It looks like tech-enabled consumer product company Aterian (NASDAQ: ATER) is re-emerging as a potential short squeeze candidate. Shares have risen 43.6% over the past five days and have spiked over 120% since the beginning of April.
Aterian ranks number one on Fintel’s Short Squeeze Screener and Leaderboard, which uses an advanced quantitative model to track companies having the highest likelihood of experiencing a short squeeze.
Aterian stock was involved in the short squeeze frenzy last year amid heightened interest on Reddit’s WallStreetBets and other social platforms. However, the rally did not sustain for long.
This leads one to wonder…is Aterian just a meme stock, or is there more to it?
What Does Aterian Do?
Aterian’s proprietary software platform called AIMEE (Artificial Intelligence Marketplace E-commerce Engine) helps find new product opportunities, which the company uses to build, acquire, and partner with e-commerce brands.
Aterian (formerly Mohawk Group) owns and operates 14 consumer brands, selling products across various categories, like heating, cooling, air quality and kitchen appliances, and health and beauty products on channels such as Amazon, Walmart, Shopify, eBay, and more.
Aterian ranked 166th in Financial Times’ 2022 list of The Americas’ Fastest Growing Companies.
Financials Snapshot
Aterian’s Q421 revenue grew 52.6% to $63.3 million. The company reported an adjusted EBITDA loss of about $3.0 million compared to adjusted EBITDA of $0.5 million in Q420. Aterian blamed supply-chain bottlenecks and inflation for the disappointing bottom-line results.
Overall, Aterian’s revenue grew 33.4% to $247.8 million in 2021. However, GAAP net loss per share widened considerably to $6.67 from $3.68 in 2020. Moreover, operating cash flows were negative to the tune of $42 million in 2021, compared to positive cash flows of $6.1 million in 2020.
Aterian did not provide any specific guidance for 2022 but stated that it expects Q122 revenue to decline year-over-year.
Wall Street’s Take
Following Q4 results, Alliance Global Partners analyst Brian Kintslinger lowered his price target on Aterian to $4.50 from $9 but maintained a Buy rating on the stock.
Kintslinger cited dilution from the latest equity offering and limited conviction about an improvement in the supply-chain challenges faced by the company as reasons for the reduced price target.
Further, the analyst feels that higher oil prices will make it difficult in the near term for Aterian to improve its unit economics.
On TipRanks, Aterian scores a Strong Buy consensus rating based on four Buys and one Hold. The average Aterian price target of $6.80 implies 22.97% upside potential from current levels.
Conclusion
While the majority of analysts covering Aterian are bullish, it’s worth noting that the stock is quite volatile. Investors should be wary of the fact that many of the meme stocks that soared due to the short squeeze last year subsequently crashed. Prudent investors would be encouraged to analyze the fundamentals of a company before making investment decisions.
TipRanks’ Insider Trading Activity tool shows that Insider Confidence Signal is currently Negative on Aterian, with corporate insiders selling shares worth $445.2K in the last three months.
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