What has the Buddy (ASX:BUD) share price been up to lately?

The Buddy share price fell 9% on Friday with no major news out of the company. We take a look at what’s been going on for Buddy lately.

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Buddy Technologies Ltd (ASX: BUD) shares shed more than 9% of their value during Friday’s session. By the market’s close, the Buddy share price was trading at 5.8 cents after closing the previous day’s trade at 6.2 cents. 

Looking at the last twelve months, however, Buddy shares have delivered gains of over 90%. Based on the current share price, the company commands a market capitalisation of around $170 million and has around 2.9 billion shares outstanding.

Here we take a closer look at what’s been happening with the Buddy share price over the past couple of months but first, a snapshot of the company. 

What does Buddy do?

Buddy Technologies was established in 2006 and develops cloud-based technologies designed to help customers’ work and living spaces operate smarter. It does this by offering a range of internet-of-things (IOT) connected devices.

Buddy is a leading provider of smart, Wi-Fi enabled lighting solutions which the company offers under its LIFX brand. The products are distributed to over 100 countries worldwide and, according to Buddy, are already used in over one million homes.

The company also provides a range of monitoring and analytics platforms designed to help commercial and industrial customers improve the energy efficiency of their operations.

Buddy share price dips amongst legal woes

The Buddy share price took a 10% hit back in November after the company advised it was facing legal action from CST Capital. CST Capital had brought the proceedings against Buddy after an equity financing agreement between the two companies turned sour. Buddy maintains that the claim brought against it by CST Capital was misconceived and it does not believe any damages are owed.

In Buddy’s latest update regarding the dispute released on 15 December 2020, the company advised that the proceedings are ongoing. However, Buddy was also pleased to report that the default judgement has now been set aside pending future direction.

The next hearing will occur on 25 February 2021 in the District Court of Western Australia.

Manufacturing agreement to grow scale

In Buddy’s most recent announcement released 13 January, the company advised it had executed a new manufacturing agreement with Nanchang Innotech Homesmart Co. Ltd. (Innotech).

According to Buddy, Innotech is a “world class manufacturer of consumer electronics, specialising in smart home products and in particular, smart lighting”. It operates two manufacturing sites spanning over 45,000 square meters and has a production capacity of 4.2 million pieces per month. 

Buddy had advised the new partnership will increase both its manufacturing scale and product range while also reducing some of the overall costs involved with producing its LIFX products.

Orders have already been received that will be fulfilled via the new agreement with delivery expected to occur mid-2021.

It seems news of the agreement has been well received by the market. Since the announcement, the Buddy share price has marched up from 4.7 cents on 13 January to today’s current position of nearly 6 cents (at the time of writing).

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Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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