Is There Any Hope Left for Facedrive Stock?

After losing more than 95% of its value this year, is there any hope for Facedrive stock to recover?

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Facedrive (TSXV:FD) is a stock that many Canadians are familiar with by now. Earlier this year, it was one of the top growth stocks on the market. However, that performance didn’t necessarily reflect its quality. And I, as well as many of my fellow Fools, warned investors to avoid the stock as it was significantly overvalued.

What followed was a massive downtrend as investors pulled their money and fled the stock. In total, Facedrive lost 98% of its value before finally bottoming about a month ago.

Since then, the stock has been full of volatility but ultimately hasn’t done much. So you may be wondering, after all the major growth and the massive decline, is there any hope left for Facedrive stock?

Facedrive stock

Facedrive started out as a ridesharing company with a focus on sustainable and equitable operations. However, while the company has faced several headwinds since launching, the biggest of which is the ongoing pandemic. With the need for ridesharing services severely reduced during the pandemic, Facedrive has struggled to grow its revenue in a meaningful way.

Plus, with heavy competition from industry leaders, Facedrive has had to shift to other operations in order to try to grow its sales. So with the company’s operations struggling and the stock having been sold off significantly, there aren’t any catalysts for share price appreciation in the short term. Furthermore, for months insiders have been selling off their own shares, which doesn’t bode well for the future of the company.

So while the stock could still see some rallies, it will almost certainly be as a result of speculation and the fact that Facedrive is a micro-cap stock with a market cap of just over $100 million. As such, I would avoid the stock for now. Not only do you not want to lose money, but there are plenty of high-quality Canadian growth stocks to buy instead.

A top Canadian stock to buy instead

Rather than Facedrive, a small-cap tech stock that has much more potential is Drone Delivery Canada (TSXV:FLT). Drone Delivery Canada has much more potential to grow its business significantly for a couple of reasons.

First, Drone Delivery has been developing its technology for several years, and in my opinion, operates in an industry with more potential for growth than Facedrive stock does.

The company also has several pilot partners. And in addition to the industry having more growth potential, it also has a lot more barriers to entry given the restrictions and commercial licenses needed to operate any aircraft, let alone an uncrewed aircraft.

So with the company in an industry with significant years of growth potential ahead of it and without significant competitors, I think it offers tremendous growth potential today.

The stock has no debt, is commercially operational, and now has another pilot project underway, this time with UBC. So if you’re looking for a micro-cap stock with tonnes of long-term growth potential, I’d forget about Facedrive. There are plenty of high-quality Canadian growth stocks, just like Drone Delivery Canada, for investors to buy today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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