Update: Ekso Bionics: “Make or Break” Moment

Keith Fitz-Gerald Mar 17, 2017
46 

Every company reaches a “make or break” moment – meaning the precise instant in time when it will become a hero or a zero.

I’ve spent the past few days hunkered down in my office poring over reams of information, and there’s no doubt in my mind that’s where we are with Ekso Bionics Holdings Ltd. (NasdaqCM:EKSO).

The conclusion I’ve reached may surprise you.

It’s an update neither you nor your wallet want to miss.

The Wrong Perspective Could Cost You $1.38 million

Take a seat… please.

Put your cell phone aside and set down the drink in your hand. I’m going to tell you a story that upsets a lot of investors and I don’t want you to spill… or choke.

I’ve spent 35 years in global markets as a consultant, analyst, and trader, and if there’s one thing I’ve learned from evaluating thousands of companies it’s that every single one has a defining “make or break” moment.

For some, like Facebook Inc. (NasdaqGS:FB), it’s releasing a disruptive technology that catches the world by storm. For others, like Eastern Airlines, it’s the moment they close the doors forever despite having been a trailblazer. And, for still more companies, like Monster Beverage Corp. (Nasdaq:MNST)Β or Amazon.com Inc. (NasdaqGS:AMZN), it’s the moment where they transition from a startup to a mature player ready to dominate their industry.

It’s hard to tell which is which unless you know what to look for and how to frame what you find in terms that make sense. So, let me set the stage.

Think back to 1997.

Enamored by the prospect of making a gazillion dollars overnight because of the media circus surrounding the latest crop of β€œunicorns” and a bull market that’s roaring to new highs despite overwhelming odds, many investors confuse patience with genius.

Twenty years ago, Apple Inc. (NasdaqGS:AAPL) – yes, THAT Apple – was on the tail end of 18 consecutive months of financial losses. Its market share was a mere 4% of the PC market and Club Cupertino was hemorrhaging more than a $1 billion a year.

The stock had fallen more than 50% and the company’s balance sheet was so bad that to call it a “loser” would have been an insult to actual losers.

Rival PC maker CEO Michael Dell even went so far as to openly mock Apple, saying that if he ran the place he would “shut it down and give the money back to shareholders.”

Obviously, that didn’t happen.

Today, Dell is the one who’s struggling and Apple is on the verge of becoming the world’s most valuable company with a market capitalization approaching $750 billion.

Investors who stayed the course despite overwhelming odds and dim prospects 20 years ago have turned every $10,000 invested then into $1.38 million today.

It’s the stuff of legend.

Which is why you’ve got an important choice to make when it comes to Ekso.

Are You a Speculator or an Investor?

From the very first moment I walked through Ekso’s door, I knew the company was on to something special and I challenge you to think differently given what they’ve achieved by helping stroke victims and people with traumatic spinal injuries become mobile again.

Watch these two videos if you’re uncertain:

The U.S. spinal cord and stroke rehabilitation segment all by itself is a $20+ billion market; overseas applications may double that figure. More than 71.4 million steps have been taken by people who otherwise would never take one again thanks to Ekso products used in more than 130 rehabilitation centers around the world at last count.

Then, there’s the $21 billion industrial and construction industry market where EksoWorks products are helping workers achieve more with less fatigue, better quality, and fewer injuries from high-frequency, long-duration tasks.

This video from United Rental will give you a quick look at why they’ve become one of Ekso’s largest customers very quickly.

And, finally, the military robotics market may be $21.11 billion by 2020, which represents a compound growth rate of roughly 9.27% according to Marketsandmarkets.com.

Here’s a video simulating the Tactical Assault Light Operator Suit or TALOS for short. I wouldn’t want to be a bad guy when this thing comes through the door!

Ekso has just had its best quarter ever, booking $2.3 million in revenue – $573,000 of which came from the industrial market. That’s a 324% increase in 12 months for a market that literally didn’t exist a year ago. I can easily imagine a series of doubles in the next 12 months if sales continue to grow at this pace.

Further, the company has raised more than $100 million, holds 279 patents worldwide (of which 140 are issued and the rest are in prosecution or provisional), and is moving further into sales channels by leveraging early adopters like the Kessler Foundation, the Department of Veterans Affairs, and the Swiss Paraplegic Centre.

Yet, Ekso’s stock has dropped 50% over the past 18 months to $2.75, where it’s trading as I write.

So Now What?

Ekso has to put some numbers “on the board” quickly or risk the wrath of increasingly impatient investors just as Apple did 20 years ago.

I won’t mince words.

This is Ekso’s “make or break” moment. The company’s latest 10-k report suggests they have enough cash on hand to survive through the end of the third quarter.

I see three possibilities.

First, the company raises more capital, broadens marketing efforts, and continues operations. The markets recognize the progress Ekso is making as it becomes profitable. Ekso’s stock price rises accordingly as revenues begin to match expectations.

This is complicated by a shareholder base that is largely individual, short-term oriented, and fickle, as opposed to institutional, longer-term focused, and stable. I bring this up because most individuals think additional capital raises are dilutive when, in fact, companies do them all the time as a means of growing faster and more profitably than they would otherwise.

Tesla Inc. (NasdaqGS:TSLA), not coincidentally, is getting ready to do the same thing.

Second, the company sells to a much bigger player with deeper pockets that can capitalize the long-cycle sales process and development at the same time. This is a viable alternative for management and shareholders alike. It’s also very typical for growing companies with the kind of valuable intellectual property like Ekso has that just need a little “umppph.”

Google, Facebook, Amazon, Microsoft, Intel… between them they’ve probably purchased more than 100 smaller companies with attractive technology. And, that’s worked out well for long-term shareholders.

I’ve long thought that Medtronic (NYSE:MDT) would be a suitable buyer, as was the subject of unconfirmed rumors last month. However, I could also envision a defense contractor moving in simply because so much of the intellectual property could easily crossover to military applications. Or, even Google X for that matter.

Third, the company simply shuts down. Frankly, I have a hard time imagining this would happen. At this point, Ekso’s intellectual property portfolio could be worth $75 – $100 million or roughly 30-80% more than the current market capitalization at $2.75 a share. Factor in the discounted cash flow associated with existing sales channels and the combined market potential of both the medical and industrial markets and another few hundred million dollars isn’t inconceivable.

Now comes the tough part.

You’ve got to decide if you’re an investor willing to take a longer-term leap of faith based on extraordinary market potential and disruptive technology or a short-term trader willing to dance like a kite in a hurricane.

As much as I’d like to, I can’t make that decision for you because I don’t know your individual risk tolerance, nor do I know your individual investment objectives.

My preference, of course, is that you approach Ekso as an investor.

If you’re following along as directed, that means: a) limiting your investment to 2% of overall holdings to control risk, and b) making sure that Ekso is part of a larger, disciplined investment strategy like the 50-40-10 portfolio we talk about frequently. Unbelievably, it also means you think very seriously about buying more Ekso stock.

“Buy low, sell high” is how the game works, and the path to profits.

If you’re not yet fully invested – meaning that your Ekso position is less than 2% of your overall investable assets – then you can afford to “tank up” – meaning buy more shares – to the point where you reach the 2% threshold. Much the same way as dollar-cost-averaging, this actually improves your profit potential even if the company ultimately blows up.

If you’ve got more than 2% tied up in Ekso stock, then you’re overexposed and taking on too much risk. In that case, consider unloading enough shares so that the amount of money you have at risk drops back under the 2% Rule of Thumb.

And, if you’re holding Ekso shares having already converted them to a “Free Trade” early on, then you’ve got nothing to worry about and don’t have to do a thing.

I know it’s not easy; situations like this never are.

Then, again, neither was the decision facing Apple investors under very similar circumstances in 1997…

…do I hold on or buy more?

I will be with you every step of the way.

Until next time,

Keith

46 Responses to Update: Ekso Bionics: “Make or Break” Moment

  1. William Sharek says:

    Thank you for the EKSO story. I have 20% of my investment in EKSO so I know I am over-exposed. But my average is now $3.42 and I am hoping that I can rise to a level where I can convert part of my shares to “free trade”. In the meantime, while I have complete confidence in the PRODUCT POSSIBILITIES, I worry that another “Gottlieb” manager will kill the golden goose. I guess the only thing I can hope for is that management keeps its eye on product… rather than profit. (hope I expressed that correctly)

    • Keith says:

      Hello William and thanks for the thoughtful reply.

      Yes, you did express that correctly and, by the way, congratulations on knowing your exposure. Not many investors take the time to put something like this in perspective let alone have a plan for working towards their goals like you do. If I may be so bold, consider rethinking the exposure in light of the company’s cash situation and your overall investment objectives and risk tolerance.

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  2. Chris W says:

    Thanks for the update Keith. Very interested to see what happens as the cash dries up in the 3rd quarter.

    • Keith says:

      You’re welcome, Chris.

      You and me both when Q3 rolls around. To paraphrase the Nike advertising slogan, it’s “just do it” time.

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  3. Barry says:

    Hi Kieth

    Thanks , exactly what i asked for

    Well I am an investor , I hate to but can afford a total loss

    I increased my position by 25% & hoping for the best, realizing can handle the worse scenario possible
    ——————————————
    Next please update CWCO which just came out w with earnings and is so disjointed with bali desalination operations they are considering dumping it and do to trump policies and peso etc are trying to renegotiate something with the new Baja desalination they were strived to get

    Thanks truly Barry

    • Barry says:

      sorry for English even with spell check , my disability makes writing hard & Painfull

      • Keith says:

        Hi Barry and thanks for writing in. I’m pulling for you and appreciate the tremendous effort it takes to participate!

        As always, planning ahead is important and you are wise (as always) to maintain the total loss perspective and not just on this company, but all investments. Most investors take that for granted and are surprised when they have an Eastern Airlines or Palm or even Kodak “moment.”

        We’re working on the water situation as well. Obviously Mother Nature has changed the dynamic a bit.

        Stay tuned, best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  4. Bob says:

    Hope your investigative evaluation is correct. You have been on this one for a while and I have been on board accumulating along the way. I’m staying for the long run. Keep up the valuable updates. Thanks

    • Keith says:

      Hi Bob.

      I sure hope so, too. There is no doubt in my mind that the company has tremendous potential and a truly disruptive technology that’s worth far more than the value the market places on them at the moment.

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  5. george krupinsky5 says:

    THANK YOU FOR THIS UPDATE, YOUR TIMING COULD NOT HAVE COME AT A BETTER TIME. I HAVE BEEN ACCUMULATING THIS STOCK (EKSO) SINCE IT WAS RECOMMENDED AND GETTING READY TO BUY MORE AT THE CURRENT PRICE. THIS ARTICLE JUST HELPED ME MAKE UP MY MIND…….GEORGEGEORGE

    • Keith says:

      Hello George and you’re welcome.

      It sounds like you’ve got a very specific strategy in place and that’s fabulous! Just remember to keep risk management front and center as always.

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  6. Gary says:

    I would like to see a bigger company take over EKSO, there is value in this company and the hard work has been done!

    • Keith says:

      I share your sentiment, Gary.

      Many pioneers wind up doing some terrific things when they get access to far deeper pockets and established marketing channels. We will see!

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  7. Dr. JohnM says:

    Keith,

    You’ve presented the pluses for Ekso, a continuing problem company; videos are interesting and engaging but sales and profits are proof that the company is viable to an investor.

    You haven’t presented any data that defines why it has struggled so badly over the years. Is it management? Is it marketing? Is it lack of a market with the required funding that it can tap? Maybe it’s just a science project without a path to becoming a company.

    If you are going to compare it Apple, then please at least suggest what the catalyst(s) is or are that have a chance of making this a viable company.

    I’ve held it a long time waiting for “the make” moment. It’s hardly worth selling or watching now.

    • Mike says:

      I have the same questions. The product is there so apparently a better management team is in order. Keith has been pounding the table on this one for quite a while but it just won’t pick itself up. I picked it up as a penny stock before the RS and all it’s done since is bleed so I bailed with over a 50% loss. I like your science project comment, makes my day

      • Keith says:

        Hi Doc and hello Mike.

        Great questions from both of you. I’ve spent quite a bit of time with management and see no evidence that they’re unqualified or flailing. I think that the sales cycle is simply proving to be longer than they anticipated which can often be the case with medical devices dependent on insurance/billing funding. That said, the company deserves kudos for pivoting last year into the industrial market when they realized it. Whether that was too late or is too early remains to be seen.

        And, I was rolling on the floor with your “science project” comment as well. I’m going to borrow that – with due credit of course if you don’t mind.

        Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  8. Bill Stapp says:

    This is such an interesting company but at this point I have to worry about whether it has proper management.I was hoping to hear you comment about your feelings about them and I think you might also have the same feelings and are not willing to share them at this point.The fact that the current clown show in the white house wants to increase support for veterans might be good but how can you believe anything the head clown says.It seems to me that your second idea is probably the best bet……Many thanks for your analysis Keith.I am staying at 2%.

    • Keith says:

      Hello Bill.

      See my comments above to Dr. John and Mike regarding management.

      As for the White House, I can’t comment on that because I am not qualified to do so as a political expert. We “do money” – no matter who’s running the show – and I say that most respectfully.

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  9. Robert F. Pacione says:

    No other word to say is “Brilliant Company”. I have followed this before the split last year. This is just the beginning for this company. The expansion of this company is enormous. I agree Keith without words been spoken between us. Hold on people. This is the future.

    I also believe in this company as I am on the verge of possibly becoming a recipient of this technology or looking to be involved if my Specialists cannot figure out to take my pain away as I have lost my L5 disk completely.

    Huge Respect Keith!

    • Keith says:

      Thank you for the kind words, Robert!

      As for the company, no doubt on the technology…now we just have to see about the race between potential and profits.

      Good luck with your L5 by the way! I suffered a C-spine injury in the late 1990s and that was an experience I’ll never forget.

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  10. Tom Brennan says:

    You know, comments from Bill Stapp are totally inappropriate for this forum . let’s keep your politics out of the discussion and focus on the investment which I think still makes sense. It”s interesting how the stock bumped up today.

    • Keith says:

      Hello Tom and thanks for chiming in.

      Politics are always tricky and your point is well taken. My grandfather used to say talking about them was like trying to hug a cactus. I can only imagine what he would say now were he alive. I, too, found the bump interesting.

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  11. Idrea says:

    Thank you so much for your update as I am currently in 6.5% of my total portfolio and it’s down 38% from where I picked it up. Thank you so much, Keith, for all you do. Arigato-arimas.😊

    • Keith says:

      Hello Idrea and thanks for the update.

      Obviously 6.5% is little higher than the 2% Rule of Thumb so tread carefully – and I mean that most respectfully.

      You are welcome, incidentally.

      Doitashimate.

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  12. Chuck says:

    Bill – spit up someplace else. I have gone up over 20% on large holdings since the election. Go hard on the stock – go to 5% cause I think you have all the answers.

    • Keith says:

      Hi Chuck.

      20% is great – way to go!

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  13. George Bragg says:

    Keith:
    We all make mistakes and this was one of them. When the stock dropped over 50% of my average purchase price, and after holding the position for 18 months, and still down over $30,000 I sold, and placed what was left in another investment. The products are excellent and the mission of the company is a noble one, but we were placed in the investment far too early and/or at much too high of a price per share. Some deals work very well, and some don’t. When they don’t, the sooner you move on to something else the better. Hopefully, in the long run we have more good deals than bad ones, and everyone comes out OK. I am not complaining, just explaining as they say in poker, “There is a time to hold them, and a time to fold them.”

    • Keith says:

      Hello George.

      Thanks for the thoughtful reply and for laying out your points very clearly. That’s a huge part of what makes Total Wealth such a great place to be because it means we can all learn from each other…and hopefully become more profitable for having done so even when it comes to what’s happening with Ekso at the moment.

      Hold’em or fold’em, indeed…reminds me of that old Kenny Rogers’ song…. The Gambler.

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  14. Bill Mencke says:

    Its amazing how Zacks said to sell it and today the stock took off!! Hmmm,
    either Zacks is totally off or Keith has that much power. Definitely worth watching ,but there is competition from Rewalk,
    although they also have been in a downward spiral.

    • Keith says:

      Hi Bill.

      I wasn’t aware that Zacks said sell today. That’s very interesting indeed. And, while I appreciate the thought about me having that much power, I don’t think so. I put my shoes on just like the next person.

      As for competition, ReWalk is out there but don’t forget Cyberdyne in Japan, either. Both companies have radically different approaches, technology, etc. All three seem to be struggling with time to market versus technological promise.

  15. Tim L says:

    I’ve held on since almost the beginning of the recommendation to buy and am down over 50% but will continue to hang on based on your continued positive reports. Abiding by the 2% guideline is very responsible investing. If we can’t absorb a loss (hopefully temporary) as we benefit from other winning investment advice from you, shame on us.

    • Keith says:

      Hello Tim and thanks for chiming in.

      You raise a very important point – absorbing losses. Most investors think only in terms of protecting capital when, in fact, learning how to absorb losses and manage risk is the key to higher profits. Ekso is obviously a smaller company so trailing stops are of limited utility which is where the 2% Rule comes in as a means of controlling risk.

      Speaking of which, please keep in mind that not every stock I recommend will be a winner despite the fact that I’d very much like that to be the case. Homework, research and prudent risk management are key with every investment, including Ekso.

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  16. Bob Ruona says:

    Thanks for the up date.I have followed the company since Keith recommended it. I’m at the 2% level and I am considering going up another percentage point. At the current price and the value of the patents it make sense to me increase my holding.

    • Keith says:

      You’re welcome, Bob.

      As always, make sure increasing your holdings makes sense within the context of your personal risk management and investment objectives – not just because I believe in the company.

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  17. Timonster says:

    Hello Keith.
    I hope you and your family are well. I am happy for your sons’ success. Glad to hear your news and appreciate you sharing with your readers.
    I listened to your advice and earned 104% gain on NetEase and have sold 50% of the shares. Therefore, your guidance is golden to me.
    Your latest report and assessment on Ekso could not have been more timely because I have been yearning for them. It holds 3.75% of my portfolio. The company can follow one of the three options you mentioned. No one has the crystal ball. I believe in the company and it’s doing wonderful things to improve mankind’s quality of life. I won’t retire for another 10-15 years so I still have time to make up any loss. My gut feeling is the Ekso will “make it”. In summary, I will up my shares to 5% and wait and see. I either pat my back and shout out thank you to you or say crash and burn like Tom Cruise’s Top Gun.
    Thank you ahead of time. : )

    • Keith says:

      Hello Timonster and thanks for the shout out. The Fitz-Gerald Clan is doing well as I hope is the case for you and your family, too.

      Thanks for the kind words as well; I will do my best to ensure the trust you place in me is well founded.

      On that note, you raise a very important point – time. It’s the one thing that every investor has or has had and lost. That’s key when it comes to making risk appropriate decisions as you so rightly point out.

      Permission to buzz the tower?!

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  18. Randy says:

    Thanks for the update. I’ve been hoping from some word from you on this company. My position is at about 3%, but I was fortunate to have picked up over half of it on a lowball order. I recognized the potential for EKSO from the start, based on the information provide by Keith, but very much considered it a risky position, and emotionally wrote off the investment from the beginning. Not that I’m here to lose money, but I don’t want to get ulcers worrying about this one position, when I’m following the guidelines, and doing well otherwise.
    I’ve been excited with their product line, and still believe that if they get it into gear and not let the competition get ahead of them, that this is going to be a big winner. The R&D on the current product line seems to be completed to the point that the product is in the field, and it’s apparently been well received. New operating capital was recently added, to keep them moving, but marketing may be a problem. If they don’t move the product, the company, and our money’s going down the drain.
    However that said, I’m going forward with EKSO, and frankly expecting it be a successful play.

    • Keith says:

      Hi Randy and you’re welcome!

      You raise some very important points and my hat is off to you because you obviously have a carefully crafted strategy and approach. Most investors don’t which is why they’re never going to achieve the kind of results they hope to. That gives you a tremendous advantage!

      I, too, expect success from Ekso but we are definitely down to brass tacks as the old expression goes.

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

  19. Jerry says:

    Wow! I just got into Vanguard investments a month ago with a mear $10K from some retirement incentive money. I am one of those recently retired simple school teachers that usually “gets screwed” no matter what I try to invest in, HA! So far staying pretty conservative. Anyway, I just read this recent EKSO report by Kieth totally out of the blue today. Guess I will try the “investor route” and see if I get lucky for that “make moment.” At least seems better than all those scary pot high risk investment scams out there right now. I moved 2% into EKSO. Just for the fun of it. I enjoy reading and listening to you “Big Boys” play. Just learning like a kindergartener myself. For instance, what does it mean to convert some shares to “”FREE TRADE?”” I am paying $7 a trade right now.
    New Learner here, please be kind! I would love to have one of those esko-skeleton suits, though, for scouting in the woods and climbing/placing tree stands during my archery hunting seasons. Just kidding, as I realize they are for people with real ailments. But the arthritis, spine, and muscles are deteriorating with age fast. Wow!!!!
    Jerry

    • Keith says:

      Hello Jerry and welcome to Total Wealth Family – I am thrilled you are here!

      I suspect you are quite a bit more knowledgeable than you let on. Wisdom in life and in the classroom counts for a lot!

      If I may, please take a moment to spin through the Total Wealth archives. There’s a lot there on a wide variety of subjects all of which can, hopefully, make you a better investor. If you’d like me to cover something I’m not or like clarification on a topic I have, please write in. The Total Wealth Family is a great place to be because we all learn together and, hopefully, are far more profitable because of it.

      Best regards and thanks for being part of the Total Wealth Family, Keith πŸ™‚

    • Barry says:

      Jerry

      Re: FREE TRADE

      I interpret that as if you have a double then sell half, get your money back, and let the rest ride at no cost… thus free trade!

      BTW if you got in at the very beginning you had a chance to do this.

      Barry

  20. Barry says:

    Here is a good vote on the technology & what it can do

    UPDATE

    3/21/17

    Ekso GT Named a Finalist in Fast Company’s 2017 World Changing Ideas Awards

    http://ir.eksobionics.com/press-releases/detail/605

    Barry

  21. Alex Arredondo says:

    Hi, Keith!
    Where can I read to learn what the 50-40-10 portfolio means?
    Alex Arredondo

    • Jessica Sheppard says:

      Alex,

      Great question, and thanks for reaching out!

      If you click here to check out one of Keith’s articles from February, you’ll find a rundown of the 50-40-10 model. That’s just the tip of the iceberg, though. Members of Keith’s Premium Publication, The Money Map Report, can tell you that when the 50-40-10 is put to work with Keith’s weekly research and monthly recommendations, you can multiply your profit potential several times over.

      Click here to learn more about that service, if you’re interested, and don’t hesitate to reach out to our Member Services team if you have any other questions!

      Their number is: 1.888.384.8339

      As always, we love hearing from you, and thanks for being part of the Total Wealth Family!

      Jessica Sheppard
      Associate Editor

  22. John Tennant says:

    Hi Keith. Well, I guess everyone else got in at a better price than me, since I am down since I bought in. I had been willing to hold on for a bit longer. But if the company has a chance of going bankrupt in the third quarter I can see why the market has punished it, and I may put in a tight stop loss at this point. I wish all of us well in this venture. Being a pioneer in anything is clearly a very high risk/high gain proposition.

  23. bob spence says:

    thank you–great report–please stay with us

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