$OSS New IdentityLeading the AI transportable solutions market, One Stop Solution, Inc. (NASDAQ: OSS) is amidst a huge transition to shift its focus to its AI transportable business and abandon its low-margin media business. With the company expecting to realize $850 million in identifiable value over the next 3 years, OSS stock may be undervalued at the moment.
OSS Fundamentals
New Direction
After appointing Michael Knowles as a new CEO, OSS is shifting its business focus from its media business to the high-margin AI transportable business. OSS will be looking to decrease its $23 million inventory and offset the revenue loss from the media business by realizing more AI transportable contracts, which it has successfully done. Back in February, OSS executed a $1.3 million contract with the U.S. Army for the design and development of a rugged 360-degree visualization compute system and vehicles with the company expecting to realize revenues from the contract in Q2.
Furthermore, OSS is engaged in several Air Force opportunities with the company announcing earlier in May a new contract with the Air Force and the Air Force wanting a new contract that includes its flagship supercomputer Rigel. It is also worth noting that Rigel recently obtained full Nvidia certification and stands as the only certified rugged edge supercomputer based on Nvidia’s HDX, A100 GPU which is a testament to OSS’ impressive AI capabilities.
The military contracts may draw a parallel with Palantir (NYSE: PLTR) since both OSS and Palantir are AI companies that heavily rely on military contracts. If OSS can fully transition in 2023, OSS stock may be undervalued at the current PPS. Considering its low float of 15.2 million, OSS could soar to new highs if its transition is successful.
Future Prospects
This year’s Q1 revenue from OSS Europe saw a 26% increase to $8.2 million, which covered the 18% decline in revenue in OSS Classic due to OSS fading its media business, which operated mainly in the US. However, OSS expects to realize $17.5 million in Q2 revenues which indicates that the company is successfully offsetting the revenue loss from abandoning its media business.
Additionally, OSS sees approximately $850 million in identifiable value over the next three years, with two-thirds of it in pending and existing contracts and only one-third in future targets and opportunities. A $850 million in identifiable value is a big deal for OSS, especially since it is still amidst its transition to focus on AI, which is a testament to OSS’ growth prospects. It also means that OSS may find its way back to profitability in 2024, which could see OSS stock soaring.
OSS Financials
In its Q1 2023 report, OSS’ assets increased 3% QoQ from $56 million to $58 million and its cash and cash equivalents increased 9% QoQ from $3.1 million to $3.4 million. However, OSS’ liabilities increased by 14% QoQ from $12 million to $13.7 million.
In terms of revenues, OSS witnessed a 1.8% decline YoY from $17 million to $16.7 million which could be attributable to the company abandoning its media business. Meanwhile, operating costs increased more than 15% from $4.5 million to $5.2 million, which amounted to a net loss of $400 thousand – a 169% increase YoY.
Technical Analysis
OSS stock’s trend is bullish with the stock trading in an upward channel. Looking at the indicators, the stock is trading above the 200, 50, and 21 MAs which are bullish indications. Meanwhile, the RSI is approaching overbought at 69 and the MACD is approaching a bearish crossover.
As for the fundamentals, OSS stock may be driven by AI revenues and new future contracts. The current PPS seems like a suitable entry before OSS completes its transition by the end of 2023 – especially with the stock trading near its lower trendline.
OSS Forecast
OSS is undergoing a huge transition to focus fully on its AI transportable business which will see it realize a high gross profit increasing its odds of returning to profitability by 2024 – especially since it expects $850 million in identifiable value over the next three years. Furthermore, OSS is operating in a similar space and business model to Palantir which is currently seeing huge interest from investors. If OSS can complete its transition, OSS stock may prove to be undervalued at its current PPS.
