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Ebix hit by trade wars and more nonsense -3

14:56 17-Jun-19


EBIX gapped down to $50 at the open this morning and briefly continued the decline beyond 20% to $42.40.  In retrospect, this drop seems to be caused by traders and/or algorithms focusing on news, which broke on Saturday, that India is imposing tariffs on 28 U.S. products in retaliation for Trump canceling India's GSP status, which allowed $5.6b worth of its exports to enter the America duty-free.

I see this as a limited opportunity.  On one hand, the tariffs have nothing to do with Ebix, which sells services, not Indian exports.  Accordingly, Ebix reiterated its outlook today.  The company does derive ~40% of its revenue from India and expects that to rise to more half this year, but fundamentally, this looks like a prime example of the Wall St. herd mentality that always disgusted me.  That said, EBIX has always been volatile and recent gains left it ripe for this sort manipulation.  Furthermore, since these decisions are motivated by things like the oil trade and local politics, there's no telling where the madness will end.  Even so, I could see buying the stock up to $50, and maybe beyond that especially if one has an investment horizon of 3 years or more.

While we're on the topic of things that disgust me, I'll briefly note that MicroVision received a non-compliance letter from Nasdaq last week.  That doesn't really change anything; I've been saying for quite some time that dilution would continue, the stock should be priced below $1, and that the company either pulls a rabbit out the hat in the next few months, or we'll see a reverse split and further price erosion in the fall.