Will this penny stock recover in 2023?

AITX (OTC: AITX) stock price has been in a freefall in the past few months as concerns about the company continues. The penny stock was trading at $0.0070 on Thursday, which was close to its all-time low. It has plunged by more than 99% from its all-time high and by 54% in 2022, giving it a market cap of $39.2 million and an enterprise value of $65 million.

Artificial Intelligence Technology Solutions

AITX is a small technology company that manufactures robots that are used in several industries like manufacturing. The firm operates through its subsidiaries: RAD, RADM, and RADG. RAD creates stationary workflow automation solutions that are used in industries while RADM creates mobile automation solutions. RADG is a software company that creates autonomous remote services solutions.

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AITX is a loss-making company that is in a cash-burning phase. The most recent results showed that the subscription revenue increased by 85% on a year-on-year basis to $228k. Its gross profit margin declined as the company dealt with inventories. 

AITX is a highly dilutive company. In October, the firm received about $4 million after selling shares. It also expects to sell additional stock worth between $4 million and $6 million. It hopes to use these proceeds to repay its debt and funding its growth. 

AITX robots are gaining traction. The firm has orders from 35 of the top Fortune 500 companies and it expects this growth to continue. It is gaining traction from security companies, who are using the robots to save thousands of dollars every year. In a recent statement, the firm said that it had 280 units of RAD in deployment and a backorder of 280 units. The CEO said:

“The entire Company is running at full speed as we continue our drive to be the dominant player in the security services and #proptech industries. We intend to continue to fuel the Company’s growth and expansion.”

Still, the main concern for the AITX stock price is the significantly high debt and significant cash burn. It has more than $35 million in total liabilities and little cash. Therefore, with the stock sitting at an all-time low, the company will likely have a challenge selling more stock.

AITX stock price forecast

The AITX share price has been in a freefall in the past few months as the company continues to dilute its shareholders. It has crashed below all moving averages and the important resistance level of $0.018, which was the highest level on November 21. It has moved below the important support level at $0.0092, which was the lowest point since May. The Relative Strength Index (RSI) has continued falling. 

Therefore, the AITX share price will likely continue falling as sellers target the next psychological level at $0.0050. A move above the resistance point at $0.0092 will invalidate the bearish view.