It’s no secret that we’ve been covering Vection Technologies Ltd [ASX:VR1] quite frequently.
This small-cap tech stock has garnered a lot of attention lately, delivering some remarkable share price gains throughout September and October. Much of which has come off the back of new agreements and partnerships.
However, as we’ve consistently outlined, revenue is the biggest issue facing this stock.
Vection has built up plenty of hype, but a lot less substance. And as any experienced investor can attest, eventually the lip service won’t win over the market…
As can be seen with the rather flat reception of Vection’s new MOU today.
Another partner only begs more questions
Vection has announced yet another partnership. Teaming up this time with Olivetti — a subsidiary of the much larger Telecom Italia (or TIM for short).
Together the pair have signed a memorandum of understanding (MOU). Working to integrate Vection’s VR and AR solutions into Olivetti’s existing B2B and B2C offerings. Aiming to penetrate several major industries such as farming, healthcare and retail to name just a few.
Here is how Olivetti’s CEO Roberto Tundo described their objective:
‘The launch of this collaboration is part of Olivetti’s strategic repositioning as a Digital Farm for the TIM Group’s IoT solutions, geared towards both technological development and the renewal of its business model.
‘Through this memorandum of understanding, we are aiming to pool together our respective innovative skills to develop a commercial offer that is able to express tangible value for each of Olivetti’s various vertical markets. In this way, we are broadening the solutions Olivetti currently provides to support businesses and government bodies in their digital transformation process, repositioning Olivetti at the forefront of cutting-edge technology.’
It certainly sounds impressive, but Vection’s investors weren’t so gung-ho. The share price only saw some brief movement higher throughout the morning. With trading volumes in-line and even below the past few days.
Suffice to say, it seems the market isn’t all that impressed with the update. At least for now.
I suspect that is because, once again, there was no direct dollar figure mentioned at all. Instead, all Vection mentioned was the potential to ‘create revenue generative market opportunities’.
In other words, there are no guarantees this MOU will net them any financial return. And even if it does, they have no idea how much, or when it may happen.
Granted, this isn’t an uncommon position for a small-cap. It’s just that this is the latest in a long run of similarly vague partnerships.
What’s next for Vection
As we’ve been saying time and again, Vection needs to start making sales.
Whether it be through a partner or not, they simply need to generate some income. Otherwise, they run the risk of losing all the good ground they’ve made.
This stock has gone nuts recently, and they have the potential to tap into a huge new growth industry. The challenge facing them right now though is to figure out how to extract value from it.
Either way, you’d best have a whole lot of conviction if you’re investing in Vection. Because it is an extremely speculative stock right now — and its recent volatility is proof of that.
Speaking of which, if you’re looking for techniques to limit your risk exposure, we can help.
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For Money Morning