Shares of security camera and robotics specialist Knightscope (NASDAQ:KSCP) — which focuses on providing autonomous security solutions — moved up sharply on Friday. Earlier this morning, management disclosed that it received three new orders for its “blue light” emergency communications systems. Although KSCP stock jumped on the credibility boost, it remains a highly risky market gamble.
According to the accompanying press release, Knightscope’s orders consist of the following:
- One K1 Blue Light Tower is to be sent to a Texas-based university.
- One K1 Blue Light Tower is earmarked for a New Jersey municipality.
- One K1 Call Box and the Knightscope Emergency Management System (KEMS) software for a Virginia-based country club.
Both the Blue Light Tower and Call Box represent distinct yet familiar telecom stations that enable reliable, one-touch communications with emergency services. Per the press release:
“Emergency communications are always available and are particularly helpful when cell phone service is scarce or a phone’s battery has died, and they provide the exact location of the device being used so that services may be quickly dispatched.”
In contrast, law enforcement officers may not be able to pinpoint the location of people using their personal cellular devices. That’s because GPS data might not be transmitted through the 911 system.
KSCP Stock is Relevant but Also Wildly Risky
Following the disclosure, KSCP stock initially gained around 12% before settling roughly 6% up in the afternoon session. Undeniably, the three new orders underscore the relevancy and demand for security-related solutions. While violent crimes in 2023 declined from the prior year, major cities still struggle with a wider increase in property crimes.
Fundamentally, the core offering of Knightscope — its autonomous security robots — presents tremendous utilitarian and safety value. Perhaps most notably, robots can be sent to assess dangerous situations that may otherwise harm human operators. These incidents can range from overseeing a fire, inspecting a suspicious package or providing real-time intelligence about a dynamic threat.
In addition, if robots lack anthropomorphic features — that is, if robots do not have human-like features such as eyes or a face — people may respond to the autonomous security device neutrally. In contrast, evidence exists that humans may subconsciously assign their biases toward anthropomorphic robots. With Knightscope robots looking more like trash cans on wheels than humanoids, security interactions may occur with minimal social friction.
Nevertheless, the idea of robotics-based security also presents challenges. On the ethical front, more robots may mean fewer employed humans. Regarding the investment narrative, KSCP stock suffered a hefty loss of around 67% in the past 52 weeks. With a share price of 65 cents, it’s unquestionably speculative.
Why It Matters
Currently, no Wall Street analyst covers KSCP stock, which isn’t surprising. Along with its trailing one-year loss, Knightscope hemorrhaged 96% of equity value since its public market debut. Also, with a market capitalization of $56 million, it’s just barely dancing above the threshold of nano-cap territory.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
