HTC has zero value and virtually one chance to flip it all around.
According to Bloomberg, its stock is now trading at less than $2 per share. The Taiwan-based smartphone company's plunging market price of a mere $1.46 billion (from nearly $28 billion four years ago) is now officially shy of the cash it held at the end of June - by as much as $6.2 million. This most likely means investors are putting no value on the rest of the company, and analysts can hardly blame them.
The company's forecast for third-quarter sales paled by as much as 48 percent against analyst estimates, which weren't all that high to begin with. Many of those analysts now predict the company could go without profits to the end of 2017. All 22 analysts tracked by Bloomberg are indeed shying away from recommending investors buy the stock.
The company has no long-term debt - but it does have long-term inventory. That is, consumers aren't buying the smartphones and numerous other little-known products the company is offering. Up against industry behemoths Apple and Samsung, HTC's smartphone business may be as much a lost cause as it is a lost cost.
Sales have fallen by more than 75 percent since September 2011. Meanwhile, inventory has ballooned by 60 percent over the last 12 months. Quarterly revenues were axed by half at the same time. And although the company is now on the cusp of cutting more than a third of its expenses - a plan that includes a 15 percent slash to its workforce - certain buys are hard to pass up.
Amid the bleak outlooks, HTC penned a $10 million deal with WEVR, a US-based virtual reality company, to buy 15 percent of the company, alluding to rumours that the company may be leaving smartphones behind for a future in virtual reality.
The risk is real
That future might not be so distant, with HTC launching their first virtual reality headset, HTC Vive, this holiday season. It's a change for the company, given the product has no connection (no pun intended) to smartphones whatsoever. Rather, it connects to a PC and focuses on creating a virtual experience in gaming and entertainment unlike any others out there. So far, it's earning nods of approval.
ZDNET describes HTC Vive as the company's "one shining star for 2015," - with all the gold medals to go with it. Announced in March, it's already won the Best Hardware category in both the Gamescom awards and the Computer Spiele’s award.
But it's likely reward that investors are most concerned about. Indeed, some buys have all the luck. Time will tell if this is one of them.