SMX (Security Matters) Public Limited Company (SMX): A Bear Case Theory

We came across a bearish thesis on SMX (Security Matters) Public Limited Company on Fugazi Research’s Substack. In this article, we will summarize the bears’ thesis on SMX. SMX (Security Matters) Public Limited Company’s share was trading at $23.98 as of January 13th.

Security Matters Public Limited Company (SMX) is a Foreign Private Issuer listed on Nasdaq, domiciled in Ireland with operations in Israel, that has reported zero revenue in every SEC filing to date despite promoting molecular marking and verification technologies for more than a decade across multiple markets.

Its own 20-F and 6-K disclosures confirm no commercial customers, no contracts, and no revenue generation, while losses continue to mount and shareholder equity has collapsed from roughly $11.4 million in FY 2023 to about $1.3 million by mid 2025, alongside an accumulated deficit exceeding $100 million. The company’s business model, as reflected in filings, centers on capital markets activity rather than operating performance.

Over roughly two years, SMX executed multiple reverse splits to maintain Nasdaq compliance, only to subsequently expand its share count again through discounted promissory notes, VWAP based convertible instruments, warrant coverage, equity lines, and resale registrations. These structures are designed to provide counterparties with discounted entry and rapid liquidity, creating persistent dilution and downward pressure on the stock. Filings show a repeated cycle in which promotional technology narratives precede financing events, followed by dilution, equity erosion, and another reverse split, with no improvement in revenue or cash flow.

SMX’s multi jurisdiction structure and Foreign Private Issuer status allow it to issue discounted equity and modify capital structures without U.S. shareholder votes, further enabling this cycle. The pattern is reinforced by aggressive promotional activity, including dozens of press releases in short windows and documented paid stock promotion campaigns funded directly or indirectly by the company.

Taken together, the disclosures depict a financing dependent issuer sustained by dilution rather than a commercial enterprise, with valuation driven by capital structure mechanics instead of business fundamentals.

Previously we covered a bullish thesis on Palo Alto Networks, Inc. by Magnus Ofstad in October 2024, which highlighted the strength of its integrated cybersecurity platform, AI driven product expansion, and rising enterprise demand. PANW’s stock price has appreciated by approximately 5.93% (adjusted for stock splits) since our coverage. This is because parts of the platform adoption thesis played out despite valuation concerns. Fugazi Research presents an analysis of SMX, highlighting its capital structure risks and absence of revenue generation, which contrasts with a model driven by actual product growth.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.