Why Richtech Robotics Stock Popped Today
Key Points
Richtech stock is down 35% so far this year.
Now, the start-up robotics company is buying back its own stock.
Richtech stock has no profits, but plenty of cash on hand.
- 10 stocks we like better than Richtech Robotics ›
Richtech Robotics (NASDAQ: RR) stock soared 17% through 12:45 p.m. ET on Tuesday after announcing plans to buy back $12 million worth of stock.
Shares of the Las Vegas-based robotics company fell 35% in the first half of this year. You and I might view that as a disaster -- but Richtech sees it as an opportunity to scoop up some shares on the cheap, and concentrate future profits among fewer shares outstanding.
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Disaster or opportunity?
As its name suggests, Richtech builds robots -- Matradee robots for the restaurant industry, ADAM and Scorpion bartending robots, Titan heavy-duty autonomous delivery robots, and Dex industrial humanoid robots, too.
It's a business with plenty of potential in a world where so many countries are experiencing negative population growth, and may need artificial labor to prop up their economies going forward. But Richtech is still a start-up, with start-up-like numbers: revenues in the single-digit millions, negative earnings, negative free cash flow, and a market capitalization of less than $400 million.
Investing in a stock like this is always an exercise in speculation, but Richtech seems happy to bet on itself today.
Should you bet on Richtech?
Is it a good bet? Wall Street isn't convinced. Only one analyst follows Richtech so far -- with a "hold" rating according to data from S&P Global Market Intelligence. Most investors aren't, either. (Witness Richtech's steadily declining stock price up until today!)
Still, S&P estimates see Richtech doubling its revenue over the next couple years, and losses steadily falling. If this is the way things play out, the stock could be a winner. With Richtech stock valued at only $365 million, and nearly that much cash on hand, the worst I can say is there seems little risk left in the stock today.
Should you buy stock in Richtech Robotics right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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