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Shares of security-focused robotics firm Knightscope (NASDAQ:KSCP) popped higher on Thursday, bolstered by a new contract with a New York-based pharmaceutical company. Under the terms of the deal, Knightscope will provide seven robots to monitor the client enterprise’s property. While KSCP stock remains incredibly speculative, today’s news also bolsters its long-term potential.
According to the accompanying press release, Knightscope’s autonomous monitoring and security robots will provide critical coverage of the unnamed pharma’s facilities, which include a four-story garage. In addition, the robotics specialist will deploy six K1-Tower ASR machines to monitor building entrances, open areas and parking lots throughout the corporate campus.
Fundamentally, the release pointed out that a secure and resilient pharmaceutical supply chain offers the best means to ensure the stability of critical medicine flow to the broader U.S. healthcare system. Per the National Institutes of Health (NIH), protecting the integrity of said supply chain can help prevent nefarious activities, such as counterfeiting or the distribution of unapproved medications.
As well, KSCP stock aligns with a robust underlying industry. Per Acumen Research and Consulting, the security robots market may reach a valuation of $160.8 billion by 2032. This tally would represent a compound annual growth rate (CAGR) of 17.9% from 2023.
KSCP Stock Is a Risky but Promising Opportunity
To be clear, anyone considering acquiring KSCP stock must acknowledge the severe risks. Even with today’s pop higher, shares trade for only a few cents above the $1 mark. Also, Knightscope only carries a market capitalization of around $87 million. That’s alarmingly close to the nano-cap threshold of $50 million.
Even worse, KSCP stock has fallen around 40% since the beginning of this year. In the trailing 365 days, it gave up over 57% of its equity value. Since making its public market debut in early 2022, Knightscope tumbled 93%. For onlookers, that may be the most disconcerting sign since the robotics specialist commanded much hype prior to its initial public offering ().
Still, with so much negativity baked in, KSCP stock may offer extreme speculators a bounce-back opportunity. Fundamentally, as InvestorPlace editor-in-chief Sarah Smith pointed out in December 2020, many Americans feel greater anxieties about their safety. Also, with certain crime categories being notoriously underreported, Knightscope may help address the matter via a wider security footprint.
Moreover, security robots present a win-win, helping to diffuse potentially violent encounters while also creating a time/space buffer for responding officers. By allowing robots to be the initial point of contact, human life and limb may be preserved on both sides of a security encounter.
Why It Matters
According to TipRanks, only one analyst presently covers KSCP stock. However, it’s a very positive assessment coming from Ascendiant analyst Edward Woo. The market expert believes shares will hit $3.50, implying over 215% upside from the time-of-writing price.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.