Innodata Inc

Innodata Inc. (NASDAQ: INOD) is a data engineering company. The Company's segments include Digital Data Solutions (DDS), Synodex and Agility. The DDS segment provides artificial intelligence (AI) data preparation services, collecting or creating training data, annotating training data, and training AI algorithms for its customers, and AI model deployment and integration.

Recent Financial and Business Updates:

• For the quarter ending June 30, 2023, INOD reported total revenue of USD 19.7 million, indicating a slight decrease compared to the same period last year when revenue amounted to USD 20.0 million. It's important to highlight that during the comparative period, there was a significant contribution of USD 2.5 million in revenue from a prominent social media company. However, this company underwent significant management changes in the latter part of the prior year, resulting in a substantial reduction in spending across its operations. Consequently, there was no revenue generated from this company in the second quarter of 2023.
• INOD recorded a net loss of USD 0.8 million, which translates to USD 0.03 per basic and diluted share, for the second quarter of 2023. This represents a noteworthy improvement from the same period in the previous year, when the net loss stood at USD 3.8 million, or USD 0.14 per basic and diluted share.
• Examining the six-month period ending June 30, 2023, INOD reported total revenue of USD 38.5 million, down from USD 41.2 million during the same period in the prior year. Once again, it's crucial to emphasize that the previous year's figure included a significant USD 6.9 million in revenue from the social media company. However, no revenue was generated from this source in the first half of 2023.
• The net loss for the six months ending June 30, 2023, amounted to USD 2.9 million, or USD 0.11 per basic and diluted share, compared to a net loss of USD 6.6 million, or USD 0.24 per basic and diluted share, in the corresponding period last year.
• Furthermore, INOD reported an Adjusted EBITDA of USD 1.6 million in the second quarter of 2023, a significant improvement compared to an Adjusted EBITDA loss of USD 1.3 million in the same period last year. For the first six months of 2023, the company achieved an Adjusted EBITDA of USD 2.4 million, compared to an Adjusted EBITDA loss of USD 2.3 million in the corresponding period last year.
• As of June 30, 2023, INOD held cash, cash equivalents, and short-term investments totaling USD 13.7 million, compared to USD 10.3 million as of December 31, 2022. This indicates a healthy increase in liquidity over the period.
  

Technical Observation (on the daily chart)

Presently, the stock has delivered an impressive return of approximately 316.07% since reaching its lowest point in the past 52 weeks, which occurred on September 23, 2022. The Relative Strength Index (RSI) over a 14-day period stands at 42.27, indicating a state of potential consolidation or a minor short-term correction. This correction might take the stock closer to a significant support level at USD 10 before resuming its upward trajectory. Additionally, the stock's current positioning is below both the 21-day Simple Moving Average (SMA) and the 50-day SMA, which may serve as dynamic short-term resistance levels.  In summary, the stock has shown remarkable growth from its recent low, but the RSI and SMA indicators suggest a potential short-term pause or correction before it continues its upward movement. Investors should keep a close eye on the stock's performance around the USD 10 support level and monitor how it interacts with the 21-day and 50-day SMAs in the coming days.­­­­­­  

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given to Innodata Inc. (NASDAQ: INOD) at the current market price of USD 11.47 as of September 06, 2023, at 08:55 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is September 06, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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