Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Crazy Stocks

See Medical Tech Stocks Bubble at Nanox

Nanox Imaging Ltd (NASDAQ: NNOX), orNano-X, is another questionable medical stock that is bubbling.

Notably, Nanox’s price rose from $21.70 on 21 August 2020 to $89.39 on 27 January 2021. Nanox (NNOX) fell to $31.67 on 3 May 2021 and $29.40 on 5 May 2021. Thus, Nanox stock went through a bubble since it appeared in August 2020.

So what is Nanox and why does Mr. Market show interest in it? Nanox is an Israeli-based manufacturer of x-ray and imaging systems. The primary use of those imaging systems is in healthcare.

Does Nanox Have Better X-Ray Technology?

Nanox’s management claims they have a better x-ray technology known as Cold Cathode. A Cold Cathode is a cathode ray tube that is not electrically heated by a filament.

Nanox claims Cold Cathode ex-rays will use electricity, run faster, last longer, and offer more safety than traditional x-ray machines. In addition, Nanox claims Cold Cathode x-rays will be cheaper and more efficient than other X-ray systems.

Another hope is that Nanox will provide high-quality images at a lower price than other x-ray systems. One way Nanox’s systems could be more efficient is that they claim to be digitally control each Cold Cathode tube which could reduce the need for electricity and power cables.

The hope is to create a smaller and cheaper X-ray system medical providers can deploy widely. However, there is no evidence that Nanox has a marketable product.

Notably, they label the images on Nanox’s website for “educational purposes only.” That means the technology does not yet exist.

A Concept not a Stock

Thus, Nanox (NNOX) has a concept for a new technology, not a working product. Hence, Nanox is a purely speculative investment.

In fact, Nanox makes no money. For instance, Nanox reported an annual operating loss of -$43.92 million in 2020. Moreover, Nanox reported an annual “gross profit” of -$21,000 in 2020.

Moreover, Nanox reported no revenues for 2020, and no quarterly revenues for 2020. Instead, Nanox reported spending $2.95 million on research and development (R&D) expenses. Additionally, Nanox reported a quarterly operating cash flow of -$8.18 million on 30 September 2020.

Nanox Generates Debt not cash

Instead of generating cash, Nanox borrows money. Nanox had a quarterly financing cash flow of $241.66 million on 30 September 2020.

Thus, Nanox borrowed $244.66 million. In 2020, Nanox’s net debt rose from -$8.07 million on 31 December 2019 to -$212.03 million on 31 December 2020.

Thus, Nanox generates more debt than money. However, Nanox had Total Assets of $236.15 million on 31 December 2020. Those assets grew from $0 on 31 December 2019. In addition, Nanox’s cash and short-term investments grew from $8.07 million on 31 December 2019 to $213.47 million on 31 December 2020.

Nanox has no Actual Value

Therefore, Nanox has a little value but there is nothing in its financial numbers that support the $31.59 Mr. Market paid for it on 5 May 2021.

Consequently, I do not consider Nanox a company. Instead, I consider it a research and development project for a new technology. Hence, Nanox (NNOX) is a venture capital play they are marketing as a stock.

I think investors need to stay far away from Nanox because this company has no actual value.