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GFAI Stock Alert: Why is Guardforce AI soaring today?


A micro-cap stock that many investors may not have on their radar, AI Guardforce (NASDAQ:GFAI), takes off today. Currently, GFAI stock is up over 50% at the time of writing, on extremely large volume.

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For investors in this leading provider of security solutions, the past few months have been difficult. Officially, GFAI shares went public in September last year, raising $15 million at $4.15 per share. However, shares fell as low as $1.01 yesterday, hitting all-time lows. Today’s rally takes GFAI stock to around $1.60, still a loss of more than 60% for investors who bought into the IPO. However, positive momentum is positive momentum.

Let’s dive into what is driving the GFAI stock higher today.

GFAI stock increases due to geographic expansion

Today, Guardforce AI announced that the company will enter the “robotics as a service” space, through the acquisition of two companies. These companies, Shenzhen Keweien Robot Service Co., Ltd (SZ) and Guangzhou Kewei Robot Technology Co., Ltd. (GZ), are key players in AI robotic services. Companies aim to use automation to reduce repetitive tasks for businesses. As a result, investors seem to appreciate the synergies this deal can provide, by offering GFAI shares today.

Reports suggest it will be primarily an equity deal, with 10% of the proceeds being paid in cash. The deal is believed to be worth $10 million and is expected to close next month.

Notably, reports suggest that this deal is closed at approximately 0.55 of the five-year revenue of the combined SZ and GZ entities. With this type of valuation, investors seem to appreciate the upside potential of this integration.

As of the date of publication, Chris MacDonald had (directly or indirectly) no position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

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