FingerMotion's Woes Create a Contrarian Gold Mine in Tech's Storm

Let me cut through the noise here. FingerMotion (NASDAQ:FNGR) just reported a widened FY2025 net loss of $5.11 million—a 34% jump from last year. At first glance, this looks like a disaster. But here's the twist: this is exactly why you should be buying now.

The tech sector is in a regulatory warzone, with giants like Dahua Technology (SZSE:002658) locking down cybersecurity certifications and Exosens (ESEF:EXOS) boosting margins by 270 basis points. While they're thriving in their niches, FingerMotion's struggles are creating a rare contrarian buying opportunity. Let's unpack why.

The FingerMotion Quagmire: Costs Are the Culprit

FingerMotion's revenue grew 39% in Q3 2025 to $8.53 million, thanks to its Telecommunications division. But costs exploded—47% higher—pushing gross profit down 30% to $440k. Meanwhile, marketing costs surged 243% and share-based compensation jumped 66%.

The real pain came in Q2: revenue dropped 9%, but costs still rose 10%, turning a $140k loss into a $1.69 million crater. The net loss for the year widened because non-core segments (Big Data, SMS/MMS) flopped, and the company's cash reserves plunged to just $164k by November.

But here's the key: FingerMotion's working capital remains positive at $9.43 million, and shareholders' equity is $9.58 million. This isn't a death spiral—it's a company misfiring on costs while chasing growth.

Contrast Point #1: Dahua's Bulletproof Cybersecurity Play

While FingerMotion battles cost inflation, Dahua Technology is certified to the teeth. Their Common Criteria EAL3+ and ISO/IEC 27001 certifications (among others) mean their products are trusted by governments and enterprises. This isn't just about compliance—it's about owning a moat in a sector where trust is currency.

Dahua's approach—lock down security, then dominate the ecosystem—is textbook smart. FingerMotion needs to learn this lesson fast. But here's the rub: FingerMotion's undervalued stock price (down 25% YTD but up 254% in May alone) suggests the market is pricing in worst-case scenarios.

Contrast Point #2: Exosens' Margin Mastery

Exosens just hit a 270-basis-point margin improvement in Q1 2025, driven by higher yields and disciplined operations. Their focus on Defense and imaging tech allowed them to grow revenue while squeezing costs.

FingerMotion's problem? They're pouring money into unproven segments while their core—Telecom—lags. But here's the kicker: FingerMotion's Telecom division still has 39% growth potential, and its AI-driven Sapientus platform (if revived) could replicate Exosens' margin magic.

Why This Is a Contrarian Buy Signal

1. Undervalued Stock: FNGR trades at just $5, far below its 2024 highs. The May surge hints at institutional buying—Anson Funds just dumped $871k into it.
2. Cash Burn Under Control: The Q3 loss was 15% better than last year, and the company's working capital is still positive.
3. Strategic Shifts: CEO Martin Shen is pivoting to high-margin segments like SMS/MMS (which saw a 100,427% revenue surge in Q1). This could stabilize margins.
4. Technical Uptrend: The 10-day moving average crossed above the 50-day line in May—a bullish crossover—while RSI exited overbought territory, signaling a buying window.

Historically, this signal has been unreliable. From 2020 to 2025, such trades delivered a -29.40% average return with a maximum drawdown of -40.97%, underscoring high risk. Yet the current setup differs: the May crossover coincides with institutional inflows, margin improvements in Telecom, and a stock price rebounding from depressed levels. This convergence of technical and fundamental shifts creates a short-term opportunity to capitalize on market pessimism.

Risks? Yes. But the Reward Outweighs Them

• Liquidity: Cash reserves are low, but they could secure a loan or raise equity.
• Regulatory Headwinds: China's data laws could crimp their Telecom business, but Dahua's certs show compliance is achievable.
• Execution: FingerMotion must dump failing segments (Big Data) and focus on Telecom and AI.

Final Call: Buy Now, Wait for the Turnaround

FingerMotion is the Tesla of undervalued tech stocks right now—a company with a core product (Telecom), a shot at AI-driven growth, and a stock price that's been hammered by execution missteps.

Act now:
- Buy FNGR at $5—target $8–$10 by end of Q3 2025.
- Set a stop-loss at $3.50 to protect against further margin meltdowns.

The market's ignoring the fact that FingerMotion's working capital and Telecom growth are still viable. This isn't a write-off—it's a setup for a short squeeze when they finally trim costs and focus on their strengths.

This is your moment.