Aterian Share Price Forecast December 2021 – Time to Buy ATER?
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Shares of e-commerce company Aterian (NASDAQ: ATER) are in the green today after closing at $4.59 as of December 6th (19:59 EST). Aterian’s main business model includes using AI and data gathering algorithms to quickly and effectively produce and bring to market products to sell on websites like Amazon. Shares were flying high earlier this year, reaching their highs of $47.66 on February 17th. However, things have gone downhill since then, as evidenced by its current price.
Aterian – Technical Analysis
Aterian’s financial statement indicates a market cap of $245.697 million with total assets worth $321.685 million. Revenue for 2020 was at $185.70 million with a profit margin of -33.99% compared to $114.45 million in 2019.
Moving averages such as Exponential Moving Average (10)(4.88), Simple Moving Average (10)(4.89), Exponential Moving Average (20)(5.43), Simple Moving Average (20)(5.54) and Exponential Moving Average (30)(5.93) are indicating a sell action. Oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(29.56), Williams Percent Range (14)(−72.98), Bull Bear Power(−1.31) and Ultimate Oscillator (7, 14, 28)(46.12) are neutral.
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Recent Developments
Aterian’s downward spiral began when it Q2 results were published in August 9th which indicated that year-over-year revenue growth slowed to 14%. This was shocking considering that growth in previous four quarters was between 44% and 96%. Contribution margin, net income, and free cash flow have all declined which forced the company to withdraw its guidance. Shares dropped 50% almost instantly, following the news being made public.
Third-quarter results didn’t show much improvement with revenue being flat sequentially and up 16% year over year and a net loss of $111 million, To compare, Aterian only had a net loss of $800,000 in Q3 of 2020. While the market didn’t react as severely as it did in Q2, the shares still continued in a downward trend.
The company’s poor performance has been attributed to supply chain issues, which were mentioned multiple times on both Q2 and Q3 earnings reports. While it launched 8 new products in Q3 of 2020, it has launched no new products this year. The company also had to raise prices to tackle the supply chain disruptions which had an impact on sales. This is proof that the company doesn’t possess the pricing power necessary to weather supply chain issues or inflation.
Should You Buy ATER Shares?
Investors should know that when Aterian is at its best, it uses AI technology to find what products are in demand, produces them quickly, and sells them on third party websites. This provides a go-to-market timeframe of six to eight months, compared to the 18-24 months. However, most investors are concerned that the company still doesn’t have a concrete plan to address the supply chain disruptions that has been affecting the aforementioned pricing model. The main message of the Q3 earnings call revolved around how Aterian will come out of the other side of the current struggle while offering no concrete plans on how to achieve this.
Efforts like this aren’t enough to convince shareholders and investors. While many investors can argue that now is the right time to acquire ATER as it’s near its 52-week low, there are too many assumptions to consider. Thus ATER seems more like a value trap than a smart investment until the company is able to generate a few consecutive quarters of improving sales and decreasing net losses. Considering all of the above, now is not the time to invest in such shares.
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