CXApp (NASDAQ: CXAI) stock was up 345% on Thursday on NASDAQ. This gives a market capitalization around the $100 million level - meaning that at the start of all of this CXApp was very definitely what we would call a microcap. Which means we do have to think a bit about what is driving this CXAI stock price rise. Is it some mature reconsideration of the value of the newly floated company? Or just one of those things which happens with small stocks with limited floats?
The business itself is trying to address a real problem. How does one manage a hybrid - ie, office work and work from home - workforce? We can easily make the intellectual case that a “CXApp Inc. ("CXApp"), The Workplace SuperApp, is a platform that consolidates the services, features, and functions of the workplace tech stack into a single mobile app” makes entire sense. But we'd also need to see good evidence that this specific exemplar of such an app is not only the way to do it but also the one that is going to conquer the marketplace. Slack has done very well after all - which is itself one of those workplace and workflow management tools.
CXApp stock price from NASDAQOn the other hand we might think of how markets are prey to fads and fashions. Investors - perhaps speculators is better - can be prey to thinking “Oooh, sexy, sexy” and putting their money down on that basis. Add together app, new workplace, work from home, dust with some AI and well, maybe it'll catch on? Among investors that is, not necessarily among users. At this very early stage of the game it's difficult to say which is more likely.
There's no specific news out of CXApp, nothing on Edgar. There is that AI in the name though, so perhaps that really is it?
There is one of those things here though. There's a fairly natural looking cap to any short term price rise - around the $12 mark. As part of the asset shifting that led to the creation of CXApp and then the Spac, there's this: “Under the terms of the Business Combination, which was structured as a Reverse Morris Trust transaction, at the Closing Inpixon Securityholders received approximately 0.0975222161241519 of a share of CXApp Class A common stock and approximately 0.3457605844401750 of a share of CXApp Class C common stock for each share of Inpixon common stock.” and “As a result of the transactions, Inpixon Securityholders received 7,035,000 shares of CXApp common stock, representing 50% of the outstanding CXApp common stock, of which approximately 22% were issued as Class A common stock and 78% as Class C common stock. “ and then finally: “CXApp Class A common stock and CXApp Class C common stock are identical in all respects, except that CXApp Class C common stock is not listed and will automatically convert into CXApp Class A common stock on the earlier to occur of (i) the 180th day following the Closing and (ii) the day that the last reported sale price of CXApp Class A common stock equals or exceeds $12.00 per share for any 20 trading days within any 30-trading day period following the Closing.”
The way we read all of that is that 39% of the total stock is currently in those Class C shares which are non-tradeable. But if CXAI stock goes over $12 for 20 out of 30 trading days, then that all converts to Class A stock and becomes tradeable immediately. We'd very strongly suggest therefore that in the medium term this puts a useful cap upon the likely CXApp stock price. Any substantial move above $12 releases that wave of stock for potential sale.