Inmode Stock Update - When Am I Buying?

Summary

In this video update, the speaker discusses the current state of InMode's stock, which has seen a bumpy ride since its IPO in 2019. Despite significant financial growth with revenues tripling and profitability nearly quintupling, the stock price has only risen by 15%. The speaker highlights the company's recent share buyback, which they view positively, and speculates on whether the stock's decline is due to external factors like interest rates and geopolitical conflicts or mismanagement. They express cautious optimism, stating they will consider buying more shares if they see a rebound in financial performance.

Takeaways

• 📈 The speaker is considering buying back into InMode stock after previously selling for a 300% profit.
• 📉 InMode's stock price has been volatile, experiencing both highs and lows since its IPO in September 2019.
• 💹 The company has shown significant financial growth with revenue tripling and profitability nearly quintupling since the IPO.
• 📉 Despite strong financials, InMode's stock price has only increased by 15% from its IPO price.
• 💸 InMode has a clean balance sheet with no debt and a large cash reserve, which has raised concerns due to a perceived lack of investment or buyback activity.
• 🔄 The company has recently initiated share buybacks, signaling a change in capital allocation strategy.
• 🚫 A major criticism of InMode has been the lack of dividend payments and share buybacks despite strong cash reserves.
• 📊 The speaker is cautious about reinvesting due to recent poor financial performance and is waiting for a rebound in growth.
• 🌐 External factors like interest rate hikes and geopolitical conflicts in Israel have negatively impacted InMode's business.
• 🔮 Analysts predict a potential rebound in InMode's financial performance in Q4 of the current year and beyond.

Q & A

What is the current stock price of InMode according to the transcript?

The current stock price of InMode (INMD) is mentioned as $16.50.

When did InMode IPO and how has the stock performed since then?

InMode IPOed around September 2019 at $4 and by the time of the transcript, it had increased to around $16.50, which is a 15% increase over nearly 5 years.

What was the speaker's initial experience with InMode stock?

The speaker became a shareholder in 2020 and the stock performed well, becoming a four-bagger, which means it increased by 300%.

What are some of the products offered by InMode?

InMode offers products like Define, EMPower, Evolve, Ignite, and Optimus Max, which are machines that help improve physical appearance without surgery.

What is the financial performance of InMode over the past 5 years?

Over the past 5 years, InMode's revenue has tripled from $123 million to $416 million, and profitability has increased from $33 million to $149 million.

What is the current PE ratio of InMode and how does it compare to historical values?

The current PE ratio of InMode is 9 times earnings, which is a significant drop from its historical range of around 20 times earnings.

What is the significance of InMode's share buyback program?

InMode is planning to buy back approximately 10% of its shares, which is around 7.68 million shares. This is seen as a positive move as it reduces the number of shares outstanding and increases the ownership percentage for existing shareholders.

What concerns have been raised about InMode's management team?

Critics, including the speaker and Sven Carlin, have raised concerns about InMode's management team for not utilizing their cash reserves effectively and for not initiating a share buyback or dividend program despite having a clean balance sheet and significant cash reserves.

What external factors have impacted InMode's performance?

External factors impacting InMode include rising interest rates, which affect the cost of purchasing their machines, and geopolitical tensions in Israel, where InMode is based, which have impacted their ability to manufacture devices quickly.

What is the current sentiment of the speaker towards InMode's stock?

The speaker is cautiously optimistic about InMode's stock. They are not actively buying more shares at the moment due to recent financial declines but are watching closely for signs of improvement to potentially increase their position.

What are the analyst expectations for InMode's future performance?

Analysts are expecting a rebound in Q4 of the current year with a 9% revenue growth and an EPS increase from $1.91 to $2.17, indicating a return to growth.

Outlines

00:00

📈 Stock Update on InMode

The speaker discusses an update on InMode's stock, considering it an interesting time for the company. The stock has experienced significant volatility, with the speaker having been a shareholder since 2020 and having profited from it. The stock IPO'd around September 2019, and despite the company's revenue and profitability increasing significantly since then, the stock price has only risen by 15%. The speaker is considering whether it's time to buy the stock again, especially with the company's share buyback plan. InMode provides machines for non-invasive cosmetic procedures, and the speaker discusses the company's financial performance and the stock's valuation.

05:01

💹 InMode's Share Buyback and Management Criticism

The speaker talks about InMode's share buyback, which is a positive sign as it represents nearly 10% of the company. However, there has been criticism of the management team for not utilizing the company's cash reserves effectively in the past. The speaker mentions a YouTuber, Sven Carlin, who criticized InMode for not investing back into the business despite having a clean balance sheet and significant cash reserves. The company's financial performance has been good, but there are concerns about the recent lack of revenue and profit growth. The speaker also discusses how external factors such as interest rates and geopolitical conflicts may be impacting InMode's business.

10:01

📉 Decline in InMode's Growth and Future Outlook

The speaker delves into the reasons behind InMode's recent decline in growth, attributing it to factors such as rising interest rates and geopolitical conflicts in Israel. The company's management had previously downplayed the impact of these issues but later acknowledged their effects on the business. The speaker discusses the potential for a rebound in the company's performance, noting that analysts are forecasting a return to growth in the coming quarters. They also highlight the potential for dividends and further share buybacks, given the company's profitability and cash reserves.

15:03

🔍 Waiting for a Turnaround in InMode's Financials

The speaker shares their personal stance on InMode's stock, stating they are currently not buying more shares due to the recent decline in the company's financial performance. They are waiting for signs of improvement before considering further investment. The speaker presents potential scenarios for InMode's growth and profitability, even under conservative assumptions, which suggest significant upside potential for the stock. They conclude by emphasizing InMode as a stock to watch for 2025, expressing optimism that the company could recover and perform well if certain conditions align.

Keywords

💡Emote

Emote refers to a company that produces medical devices, as mentioned in the video script. It is the central subject of the video, with the speaker providing an update on the company's stock performance and discussing its financials. The term is used in the context of evaluating whether it is a good time to buy or sell Emote's stock.

💡Stock

Stock, in this context, refers to shares in a company that investors can buy and sell. The video discusses Emote's stock performance, its historical prices, and the potential for future growth, making 'stock' a key term for understanding the investment advice being given.

💡IPO

IPO stands for Initial Public Offering, which is the process by which a private company goes public by offering its stock to the general public for the first time. The video mentions Emote's IPO in September 2019, which is a significant event used as a reference point for discussing the company's stock performance over time.

💡Share Buyback

A share buyback is when a company purchases its own shares from the market, typically to increase the value of remaining shares or to make use of cash reserves. The video discusses Emote's share buyback as a positive sign, indicating the company's confidence in its own stock and its financial health.

💡Revenue

Revenue refers to the income generated from a company's primary business activities. The video highlights Emote's revenue growth from the time of its IPO, showing an increase from $123 million to $416 million, which is a key indicator of the company's financial success.

💡Profitability

Profitability indicates how well a company is generating profits from its operations. The video points out that Emote's profitability has increased from $33 million to $149 million since its IPO, which is a significant measure of the company's financial health and a key focus of the analysis.

💡P/E Ratio

P/E Ratio stands for Price-to-Earnings Ratio, a financial metric used to evaluate the valuation of a company's stock. The video mentions Emote's historically low P/E ratio, which has collapsed to nine times earnings, suggesting the stock might be undervalued.

💡Interest Rates

Interest rates are the cost of borrowing money. The video discusses how higher interest rates may have impacted Emote's sales, as potential buyers of their expensive machines may be deterred by high borrowing costs.

💡Growth

Growth, in a financial context, refers to the increase in a company's sales, profits, or stock value over time. The video script expresses concern over Emote's recent lack of growth, which is a crucial factor for investors considering whether to buy or sell the stock.

💡EPS

EPS stands for Earnings Per Share, a measure of a company's profitability on a per-share basis. The video discusses how Emote's EPS might be neutralized by the share buyback, which could potentially be beneficial for existing shareholders.

💡Valuation

Valuation refers to the process of determining the value of an asset or a company. The video analyzes Emote's current valuation, comparing its stock price to its financial performance, and considering whether it is attractive for investors.

Highlights

Emote stock update discussion

Potential to buy OT stock

Emote stock's current status at $16.50

Stock performance since IPO in September 2019

Shareholder experience and stock performance over 4 years

Stock's volatility and its effect on the investor's position

Company's revenue and profitability growth over 5 years

Stock valuation and its historical PE ratio

Current PE ratio at nine times earnings

Company's clean balance sheet with no debt

Discussion on management's strategy and criticism

Recent share buyback announcement by the company

Impact of interest rates on the company's sales

Effect of geopolitical tensions on business operations

Analyst expectations for Q3 and Q4 performance

Investor's personal stance on buying the stock

Potential for dividends and share buybacks

Emote stock as a must-watch for 2025

Transcripts

so today I thought do an update on emote

stock and when I could potentially go

buy OT stock because right now I think

is a quite an interesting time for the

company and it could be right now where

the stock is probably going to be make

or break it could be very successful or

we could start seeing the crack starting

to appear in this stock so thought i'

give you an update especially what's

going on with the chair buyback if you

could hit the like button if you're new

around here and you find this video

helpful subscribe we're so close to

6,000 subscribers and I said when we get

there I'll do a live Q&A session on the

main Channel on YouTube for you guys on

a Sunday so anyway let's get tock on to

in mode so in mode ticket symbol inmd is

currently a

$16.50 stock and it's had a very bumpy

ride a volel ride it's had its highs and

it's had its lows and that's what we're

going to cover today but also is it time

to start buying the stock again now you

can see the stock ipoed around September

2019 and I actually came a shareholder

of this business in 2020 so I've

actually been a shareholder for about 4

years in this business and the stock

actually did really well for me it was a

stock that actually came a four bagger

it did very well I think we were taking

profit on this business uh that was up

like 300% and I actually remember at the

time people were saying why are you

selling in mode and I was like you know

it's a good stock but you know I just

don't know if it's run up a little bit

too much and I did take some profit off

the table and it need really well but I

still held some some shares and uh the

stock came back down to reality now for

for a long time I was actually still up

over 100% on that stock until around

about 2023 and then the stock actually

did start falling down a fair amount and

in the last kind of 12 months and I

actually say more than 18 months I

actually started averaging into my

position and the stock is actually

continue to go lower and lower and lower

and I'm actually down on my position now

from averaging up I'm down around about

30% on in mode now I'm going to talk

about where I'm at with it is it time to

sell the stock am I going to be buying

the stock and everything like that today

so hope the video is useful now the

stock or the company itself in mode

provide a lot of these machines you can

see some of these machines here like

Define for example EMP power evolve

ignite Optimus Max which is the brand

new one which hopefully elevates sales

going forward as well with some new

progress on the technology base made

from them and what a lot of these

machines do is they help appearances

without having to go under the knife so

quite often if you wanted something

change with your appearance you'd go

under your knife obviously you'd be H

probably not going out for the next kind

of couple of days weeks it would take up

your all day you would have to be put to

sleep whereas this is more like in

andout treatment so you'd go in get the

surgery done and then obviously you

could go on with your you know

day-to-day job whatever that might be so

for example one of the ones here is the

defined cheek and Define chin so you can

see before photo and an after photo and

obviously good progress there and you

can see once again a bit of a one on the

chin and neck here one on the arm as you

can see here so these machines have

proven to work and they're very

successful machines and obviously people

are more aware about their appearance

now especially with the rise of social

media so it's a space that should

continue to grow in the next kind of few

years and when you look at the stock

itself you know the stock has gone from

where it ipoed from $4 back in 2019 to

nearly 5 years later and actually it's

nearly 5 years to the date tomorrow from

the IPO and it's h 15% up in that time

frame so yeah obviously it's not done

much since the IPO stage but if you do

look at a financial point of view and we

go from the IPO the company was doing

about 123 million in Revenue the company

now does

416 million in revenue and from a profit

point of view the company used to do 33

million in profitability and they're

currently doing 149 million in

profitability so yeah the profitability

has nearly fived extra in that time

frame and the revenue has also tripled

since that time frame yet you look at

the stock and it's only up 15% and

that's where it gets interesting because

you're like 5 years of progress and

financially the 5 years of very good

progress you know I think nearly every

company would like these s these sort of

figures and yet the stock hasn't really

reflected that all and as you see here

clearly from the business the revenue

has done very well and look at the

amount of profitability many many

businesses wish they had the profit

margins of 30 plus% profit margins and

if we have a look at what the P used to

trade at it's historically a very low PE

lowest it's ever been um it used to

trade in the 20 range even back in 2023

it was close to just a sub 20 times

earnings but right now the valuation has

totally collapsed to nine times earnings

so what's going on because obviously

what I've shown you so far is a company

that is doing very well it's also got a

clean balance sheet as you look here

there's no debt on the balance sheet

very healthy amounts of cash on the

balance sheet at the moment nearly half

the market cap in cash what has gone

wrong why is this company ipoed 5 years

ago and the share price hasn't really

done anything thing yet the financials

have trebled and quadrupled since that

time frame well mostly it goes to

management team and once again it kind

of goes to how much is it to blame from

the management team or how much has it

been external factors that has really

affected the business so when we look at

the company right now the're buying back

shares which is a positive the company

is currently going to buy around about

7.68 Million worth of shares which is

nearly 10% of the company buying back

10% of the company is very very good the

shares outstanding is going to come down

massively you if you own the stock as a

shareholder are going to own more of the

business which is great also from a

profit metric EPS as well metric that's

going to look very good even right now

as we'll get onto the financials in a

second but the profitability is dropping

slightly the EPS is going to be nearly

neutralized with the share buyback and

obviously that's really good so why have

I put that in a negative well the big

criticism that in mode had for many many

years and I'm not talking since the

recent drop it had it for the last four

years is um likes value with Sven Carlin

Sven um good YouTuber good investor um

covered it on his YouTube channel and

this is the most viewed video on in mode

on the whole YouTube scene uh obviously

238k subscriber Channel massive

influence uh on the stock market retail

investors YouTube YouTube investors and

uh it got 25k views and two years ago he

basically came out and said I think that

he said it was an amazing he said in

mode has it all but he said can't invest

because of risks H recent one of them

was a recent IPO which obviously isn't a

Rec recent IPO now cuz it's um you know

5% since that time frame bling is no

dividend no share buyback the he his big

criticism is they they sit on all this

cash and they don't do anything with it

and personally for me I've critic

criticized them as well I've come on

YouTube and I I've actually criticized

and gone why are you not spending your

cash balance you know as we just shown

here they had a clean balance sheet they

s they were sitting on so much heal cash

balances it just kept going up and up

and up where there were kind of you know

nearly 729 million of cash which is just

insane and every year the company is

going to be throwing off extortionate

amounts of cash of you know 144 million

use that cash to you know buy do

something with it and in mode manag team

kept com come out and saying we might

buy a company so we need it we need a

you know we might buy a company and they

kept refusing to do it and you had

people like Sven Carin and even me I was

getting bit like are these numbers legit

because before they had the dip in the

financials currently going on everybody

was saying is in mode legit with these

numbers so good and then everyone was

kind of getting annoyed as the shares

kept going down more and more and more

and then eventually even though the

management team said they don't believe

in share BuyBacks they came out with a

share buyback they did one share buyback

and only in the last few days they've

announced another share buyback and

you're looking and thinking how come

there's a sudden change in management

where they weren't using the cash and

now they started using the cash don't

get me wrong it's great and all these

kind of concerns that it weren't legit

is clearly showing that actually it

probably was legit and is it a master

plan now by the you know the management

team that they're able to do all these

share BuyBacks when the stock is at

historic close is it a master plan that

they've done it to Perfection and uh

they're buying the stocks at the perfect

levels was this all in you know where

management had it all under control all

this time or why was this strange share

buyback starting to happen so this was

always one concern with IM mode and it's

kind of gone out the way and if if

anything this is actually a major

positive now that they're buying back so

much amount of stock and what um I would

love Spen Callin to actually do an

updated video on this and because

obviously that was his big concern and

now obviously that that kind of big

concern has kind of gone but one big

major reason reason why the stock is

down is because OB what you have if

you're going to have a successful

business what do you need to have you

need to have profit growth and revenue

growth and what's happened within mode

in the last 12 months they haven't had

that so so maybe everyone's gone a bit

shortterm but there is some impact

because of the poor numbers and and they

have had poor numbers and they're

missing and this was never like IM Mod's

management team they always uh

overachieved and right now they're

missing and they're actually missing by

a fair amount you know 20 million is no

small Miss H and that says that you've

lost the control of the numbers a little

bit and then need to regain control of

the numbers and there's big cuts in the

guidance which you don't want to see so

there's been poor numbers and when you

look at the growth point of view you

know you can see historically pack from

obviously the co dip that happened uh

when they couldn't sell any of these

machines the growth was very very good

and then as soon as we got into like

middle of 2023 boom it just fell off and

it's just got worse and worse and even

the last quarter was actually the worst

quarter so far and that's obviously

what's caused in mode to have a bit of a

dip now obviously as you look here the

profitability is declining the revenue

is declining which isn't good but you do

look it in the context and you go that's

still a lot of Revenue that's still a

lot of profitability but it's still not

good and when we dig in so why was this

company historically doing so good and

then all of a sudden in mid 2023 it's

fall off a cliff well it's falling off a

cliff because of a couple reasons uh

that we have the interest rates so you

can see here basically since you know

mid 2022 the interest rates especially

got a lot higher so when they were

selling these machines these machines

were getting sold for let's say um

400k every time that a lot of these

doctors were buying these machines for

400k getting them on 2 3% interest rates

is okay getting them on what they went

to which was I think management was

saying like 12%

interest rates that's quite a lot and

that's why so many people have kind of

gone I don't know if I want to order it

those S of interest rates and I'm going

to wait for it to go lower so a part of

what's probably affecting the mode is

the interest rates at the moment the

other thing that's probably if affecting

them at the moment is the hamus uh

terrorist attack that happened on Israel

um I'm not going to go too far into it

because I know this is quite a sensitive

subject but obviously um Hamas Palestine

and Israel have there's a lot of you

know War situation going on there at the

moment and IMM mode is an israel-based

business they came out and they

basically said we are not going to be

impacted by this war situation and then

in the most recent quarters they've

actually come out and said actually we

are getting impacted by this situation

uh and we aren't able to build the

devices as quick as what we were doing

at because of this situation so once

again there's been a few remarks by

management that have been like shared by

back no share by back actually we're

doing a share by back there's been you

know a bit of Mis Management on the

numbers there's been management that

said yeah we're going to have no impacts

and then they do have impacts so

management have kind of lost the grip a

little bit at the moment with what's

kind of going on now is this a blip is

this a blip because of the interest

rates and the war situation and the

economic slowdown no the economy is not

doing so well people aren't going to go

out and maybe go buy these treatments

that cost you know fre 4,000 at the

moment they can't afford the higher

interest rate payments on these people

are pulling back the spending the middle

class are pulling back the spending and

maybe not going for the three 3,000

4,000 treatments the interest rates on

top maybe that's what's going on and

it's a blip or maybe it's something a

lot worse and maybe in mode has just

fallen off the cliff we don't really

know looking at analyst numbers you know

analyst numbers are expecting a poor

quarter this year H sorry the next

quarter Q3 to be poor but actually in Q4

they're actually expecting a rebound of

n % Revenue growth and this year they're

actually expecting only 13% negative

growth and they say that this trend will

break H because there was a lot of

orders that didn't fall in that quarter

and then we we'll recover from there

we'll see what happens but I mean if

immo get anywhere close to what the

actually analy are forecasting they're

forecasting the EPS to go back from $191

to $217 they're expecting sales growth

to come back because obviously hopefully

the econom is in a bit better place

interest rates are going to obviously uh

can hopefully we see cut start coming in

and maybe that gets people ordering the

machines again at least are quite

bullish on the return of growth here now

the big thing is are they you know we've

seen management team before are they

kind of smoker mirrors or is it the

truth is in mode going to bounce back

and for me that's what I'm waiting for

because right now we have the trend of

it's getting worse and worse I've got to

see a rebound and I've got to see

management deliver on the rebound of

growth and if they do hit these numbers

I think the stock will fly but my big

thing is is are they going to get there

I don't know and I want to see proof

that they can do these numbers now

normally they bring out the Q3

preliminary results on 12 of August uh

12th of October which is actually a

month today and when they bring out the

preliminary report for 2024 we're going

to get the Guide we're going to see what

numbers they've done and if they have

the numbers finally under control like

they haven't done previously and we're

going to see the guide for Q4 and we'll

see if the Q4 guide is right because by

then um we'll get to see how these

numbers are doing do do they think that

they can get to that growth of 9% and

obviously as well in the Q4 guide we'll

then get the guidance for you know the

whole year of 2025 and I'll be able to

judge management team and see actually

they've finally got this under control

and the interest rates coming down are

going to help them or is there more

going on here because if this doesn't

improve then I'm like that's a little

bit concerning but right now I believe

that it's just this in interest rate

environment the war situation and maybe

it does start recovering because at the

end day this company doesn't need much

to recover you know unless you're

expecting like 6% growth um next year

and over 10% growth on the EPS this

company when it's doing these levels of

profitability it doesn't need much to

fly and when it's trading at like nine

times earnings and it's buying back 10%

of its market cap this company doesn't

need much to go right to do well from

here this sort of valuation and with

this profitability people think a lack

of growth is a you know gone but

realistically this company I mean look

at analyst analytic expecting you know

that really big return to growth here

and they don't even need to do that to

do quite well and I'll show you this

I'll show you some numbers here because

I think people don't actually realize

like how easy it could be for them to

actually do really well so I've done

some numbers here where we've got 2% 4%

6% Revenue growth and we've got 30 32

34% profit margins they have even

potential to probably expand those

profit margins and if you look here

total earnings point of view I put 20

times earnings in I tried to be fair I

mean you could put a lower earning

multiple in but I think 20 times

earnings for this amount of

profitability and growth would be okay

but I mean just look at the numbers that

are coming out guys you know this is on

2% growth I've not even gone Ultra

bullish and you're getting quite a fair

amount of upside I mean

realistically even if they didn't trade

at 20 times earnings let's put 10 times

earnings

in the company still at 10 times

earnings would do okay and the thing is

I put I've put a um a 100 million share

buyback but they're still going to be

making what did we say here um

180 144 million of profitability a

year I mean the potential for dividends

in in share BuyBacks alone is very good

so you looking at this here thinking

there doesn't need much to go

right but does it go right and we have

to wait and see in my opinion I'm I'm

personally right now I'm not actively

buying because what I've seen is just

the financials get worse in the last 12

months and I've gone I can't buy why

thei while the financials get worse but

if I do see the financials start

recovering and I see that okay this was

probably a blip with what happened with

the wall situation with what happened

with the interest rate environment and

then I look at the valuation and

potentially they don't even they only

need to grow like 1 2% a year and this

would do very well never mind if what

analysts are saying that they expect 6 s

8% growth if they get to them sort

levels I mean it will it will actually

do really well so I'm a buy in not at

the moment not at the moment because the

financials aren't improving but if I

start seeing signs that the Improvement

is there I will be buying this stock

because I think this could turn around

very very quickly um at this sort of

valuation I've just got to wait and see

now a few people might say well if I

wait and see I might miss out on the

jump and that is kind of true but saying

that I'd rather be 100% sure and as well

as that there's plenty of times where

I've sat on like him and hairs when it

was

$3 and it was bringing out 10 out of 10

earnings and it used to take like 12

months for the market to go actually

yeah this is really good we should start

buying it you know I was in DraftKings

at 10 at $10 and it used to drop 20% off

earnings that were 10 out of 10 and then

eventually 12 months later the market

went after another fall quarters of

earnings actually went okay we'll

probably start buying this one now so

it's never 100% there and even if it

does rally let's say 10% 20% even 30%

from here it's still probably quite

undervalued if it can do the numbers

that we're showing with even you know

limited growth and the profitability

that it's showing So within mode I

actually think this is a must watch

stock for 2025 because if this does what

it could potentially do I think um we'll

be looking back in a couple years and

going $16 what a steal that was so we'll

see what happens there's a few things

that still needs to turn around but I

still own shares and I'm I'm at no place

at giving up on this stock and if

anything I'm I'm watching and to start

pulling the trigger and buying more and

if it does go to plan I could easily

double my position from here in in mode

and we'll see what happens there so hope

you enjoyed the video update on immo

guys um if you could hit the like button

like I said if you're new around here

subscribe um if you watch all the time

and you're still not subscribed you

definitely subscribe apart from that

I'll see you on uh Friday guys

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