Boxlight (BOXL) shares soared over 500% this morning as meme stock enthusiasts turned to this Duluth-headquartered education technology company.
However, since much of the gains in BOXL shares today are due to the retail frenzy instead of a meaningful business development, the underlying risks of chasing the rally in this penny stock are rather significant.
That said, Boxlight stock, at one point on Monday, was seen trading at more than 15x its price in early February.
Why Boxlight Stock Remains Super Unattractive
Long-term investors are recommended to steer clear of BOXL stock today primarily because its core interactive classroom technology business has not generated any meaningful traction so far.
The firm’s revenue printed at $31 million in its latest reported quarter, down a concerning 20% on a year-over-year basis. Plus, operating profit and positive cash flow remains elusive as well.
What’s also worth mentioning is that Boxlight had to execute a reverse stock split to remain listed on the Nasdaq Exchange this year, which further indicates financial weakness.
Without a strategic partnership, a product breakthrough, or any other meaningful development, the massive, hype-driven surge in this penny stock looks more like an opportunity to sell.
BOXL Shares Valuation Is Hard to Justify
Boxlight doesn’t appear to be a suitable pick for seasoned investors also because it’s a penny stock. This means liquidity issues, heightened volatility, and increased vulnerability to manipulation.
Moreover, BOXL stock currently receives coverage from one Wall Street analyst only, indicating a lack of institutional checks on its valuation and performance.
Meanwhile, Boxlight’s relative strength index (RSI) currently sits at 80, suggesting overbought conditions and significant risk of a crash in the days ahead, especially as Barchart pegs its book value per share at negative $7.78.
All in all, without a solid business catalyst, BOXL’s stretched valuation leaves it exposed to a swift pullback, particularly as short sellers circle and early traders lock in gains.
