Bsquare Stock is Worth Owning Here

Internet of Things (IoT) software and services provider Bsquare (NASDAQ: BSQR) stock has been a meme stock momentum mover. Bsquare has been a Microsoft NASDAQ: MSFT Embedded IoT partner since 1997. The Company helps enterprises build intelligent IoT systems. Bsquare is an underfollowed company that has largely remained stagnant during the pandemic and reopening periods. This small-cap stock found itself trading as a meme stock generating near 250 million shares as it reached a peak of $8.20 on June 27, 2021. Shares were trading under 1 million shares prior to. While there is no particular reason share volume skyrocketed, it has brought the Company in the limelight. The rollout of 5G is a major tailwind for the IoT business, as it promises more applications with faster speeds. The shares of this small-cap stock can be very volatile and should only be traded by high-risk tolerant investors or speculators on opportunistic pullbacks.

Fiscal Q1 2021 Earnings Release

On March 13, 2021, Bsquare released its fiscal first-quarter 2021 results for the quarter ended March 2021. The Company reported an earnings-per-share (EPS) of (-$0.07) per diluted share compared to a net loss of (-$0.02) in Q4 2020. Revenues for Q1 2021 was $10 million, down (-10%) from Q4 2020. EBITDAS was a loss of (-$0.6 million), compared to $0.1 million loss in Q4 2020. Cash and cash equivalents and restricted cash totaled $10.4 million on March 31, 2021. The timing of cash to Microsoft and other vendors drive Q1 cash use. The decline in quarter-over-quarter Partner Solutions segment was a result of fewer shipping days. The decline in Edge to Cloud segment resulted from a one-time revenue items in Q4 2020 not recurring in Q1 2021. Bsquare CEO Ralph C. Derrickson stated, “Our business building continued in Q1 2021. We invested, as planned, at the intersection of Partner Solutions and Edge-to-Cloud business segments where our customer’ problems and our IoT operations expertise create opportunities for growth. The increasing pace of digital transformation, growing complexity of IoT operations, and progress with our large IoT customers are the basis for our continued optimism.”

Conference Call Takeaways

Bsquare Group President Ralph Derrickson set the tone, “Q1 2021 was a building quarter for Bsquare from which we believe two conclusions to be drawn. Partner Solutions revenue was off modestly largely due to a difference in shipping days. Edge-to-Cloud revenue also declined due to changes in revenue recognition…” He continued, “As planned in Q1 2021, we continued investing in the development of IoT operations services and software growing out of our work with our large IoT customers. You saw the Itron announcement in February regarding the expansion of our relationship. The takeaway from Q1 2021 is that business building is not a linear process are always reflected in our most recent financials. We will continue executing our strategy with focus on discipline.”

BSQR Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for BSQR stock. The weekly rifle chart breakout has a rising 5-period moving average (MA) at $3.20 Fibonacci (fib) level. The 15-period MA is rising at $2.80. The weekly upper BBs sit at $5.67. The weekly market structure low (MSL) triggered on the breakout through $2.32. Although this is a micro-cap meme stock, the weekly stochastic has a bullish mini pup slowly grinding through the 20-band. The daily rifle chart is in a make or break with flat 5-period MA at $5.12 and a rising 15-period MA at $3.96. The daily stochastic crossed down but is stalled for either a cross back up or a mini inverse pup down towards the 15-period MA. Speculators can monitor for opportunistic pullback levels at the $4.23 fib, $4.02 fib, $3.50 fib, $3.20 fib, $2.48 fib, and $2.13 fib. Upside trajectories range from the $6.70 fib level up to the $10.10 fib.