INSG - Inseego Stock Rallies On Strong Outlook But Debt Issues Persist

2024-05-31 10:21:34 ET

Summary

• Following better-than-expected Q1 results and a strong Q2 outlook, shares of mobile broadband and fixed wireless access solutions provider Inseego have rallied by more than 150% in recent weeks.
• Thanks to a $15 million customer prepayment and anticipated improvements in cash generation, the company's cash balance could approach $30 million by the end of Q2.
• That said, Inseego still needs to address $161.9 million in convertible notes by May 2025.
• Should the company continue to execute and manage to negotiate a non-dilutive solution, there might be further upside in the shares.
• However, with the easy money apparently having been made, I would avoid chasing the shares at current levels and rather look for a potential setback. Consequently, I am initiating coverage of Inseego with a "Hold" rating.

Six months ago, I made some decent money shorting the stock of mobile broadband and fixed wireless access ("FWA") solutions provider Inseego Corp. or "Inseego" ( INSG ) after the company reported mediocre Q3/2023 results and guided for a very weak finish to the year which caused shares to tumble all the way from above $5.00 in early November to below $2 on a reverse stock split adjusted basis in subsequent weeks:

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