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Is now the time to buy Aterian stock?

The Aterian stock soared over 46% on Monday, but is down nearly 90% in the last year. Is now the time to buy? Prosper Ambaka investigates.

by | Last updated 27 Nov, 2022 | Technology

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Key Points

  • Aterian Inc. appoints a leading industry executive to the board.
  • The Aterian stock surged over 46% in a single day this week.
  • The stock is down over 80% in the past year.

The Aterian (NASDAQ:ATER) stock price soared a whopping 46.78% at the close of the market on Monday, 4 April. Undoubtedly, it was among the big winners of the day. Amidst the upward momentum it gathered, the stock is still down over 16% year to date and nearly 90% in the past year.

But is this penny stock back on its feet, and is now the best time to buy the Aterian stock? Let’s take a closer look at whether I should be considering this business for my portfolio.

What does Aterian do? 

Aterian, which previously went by the name of Mohawk Group Holdings, is a technology stock. The firm owns and manages a platform that builds, acquires and partners with top e-commerce brands.

Aterian’s cloud-based platform, AIMEE™ (Artificial Intelligence Marketplace E-commerce Engine), leverages machine learning, natural language processing and data analytics to streamline the management of products at scale across the largest online marketplaces in the world, which include Amazon, Shopify and Walmart

The company’s product goes through three phases, the launch, sustain and milk or liquidate phases. A product is moved to the next phase based on the success they achieve in the marketplace. If products attain market leader status, It is moved to the Milk Phase. In contrast, a product that performs poorly is moved to liquidate phase. Since going public in 2019, Aterian stock has been very volatile, soaring as high as $48.99 and a low of $1.41.

Is the Aterian stock price about to surge? 

As I just said, Aterian’s stock price surged over 46% on Monday. There are undoubtedly multiple contributing factors to have sparked such aggressive buying activity. But it seems the addition of Cynthia Williams to the board has impressed retail investors.

Cynthia is a seasoned industry executive with significant technology and e-commerce expertise, working previously at Microsoft and Amazon. It is worth noting that retail investors had pushed the price too as high as $48.99 in the first quarter of 2021. With that in mind, I will not be surprised to see the price surging even higher. In any case, only time will tell whether this is just a short-term boost or the start of a long-term growth trajectory.

Risk lying ahead

While I like the company’s business model, I am concerned about its overreliance on its proprietary technology, AIMEE™. Aside from that, the company places a high reliance on third-party online marketplaces. Where relationships with these third parties are strained, it could largely impact the business model.

It’s also worth noting that this business is yet to become profitable. Moreover, none of the company products has become a strong leader in the marketplace. In any case, with the new round of funding and further acquisition, Aterian could capture further market share for its brands. 

Final thoughts on the Aterian stock

The company strategy is to drive growth organically and through accretive mergers and acquisitions. And that can work rather well if implemented correctly. That’s why, despite the risk, I see a lot of potential in this business. Therefore I am tempted to add some Aterian stock to my portfolio today.

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Prosper Ambaka does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. The Money Cog has published a Premium Investment Report on Shopify. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.

Written By

Prosper Ambaka, Esq.

Prosper is a self-taught financial analyst and investor with years of experience. Inspired by Benjamin Graham, he employs a value-investing school of thought throughout his analyses. This has led to Prosper developing a wealth of knowledge in equities, foreign exchange, commodities, and global macroeconomic issues.

In 2019, he completed his Law degree and was called to the Nigerian Bar in 2021. Outside The Money Cog, Prosper encourages others to join the investment community through his lectures on financial literacy as well as investing strategies.

Current Holdings

NYSE:F, NYSE:ABEV, NYSE:GSAT, NASDAQ:ATER, NYSE:LTHM, NYSE:BB, NYSE:NOK, NASDAQ:SOLO, NASDAQ:RIDE, NYSE:VALE, NYSE:HPE, NASDAQ:CLOV, NYSE:EXPR, NASDAQ:AQMS, NASDAQ:IDEX

Edited & Fact Checked By
Zaven Boyrazian MSc

Zaven has worked in several industries throughout his career, from aircraft factories to game development studios. He has been actively investing in the stock market for the better part of a decade, managing over $1 million across multiple portfolios.

Specializing in corporate valuation, Zaven employs a modern take on the principles set out by Benjamin Graham to find new opportunities at fair prices.

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