The9 Limited [NCTY] is 264.12% higher this YTD. Is it still time to buy?

The9 Limited [NASDAQ: NCTY] plunged by -$4.21 during the normal trading session on Friday and reaching a high of $17.14 during the day while it closed the day at $12.89. The company report on January 4, 2021 that The9 Signed a Legally Binding Cooperation and Investment Term Sheet with Cryptocurrencies Mining Investors Led by Jianping Kong to Start the Cryptocurrencies Business.

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The9 Limited (Nasdaq: NCTY) (“The9”), an established Internet company, announced that it signed a legally binding cooperation and investment term sheet (the “Term Sheet”) with several investors in the cryptocurrencies mining industry including Jianping Kong, the former Director and Co-Chairman of Canaan Inc. (Nasdaq: CAN, the first Bitcoin mining machine manufacturer listed on Nasdaq), Qifeng Sun, the former Director of Canaan Inc., Li Zhang and Enguang Li (collectively, the “Investors”). Pursuant to the Term Sheet, The9 will issue Class A ordinary shares and warrants to the Investors. The9 is expected to receive proceeds from the transactions contemplated under the Term Sheet in accordance with certain pre-agreed conditions, if realized. The Investors are expected to utilize their cryptocurrencies mining industry resources to assist The9 for its development of cryptocurrencies mining business. The9 will set up a new wholly owned subsidiary NBTC Limited to operate its blockchain and cryptocurrencies business.

Pursuant to the Term Sheet, The9 will issue 8,108,100 Class A ordinary shares (equivalent to 270,270 ADSs) at US$0.1233 per Class A ordinary share (equivalent to US$3.7 per ADS) and 207,891,900 warrants, each warrant representing the right to purchase one Class A Ordinary share (equivalent to 6,929,730 ADSs assuming full exercise of warrants) to the Investors. The warrants will be divided into four equal tranches. The exercise price of three tranches of warrants is US$0.1233 per Class A ordinary share (equivalent to US$3.7 per ADS) while the exercise price of the other tranche of warrants is US$0.2667 per Class A ordinary share (equivalent to US$8 per ADS). Each tranche of the warrants is subject to its vesting conditions including market capitalization of The9 reaching US$100 million, US$300 million, US$500 million and US$1 billion within the timeframes of 6 months, 12 months, 24 months and 36 months, respectively. If the Investors exercise all of the warrants, The9 is expected to raise an aggregate consideration of approximately US$34 million in this transaction from the Class A ordinary shares issuance consideration and warrants exercise. The9 has the right to decide whether the Investors shall make payments in the form of U.S. dollars or cryptocurrencies (including Bitcoin) in the definitive agreement.

The9 Limited stock has also gained 264.12% of its value over the past 7 days. However, NCTY stock has inclined by 296.74% in the 3 months of the year. Over the past six months meanwhile, it has gained 69.40% and gained 264.12% year-on date.

The market cap for NCTY stock reached $150.68 million, with 8.82 million shares outstanding and 4.22 million shares in the current float. Compared to the average trading volume of 3.46M shares, NCTY reached a trading volume of 7524939 in the most recent trading day, which is why market watchdogs consider the stock to be active.

Here’s what leading stock market gurus have to say about The9 Limited [NCTY]:

Based on careful and fact-backed analyses by Wall Street experts, the current consensus on the target price for NCTY shares is $3.50 per share. Analysis on target price and performance of stocks is usually carefully studied by market experts, and the current Wall Street consensus on NCTY stock is a recommendation set at 4.00. This rating represents a strong Buy recommendation, on the scale from 1 to 5, where 5 would mean strong sell, 4 represents Sell, 3 is Hold, and 2 indicates Buy.

JP Morgan have made an estimate for The9 Limited shares, keeping their opinion on the stock as Neutral, with their previous recommendation back on November 13, 2009. The new note on the price target was released on June 18, 2009, representing the official price target for The9 Limited stock. Previously, the target price had yet another drop from $17 to $11, while Roth Capital kept a Hold rating on NCTY stock. On January 27, 2009, analysts increased their price target for NCTY shares from 16 to 20.

The Average True Range (ATR) for The9 Limited is set at 2.42

NCTY stock trade performance evaluation

The9 Limited [NCTY] gain into the green zone at the end of the last week, gaining into a positive trend and gaining by 264.12. With this latest performance, NCTY shares gained by 295.40% in over the last four-week period, additionally plugging by 69.40% over the last 6 months – not to mention a rise of 22.79% in the past year of trading.

Overbought and oversold stocks can be easily traced with the Relative Strength Index (RSI), where an RSI result of over 70 would be overbought, and any rate below 30 would indicate oversold conditions. An RSI rate of 50 would represent a neutral market momentum. The current RSI for NCTY stock in for the last two-week period is set at 70.77, with the RSI for the last a single of trading hit 69.83, and the three-weeks RSI is set at 70.36 for The9 Limited [NCTY]. The present Moving Average for the last 50 days of trading for this stock 3.80, while it was recorded at 12.01 for the last single week of trading, and 5.33 for the last 200 days.

The9 Limited [NCTY]: An insightful look at the core fundamentals

Operating Margin for any stock indicates how profitable investing would be, and The9 Limited [NCTY] shares currently have an operating margin of -38089.23 and a Gross Margin at -835.53. The9 Limited’s Net Margin is presently recorded at -55820.08.

Reflecting on the efficiency of the workforce at the company, The9 Limited [NCTY] managed to generate an average of -$452,247 per employee. Receivables Turnover for the company is 0.04 with a Total Asset Turnover recorded at a value of 0.00.The9 Limited’s liquidity data is similarly interesting compelling, with a Quick Ratio of 0.20 and a Current Ratio set at 0.20.

The9 Limited [NCTY]: Insider Ownership positions

There are presently around $5 million, or 4.20% of NCTY stock, in the hands of institutional investors. The top three institutional holders of NCTY stocks are: CVI HOLDINGS, LLC with ownership of 219,278, which is approximately New of the company’s market cap and around 45.10% of the total institutional ownership; ANSON FUNDS MANAGEMENT LP, holding 100,865 shares of the stock with an approximate value of $1.3 million in NCTY stocks shares; and HRT FINANCIAL LP, currently with $0.25 million in NCTY stock with ownership of nearly 66.879% of the company’s market capitalization.

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Positions in The9 Limited stocks held by institutional investors increased at the end of March and at the time of the March reporting period, where 4 institutional holders increased their position in The9 Limited [NASDAQ:NCTY] by around 338,645 shares. Additionally, 7 investors decreased positions by around 35,864 shares, while 1 investors held positions by with 24,383 shares. The mentioned changes placed institutional holdings at 350,126 shares, according to the latest SEC report filing. NCTY stock had 3 new institutional investments in for a total of 330,978 shares, while 7 institutional investors sold positions of 35,864 shares during the same period.

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