses can be notorious for putting the positive highlights of a quarterly financial report in big letters and numbers at the top while putting the bad news in tiny print much deeper down the page. This is precisely what Helbiz did, it seems, with its second-quarter 2022 financial press release.

Near the top of the quarterly report, Helbiz proudly announced that its second-quarter revenue grew 46% year over year to $4.4 million. That’s certainly commendable, but there’s more to this story.

Just as importantly, Helbiz’s net earnings loss more than doubled from $8.16 million in the year-earlier quarter, to $19.74 million in Q2 2022.

In per-share terms, that’s a net-loss widening from 36 cents to 57 cents. It took some digging, and a magnifying glass, to find these data points.

If Helbiz’s per-share net earnings loss was 57 cents, and the share price was recently $1, this isn’t good math for the investors. Furthermore, Helbiz reported having $37.43 million in total assets and $70.7 in total liabilities at the end of Q2 2022. Again, that’s not great math.

What You Can Do Now

Was Helbiz a short-squeeze target for Reddit traders? It seems very likely, and it’s possible that the meme-stock hype surrounding HLBZ stock is fading fast.

Moreover, Helbiz doesn’t have the positive bottom-line financial stats that cautious investors should hope to see. Therefore, you can certainly watch Helbiz with curiosity to see what happens next. Just don’t feel the need to trade the stock, as it’s much too dangerous right now.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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