Down 99.9% YTD, can Bit Brother (BETS) stock price recover?

Bit Brother (NASDAQ: BETS) stock price has collapsed amid continuing going concern issues about the company. The shares surged to a high of $415.32 in 2019 and have plunged to a low of $0.033. This crash has brought the company’s market cap to about $14 million.

Why is Bit Brother collapsing?

Bit Brother is a Chinese company that offers diverse solutions. It is involved in the Bitcoin mining industry through its BitMine solution. The company also offers crypto payment services. Also, Bit Brother provides milk tea in China.

Bit Brother, which is a highly popular company among penny stock traders, has come under pressure in the past few years. Its stock collapse accelerated after BTC prices plunged from the highest point on record in 2021.

The sell-off accelerated this year as investors remained concerned about the company’s future. For one, a look at its investor relations page shows that its last quarterly results in 2021. The same is true with its annual reports.

According to SeekingAlpha, Bit Brother had $1.1 quarterly revenues and made losses worth over $44 million. Its total net loss moved to over $96 million in the last financial year. This means that the company faces an uphill battle to become profitable.

BETS stock price crashed by over 50% on Tuesday after the company announced a $12 million direct offering. The firm agreed to sell over 184 million new Class A shares. The registered direct offering will close on Friday this week. 

Bit Brother has diluted investors several times. According to TradingView, the company has over 155 million outstanding shares, up from 8.7 million at the beginning of the year. It had 174k outstanding shares in 2019.

The other concern for BETS is that the company could be delisted since it has continually remained below $1 for the most part of this year.

BETS stock price forecast

BETS chart by TradingView

Turning to the weekly chart, we see that the BETS share price has gone horizontal this year. It has consistently remained below the year-to-date high of $12.58. A closer look at the volume shows that it remained muted throughout the year and then bounced back a few weeks ago. 

The Average True Range (ATR) has collapsed, signaling that the stock has not been volatile. Therefore, the long-term outlook for the shares is bearish and I suspect that it will move become worthless in the coming years.

In the short term, however, the stock could show some volatility because of its popularity among day traders. As a penny stock, it is relatively easy for it to be manipulated, making it risky to both trade and invest.