MGM Wireless Limited (ASX: MWR) is our ASX stock of the day today. The MGM Wireless share price is up 23% at the time of writing, here’s why!
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The MGM Wireless Limited (ASX: MWR) share price is soaring today, up 23.08%. At the time of writing, the MGM Wireless share price is trading at 16 cents, compared to its closing price of 13 cents on Friday. There is no official news out of this company today that would explain such a dramatic jump in valuation. However, MGM Wireless has had a particularly eventful month that investors seem to be waking up to today.
What is MGM Wireless?
MGM Wireless is a software company that designs and develops technology and wearable devices, especially for schools and other educational applications. It has no relation to the movie studio of a similar name.
MGM Wireless has been around since 2002, but has had a rather rough trot in recent years. The MGM share price last peaked at 59 cents way back in 2007. It also had a hefty rally in 2018, when it rose to 43 cents per share. However, it’s been pretty much downhill since then. The company was trading as high as 31 cents a share in January. But the coronavirus pandemic has hit the company’s share price hard, with MGM shares falling 77% between 7 January and 25 March. Even so, with today’s rally, MGM has gained nearly 130% since 25 March.
MGM Wireless offers a range of educational software products, including SchoolStar, OutReach and messageyou. These programs are used by schools to communicate school news, broadcast emergency messaging and manage attendance and rollcalls.
Smartwatches hold the key
One of the company’s flagship products is the smartwatch Spacetalk. Spacetalk comes in two varieties: Spacetalk Life and Spacetalk Kids.
Spacetalk Life is a smartwatch designed specifically for seniors. MGM Wireless says that Spacetalk Life is an “all-in-one phone, wristwatch, and GPS” which is a “safe and easy way for our older loved ones to keep in contact with family and friends when they need to”. It also offers features that aim to combat loneliness and isolation, which is particularly pertinent in 2020 for obvious reasons.
Meanwhile, Spacetalk Kids is a similar watch kids can wear to school, which offers location and communication services designed to keep kids safe, without social media apps and other potentially-unsound features for children. The company says “your child can make and receive calls from a set of contacts you choose”, and can also use an SOS option to make emergency calls.
The company sells the kids watch model through two Australian network providers – Telstra Corporation Ltd (ASX: TLS) and TPG Telecom Ltd’s (ASX: TPG) Vodafone. More providers are offered for Spacetalk Life. MGM even inked a deal with Vodafone back in June, which involves Vodafone selling MGM’s watches at its retail stores.
Why has the MGM Wireless share price been exploding?
As I flagged earlier, MGM Wireless has had a few positive developments in recent months, which are likely helping the company’s share price today.
Firstly, MGM told the markets about a month ago that it had inked a deal with United States e-commerce giant Amazon.com, Inc. (NASDAQ: AMZN) to sell its Spacetalk range on its United Kingdom site – amazon.co.uk. Since Amazon is by far the largest e-commerce market in the UK (a large retail market in itself), this deal could prove very lucrative for MGM Wireless if all things go well.
Further, the company also announced earlier this month that it has reached an agreement with Aussie retailing giant JB Hi-Fi Limited (ASX: JBH) to sell its Spacetalk Life models throughout JB’s network of 197 stores in Australia. Importantly, the companies expect the watches to be stocked in time for the Christmas trading season. This is the first time the Spacetalk Life products have been stocked in a physical store.
JB Hi-Fi has already been stocking the Spacetalk Kids models in-store since 2018, but MGM Wireless told investors this new deal was “the result of solid initial sales of Spacetalk Life from the company’s online store, with positive customer reviews and feedback”.
In my opinion, it’s the cumulation of these events that have caused a snowball effect and elicited the excitement we see in the MGM Wireless share price today.
MGM Wireless is a company with a turbulent history. Even so, I think the various events of the past few weeks and months have generated some interesting momentum for the company, so it will be fascinating to see where things end up from here.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Amazon. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.