iQSTEL Inc. (OTC: IQST) stock is earning every bit of its bullish run. In fact, two significant events in the last ten days alone helped rally the stock by 61% in the previous four trading sessions. The first was an announcement that IQST is entering the white-hot the EV sector. IQST announced a letter of intent (LOI) agreement to develop a proprietary electric battery that can provide top-line power to the exponentially fast-growing EV market. The agreement is styled between iQSTEL's Technology Division subsidiary, IoT Labs, and MODUS GROUP, the industrial engineering and design firm engaged by Alternet Systems, Inc. (USOTC: ALYI) for the design and development of Alternet's Revolt Electric Motorcycle.
A second value-creating was announced last week, with IQST announcing that it has eliminated all remaining debt from its balance sheet associated with any Promissory Note. They added that except for routine operational payables, the company is now completely debt free with no convertible notes, warrants, promissory notes or settlement agreements. Investors sent the stock soaring after the announcement.
The deal with MODUS is attracting attention. For IQST, it's another giant step forward in showing its expertise in diverse markets. Its IoT Labs subsidiary has already produced industry award winning technology solutions through its Smartgas technology. The 2021 recognition of excellence put them alongside Apple, Amazon and General Electric, who were also 2021 winners. The addition of MODUS is significant and its design team brings more than 200 patentable claims to the collaborative effort.
Together, the two companies plan to concentrate electric vehicle battery development efforts on HD Thin Film Lithium Battery technologies. The plan is to do this simultaneously to its research and development plans to identify new battery technologies, where research and development into Hemp and Nano-Material based batteries is showing tremendous promise.
The agreement announced earlier in February expands upon the existing working partnership between IoT Labs and MODUS. The goal is to jointly develop Smart EV solutions that IoT Labs can market to the entire EV industry. The great news from a valuation analysis and perspective is that under the current project timeline, IoT Labs anticipates a Smart EV solution suite prototype by July of this year.
Move Into EV Market Solutions
Undoubtedly, IQST's move into the EV sector is driving value for the company. The February announcement added fuel to a tremendous January, when IQST shares surged by more than 290%. Since then, the stock is trading higher by 174% to date with sentiment more bullish after the stock has help its ground over the past month. Additional news has contributed to its price gains as well.
Beyond the EV news, IQST announced exploring a business opportunity with a Fortune 500 client. The duo is evaluating the benefits of a potential business engagement with iQSTEL's Technology Division subsidiary, IoT Labs. From its brief release, the deal will involve IoT Labs' landmark Smart Gas technology, a device that won the Smart Appliance of the Year award from IoT Break Through. In this planned pact, the two are exploring a joint effort to develop a two-way communication device of the Internet of Things (IoT) for the chemical industry (IoT Smart Tank), to include a back and front-end platform to run as a Mobile App.
If the deal gets finalized, it validates a substantial IQST asset and could potentially put in place a lucrative monthly recurring revenue stream. The initial rollout of IoT Smart Tank solutions is expected to be deployed on 2500 devices. Updates on that deal getting finalized is are expected before the end of the month.
Investors should keep in mind that the deal could bring IQST together with a major Fortune 500 company and position itself well to introduce other products and services from its seven other operating subsidiaries.
Following The Gains Of January And February
Investors are taking notice of the stock, evident by the triple-digit percentage gains in the past two months. Notably, those increases come after IQST puts out favorable revenue guidance. In January, IQST management raised guidance for the full-year 2021 to $60 million, reflecting a 34% gain over the past year. Moreover, an analyst report by Goldman Small cap Research suggests that despite its current $71 million market-cap, the stock is considerably undervalued. In fact, his analytical models support much higher prices.
In particular, his analytical models suggest that from an enterprise value alone, the shares could justify a doubling in price from its current $0.84 level, which he base's on the stock coming more in line with current industry and peer multiples. But, Goldman isn't the one pushing the prices higher. Instead, it's the investor class that is responsible for IQST's 290% increase since January and it shows that they like the comprehensive business plan. Better still, with no expectations or signs that IQST is slowing down its progress, forward looking valuations could help ignite an even bigger rally for shares.
Reasons To Like IQST
What's fueling the interest? Investors were obviously impressed earlier this year by a message from the IQST CEO that laid out his company's vision for the near and long term. Goldman SCR's report is also bullish, and he presented a compelling case for why iQSTEL's stock is significantly undervalued. In fact, even though he was bullish, his revised price target was swallowed up by even higher prices with shares surging well above the revised six-month price target of $0.61. Thus, what he proposed as an 89% increase at the time has turned into a more than 120% gain. And with multiple value-creating releases made since then, more revisions may be in the works.
Greenlight Stocks also provided some compelling insight into the company. That coverage provided detail of iQSTEL's seven operating subsidiaries that have extended reach into thirteen countries. In fact, that article combined well with Goldman's researchto offer detailed insight into the value opportunity presented in each of IQST's targeted markets. By the way, IQST made a case for itself by posting record-setting revenue performance in Q4, highlighted by reaching $5 million or higher in sales for three consecutive months. The streak in revenues was a first for IQST, which led management to raise its projected year-end revenue target to $60 million for 2021.
Furthermore, iQSTEL is clearly proving that its strategy is working. As noted, IQST posted consecutive record-setting revenues to finish out the last three months in 2020. Those revenues were also strong, with each month generating $5 million or more in income. The Q4 capped off an already impressive year and helped to close out revenues that were 168% higher compared to the same period last year. On a YoY comparison, annual revenues surged 148% compared to 2019 totals. Those results and the momentum carried from Q4 led management to raise 2021 guidance.
The bullish view at IQST now expects itself to reach over $60 million in 2021 revenues, supported by seven subsidiary companies contributing to the revenue mix. Global partnerships will also add to sales mix by targeting diverse opportunities across multiple communication platforms in the SMS, VoIP, and IoT sectors. Also important to note is that IQST can capitalize on multiple revenue sources from more than thirteen different countries. In short, iQSTEL looks to be in its best operating position ever to maximize its influence and standing in the cloud-based services space. Thus, the sharp increase in value is warranted.
A Decade Of Transformation
A decade of business has done a lot for IQST. Roughly 10 years ago, they were pretty much a single-focused VoIP company. However, by embracing new technology and keeping pace with industry changes, IQST successfully positioned itself to meet the surging demand for SMS and Fintech services, two sectors that have experienced explosive growth during the past decade. That focus and discipline to change with markets opened the door to multiple M&A opportunities, which they seized upon. It also put them in a position to meet a surge in product and services demand that helped facilitate several partnerships and agreements in the SMS and Fintech services space. Those moves and agreements allowed the company has exceeded even their own guidance.
Moreover, because of the methodical actions taken, IQST is now extremely well-positioned to maximize its opportunities with PayVMS, QGlobal SMS, and itsBchain LLC. These three subsidiaries are targeting high-dollar markets with 21st-century technology products and services. Payment Virtual Mobile Solutions (PayVMS) establishes a Visa Prepaid Debit Card Service for customers to use both in-person and online. From ATM transactions to mobile payments, the platform provides specialized services, primarily targeting the immigrant population, to fill an unmet need in a substantial market. The strategy is targeting a market where these services are not usually provided.
QGlobal SMS, among other SMS services owned by iQSTEL, offers international facilitation of SMS conversions, allowing users to transact business and communicate effectively across continents. To enhance and ensure security and efficiency in those services, iQSTEL will leverage its 75% stake in itsBchain LLC, which is developing a comprehensive blockchain solution to prevent fraudulent transactions. ItsBchain will also offer services that safely facilitate payments between VoIP and SMS. Each market provides substantial revenue-generating opportunities.
The bottom line is that each of iQSTEL's subsidiaries and business interests adds substantial intrinsic value. Moreover, with seven of them operating globally, combined with its branded platforms that target billion-dollar market opportunities, IQST's 2021 revenue target of $60 million may be conservative. Keep in mind, they crushed lat years estimate as well.
Intentional Growth And A Plan
IQST has and is building upon an asset portfolio that allows them to capture major contracts. An example could be the one they are hoping to close with a major Fortune 500 company later this month. But, assets are only a part of the valuation equation. Partnerships, management, subsidiaries, and market position also play a substantial role in how a company exploits opportunities.
A large opportunity could also come soon by IQST extending its reach into prepaid debit cards, specialized SMS coverage, IoT (Internet of Things) products designed for household utilities, and the electric vehicle market. As noted, an IQST subsidiary recently entered into an agreement with MODUS, in a deal that could leverage into a relationship with Alternet Systems, who is working to become a leader in the African EV ride-share market. Thus, the deal has the potential to create substantially more deals through accretive partnerships and potential joint ventures.
All that is great, but investors should not overlook another important fact. IQST management, over the past few months, substantially improved its capital structure. They reduced total debt 48%, exchanged derivative liabilities for commercial promissory notes, and eliminated convertible debt. Those improvements are more than just accretive to earnings, they also support the company's plans to move to a more senior NASDAQ exchange.
Clearly, investors' willingness to buy stock at higher prices is supported by company-driven accomplishments and fundamentals. Its record revenues in 2020 put IQST are certainly welcome, but most investors following the stock believe they represent only the first tranche of much higher gains.
Can IQST share prices double from Here? It's best to let IQST answer that question with recent accomplishments: Record revenues, potential deals with Fortune 500 companies, raised revenue guidance, seven operating subsidiaries, a business presence in thirteen countries, and an ambitious plan to extend its reach into new and emerging multi-billion-dollar markets. All of that equals a single word answer to the former question- YES.
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