Facedrive (TSXV: FD), formerly known as High Mountain Capital Corp is a ride sharing company believes in “people-and-planet first”. The company provides ride to its customers through the Facedrive App mainly under the electric, hybrid and gas-powered vehicles variants. The company also offers social services to local communities with a strong commitment in doing business fairly, equitably and sustainably.

Key Highlights

• Recently had a Corporate Governance issue: The company recently had significant corporate governance issues, which resulted in a rapid fall in stock prices as co-founder Imran Khan liquidated thousands of Facedrive shares.

• Broadening losses: Despite excellent top-line growth, the business is unable to shift the increased revenue to the bottom line due to greater operational expenditures. The company recorded sales of CAD 5.79 million for the three months ending June 30, 2021, versus CAD 0.09 million in June 30,2020. Given the huge increase in revenue, net losses increased to CAD 7.6 million from CAD 6.7 million the previous year. As a result, strong topline growth leads to a decrease in the company's net value.

• Steep Bearish Technical Indicators: Facedrive shares are hovering in a steep bearish zone, with stock traded well below the crucial support levels of 200-day, 100-day, 50-day and 20-day SMAs. Further, despite recent sharp correction, we are not able to see bottom from the technical standpoint, therefore, it might correct further from the current trading levels.

Source: REFINITIV, Analysis by Kalkine Group 

Stock Recommendation

The company has been engaged with a range of industries, including transportation sharing, food delivery, and COVID-19 contact tracking etc. These industries have been in high demand at various points throughout the last two years. Facedrive investors were clearly thrilled by the potential of a new startup operating in a number of fast-growing industries. However, a recent argument among senior management staff, followed by a major share unloading on the market, has resulted in a dramatic collapse in the company's stock price. The suffering was compounded when the company's CEO stated his intention to retire from his present post, and recently its auditor "Deloitte" resigned from its position.  Lastly, it is not sure that how much time it will take to fix these issues. Hence, we recommend an “Avoid” rating on stock at the closing price of CAD 0.99 on October 27, 2021.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.