To call SMX (NASDAQ: SMX) a sustainability sector game-changer is an understatement. They are also an authenticator, validators, and facilitator whose ground-breaking marking technology enables materials to carry a history that can be authenticated through origination, use, recycling, and multiple reuse cycles. And not just one or two types. SMX's B2B white label platforms power commercial sustainability applications across a variety of industries, including timber, rubber, palm oil, cocoa, steel, gold, luxury goods, leather, plastics, and non-ferrous metals, to transition successfully to a sustainable circular economy, thus reducing their carbon footprint and waste.
The stock listed on the NASDAQ market last week, and after gaining as much as 50%, appears to have gotten entangled in the disruptive Silicon Valley Bank (NASDAQ: SIVB) fiasco. But that weakness may present an opportunity too good to ignore. At current prices, and with unrivaled technology likely to earn massive global adoption across multiple industrial sectors, the drop in price on Monday is not a reliable indicator of either near or long-term direction. In fact, based on its applications and with no competitor able to match SMX's innovative technology, it's justified to presume that SMX's stocks' path of least resistance is higher.
Bullish On SMX Technology
That bullish sentiment is supported by tangibles. SMX uniquely offers a robust, innovative, and scalable solution for supply chain authentication, traceability, and transparency to transform businesses for participation in the circular economy. Its technology gives materials in solid, liquid, and gas forms the ability to maintain a virtual memory of origination, processing, and supply chain journey, including the ability to authenticate provenance, as well as to track recycling loop counts and the percentage of certified and/or recycled materials contained.
In addition, the data collected is recorded digitally on the blockchain, and a linking molecular chemical marker is embedded in the product that can be read with a proprietary reader. While getting its introduction to the US markets, its technology has been in active operational use on a national scale by the Israeli Government for more than ten years, proving its environmentally sustainable platform through a proven track record.
Attractive to any industry, the SMX solution is an efficient, cost-effective drop-in solution within an existing supply chain, enabling substantial benefits for manufacturers, consumers, and others in the value chain – and the planet, including providing the necessary data for product recycling and reuse. In addition, the SMX technology addresses the issue of the increase in waste globally by meeting the rise in demand for verified, usable recycled materials by creating a commoditized, tradable certified asset which is the recycled material, which can be traded and sold to other players in the value chain and ecosystem.
On Monday, they proved its value.
A Validating Deal With Continental Tire
SMX announced that it and privately-held Continental have succeeded for the first time in verifying a marker substance for natural rubber in a tire and so throughout the entire production process. The dedicated marker technology, which both companies optimized for use in natural rubber, is designed to create greater transparency along the value chain of tires and technical rubber products from Continental.
Embedding special security features, using the marker substances enables the invisible marking of natural rubber with information on its geographical origin. This means that responsibly sourced natural rubber and its origin can be verified at every stage of the supply chain all the way through to the customer. In its role, Continental further strengthens its pioneering position in its commitment to greater transparency along its supply chain. SMX noted in its release that by 2050 at the latest, Continental expects that all materials used in its tire production will originate from responsible sources.
Ensuring Responsibly Sourced Materials
But there's more to the value proposition. Marker technology will allow Continental to ensure that the natural rubber used in its tires is grown and sourced entirely responsibly. That's an important distinction enabling them to make the complex processes in its supply chains more transparent and verifiable.
Specifics of the testing and validation were provided, and the data is impressive. In the successfully completed field test, the marker substance underwent and passed a real test of resilience. The substance was added to responsibly grown latex during harvesting and withstood not only the intensive preparations involved in producing natural rubber but also the tire manufacturing process itself. The data was retrieved using special, purpose-built software and a reader in the manufactured tire and correctly interpreted. Notable, the appearance and performance of a bicycle tire containing the invisible marker remained unchanged.
SMX added that for the field test, natural rubber grown as part of a joint project run by Continental and the German development aid agency 'Deutsche Gesellschaft für Internationale Zusammenarbeit' (GIZ) in the Indonesian province of West Kalimantan was used and enriched with the markers. The project focuses on education and digitalization as the keys to establishing sustainable supply chains for natural rubber. In that respect, local smallholders were taught how the marker substances work and what concentration they needed to be added to the latex.
A Milestone Deal With inherent Near And Long-Term Value
The best news for SMX, its clients, and investors is that with the technology passing its first test of resilience, Continental is planning to use the new marker technology on a larger scale in the future during the process of sourcing its rubber and also to integrate it in other rubber products. That could drive revenues at SMX higher faster than many expected.
Moreover, as part of the industrialization of this technology, it's conceivable to link the markers with blockchain technology, which is generally considered tamper-proof. Doing so could provide additional support for tamper-free monitoring of compliance with quality standards and quality criteria along the complex supply chain of natural rubber.
All told, it's a milestone deal that could ignite near-term catalysts contributing to revenue growth. Considering that with Continental, SMX will use a marker, reader, and digital technology to improve the transparency of the natural rubber supply chain and enable sustainability and circularity, the best news is that it may happen sooner than later. In other words, share price weakness on Monday should be viewed as an opportunity, not a deterrent.
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