Should you buy Akerna stock after last week’s results?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on May 20, 2021
Updated: May 21, 2021
  • Akerna is a technology company that wants to disrupt the cannabis supply chain industry.
  • Akerna develops platforms that will help cannabis companies to track products from seed to sale.
  • AKERN reported a massive improvement in revenue and EBITDA in the most recent quarterly results.

Akerna (NASDAQ:KERN) is a technology company that develops software for the cannabis industry. Its MJ platform helps cannabis companies better manage all aspects of their business by tracking production from seed to sale. Companies also rely on the platform for business analytics and flash reports. Shares of KERN have recently pulled back after the announcement of the fiscal first-quarter results. 

Does the recent weakness in KERN stock present a buying opportunity for investors or will the recent weakness continue?

Q1 results signals fundamentals are strong 

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Akerna reported first-quarter results on May 10 and the report shows a 62% year-over-year growth in software revenue to $3.8 million. Total revenue grew 31% to $4 million while gross profit was up 53% to $2.6 million. However, net loss increased from $4.8 million to $6.3 million.

Company CEO Jessica Billingsley said that the restructuring activities taken in 2020 continued to deliver results with the company building towards profitability. She said during the post earnings conference call:

“With adjusted EBITDA improving 42% year-over-year and 4% sequentially in the March quarter. We are encouraged by the pace of demand in the first quarter, and we look forward to continued growth in the quarters ahead.”

Source – TradingView

Technical overview of Akerna stock

Technically, shares of Akerna appear to have found strong support at the confluence of the 100-hour simple moving average and the trending support line. This provides a strong base for a rebound and investors should consider buying KERN stock at current levels. 

Investors can target short-term profits at the 200-hour simple moving average at $3.80 per share or higher just next to the trendline resistance line at $4.00.

The support level at $3.39 will be a good area to place a stop-loss limit. The next support level can be found at $3.21. 

The current upward momentum looks set to continue based on the relative strength index indicator. There is still a lot of room left to run before KERN stock reaches overbought levels.

The bottom line: It looks like a good time to buy KERN stock 

Shares of Akerna appear to be on a rebound following the post-earnings decline. The company’s net loss may have caused the recent pullback, but the long-term outlook appears to have restored investor optimism.

The company’s acquisition of Viridian sciences will help to improve its deliverables in the enterprise resource management software market. This will strengthen its position as the leading software company in the cannabis supply chain. 

In summary, the recent pullback presents an opportunity to buy the stock ahead of the next rebound. The long-term growth prospects will be compelling to growth investors.

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