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Why exciting small cap tech share Atomos is surging higher on Monday

The Atomos Ltd (ASX: AMS) share price has started the week on a positive note.

In morning trade the global video technology company’s shares are up 5% to $1.07.

Why is the Atomos share price surging higher?

Investors have been snapping up the company’s shares this morning after it announced the expansion of its product range with the launch of three new products targeted at the rapidly growing social, pro-video, and entertainment segments of the video market.

According to the release, following the launch of Shinobi in March, this month the company released the Shogun VII and Shinobi SDI products.

The Shinobi VII is the next generation model of Atomos’ Shogun Inferno. It is a 7-inch HDR monitor, recorder and switcher, using the latest technologies available and housing the best HDR screen of any production monitor in the market.

Management expects the Shogun VII to be an important new product line with significant sales expected in both the pro-video and entertainment market segments.

The Shinobi SDI is a low-priced standalone monitor that is specifically aimed at the social video content market, which is a key growth area for the company. The SDI device is expected to expand the addressable market for the Shinobi product.

In addition to this, Atomos announced that it has collaborated with Dolby Vision to form a license agreement focused on meeting the needs of the entertainment industry.

This license agreement enables Atomos to be the first company globally to have access to Dolby’s algorithm for incorporation into recording and playback devices. This will allow the user to see, at the time of recording, exactly what the viewer will see at home.

Should you invest?

In FY 2018 the company reported pro forma sales of $35.65 million. When it listed on the ASX at the end of last year management advised that it expected sales to increase 18.5% to $42.25 million.

However, a stronger than expected first half means that management expects to “deliver stronger sales than forecast in the prospectus.”

I think this and its solid long term growth potential could make Atomos worth watching along with fellow small cap tech shares LiveTiles Ltd (ASX: LVT) and Volpara Health Technologies Ltd (ASX: VHT).

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. 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.

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