Janover (JNVR) shares have been all the rage in financial markets in recent sessions after the software-as-a-service company announced plans of adding Solana (SOLUSD) to its balance sheet.
With its new crypto treasury strategy, Florida-based Janover hopes to mimic the exponential growth in MicroStrategy (MSTR) stock ever since it started investing in Bitcoin.
However, there’s several reasons why investors should remain cautious in buying JNVR stock. Shares are up more than 600% versus its year-to-date low at the time of writing.
JNVR Is Disconnected From Fundamentals
Janover’s recent stock price rally bears a striking resemblance to the meme stock phenomenon.
Much like GameStop (GME) in 2021, the massive surge in JNVR shares this week was attributed primarily to retail enthusiasm instead of strong fundamentals.
With less than $3 million in cash as of this writing, Janover will likely have to raise fresh capital in the near future, which may dilute its existing shareholders in the coming months.
Plus, investors should remember that past performance in financial markets does not guarantee future returns. So, there are no promises that JNVR will find success with its crypto strategy just because MicroStrategy did.
Janover Is an Overvalued, High-Beta Stock
Investors should tread with caution on Janover stock also because it’s overvalued at writing. JNVR is currently trading at 25 times trailing sales.
In its fourth financial quarter, the online platform that connects real estate borrowers with lenders lost nearly $500,000 despite an 80% year-over-year increase in revenue, indicating continued challenges with operational efficiency.
Note that JNVR has a beta of about 1.34 at writing, which suggests it’s incrementally more volatile than the broader market and is, therefore, not suitable for the current turbulent macroeconomic environment.
Investors should be on the lookout for more stability ahead of a slowdown, not volatility. Finally, no Wall Street analysts currently cover Janover stock, as tracked by Barchart.com
This indicates a lack of institutional interest that often leads to reduced liquidity. Additionally, stocks with no analyst coverage are typically more speculative as well.
