The Nexion Group Ltd (ASX: NNG) share price plummeted this morning despite good news announced by the tech company.
The global cloud and technology company announced it has partnered with Aryaka Networks, a California-based cloud technology service provider, to build its OneCloud node internationally for the first time.
Despite the news of its overseas expansion, the Nexion share price is down 4% at the time of writing after recovering from an 8% drop this morning. Its share price is currently 24 cents.
Nexion’s overseas expansion
Nexion Group’s subsidiary Nexion Networks Pty Ltd and Aryaka are to build a software-defined wide-area network (SD-WAN) point of presence (PoP) in Auckland, New Zealand.
A OneCloud node consists of processing and storage capacity, which can be rented by customers to integrate their corporate operations into public cloud services.
The new nodes will allow Nexion to provide its clients in Auckland with access to high-speed, low latency international bandwidth to more than 40 locations on the Aryaka network.
The first of the company’s network nodes to make it over the ditch will be its third partnership with Aryaka. It has another two nodes positioned at Aryaka PoPs in Australia, located in Perth and Sydney. Nexion also has nodes in Melbourne and Adelaide.
Nexion’s business model
Nexion says that each OneCloud node and Aryaka PoP it builds will increase its capacity to generate long-term, high-value recurring revenue from hybrid cloud hosting and high-speed data connectivity services.
The company says it’s in a “sweet spot” of a swing towards pay-as-you-go cloud data storage. Nexion believes the swing to be one of the fastest-growing segments of the IT industry, as corporations move away from owner-operated computer resources.
Currently, Nexion is aiming its OneCloud and Public Cloud services to corporations in need of flexible cloud infrastructure. The company hopes that its new location will aid it in negating clients’ reliance on traditional telco services.
Nexion share price snapshot
Nexion was listed on the ASX in February 2021. Since then, the Nexion share price has dropped 4% from its opening price of 25 cents.
It has a market capitalisation of $15.91 million and approximately 111 million shares outstanding.
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More reading
- Why the Nexion (ASX:NNG) share price is racing 8% higher
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Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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