Penny stocks have been hot lately, and few have been hotter than Remark Holdings (NASDAQ:MARK). MARK stock has grown nearly ten fold to $2.54 a share from just 27 cents when U.S. markets bottomed on March 23.
While some analysts are raising concerns that MARK stock may be over-hyped and overbought, the company presents an opportunity for investors looking for exposure to the artificial intelligence segment that has room to grow.
Indeed, naysayers seem to be in the minority when it comes to MARK stock. Zack’s Equity Research earlier this week upgraded MARK stock to a “strong buy” following several pieces of good news related to the company and an upwardly revised earnings estimate. Remark Holdings now expects to earn -19 cents per share for the fiscal year ending on Dec. 31, 2020. While still negative, the revised earnings estimate represents a year-over-year improvement of 63.5%.
MARK Stock Is Built for the Global Pandemic
The main reason people are bullish on Remark Holdings is its potential role in helping the global economy emerge from the Covid-19 pandemic. Remark Holdings makes thermal scanners that can detect if people have a fever.
The consensus among medical professionals is that thermal scanners will be instrumental in helping to reopen economies around the world. They will also be helpful in preventing a second wave of the coronavirus from overwhelming healthcare systems and sending us back into government-imposed lock downs.
Already, Remark Holdings thermal scanners are being used in the company’s home state of Nevada. Orders are coming in from as far away as China. Moving forward, Remark’s thermal scanners could be used to determine people’s body temperatures everywhere from airports and schools to restaurants and sporting events.
The potential for Remark Holdings to play a big role in the global recovery from Covid-19 has caught the attention of investors, who have sent MARK stock as high as $3.40 a share. While the stock has come off those highs in recent trading sessions, it might not be long before it goes on another run.
Dr. Oz and Oprah
In addition to excitement surrounding Remark Holdings thermal scanners, the company has also garnered attention for taking a stake in privately-held healthcare platform Sharecare. Based in Atlanta, Georgia, Sharecare connects people with medical professionals virtually through its “AskMD” platform and provides people with medical assessments and clinical diagnosis.
While Sharecare remains private today, there are rumors the company will eventually seek to list shares on a stock exchange through an initial public offering (IPO). If that happens, Remark Holdings’ stake in Sharecare could become quite valuable and further lift the company’s fortunes. While an IPO is speculative for the time being, the investment in Sharecare shows that management at Remark Holdings is serious about diversifying the AI and digital media company.
In addition to Sharecare, Remark also has a stake in Bikini.com, an online retailer focused on swimwear and accessories. The company also provides retailers with analytics data on their customers.
Speculation and Size Concerns
While Remark has received a lot of attention lately, the reality is that the company is still quite small and trades as a penny stock. Currently there is only one analyst rating on the company (a “buy” rating with a price target of $4.25 a share). There isn’t even an overview of the company available on Wikipedia, and Remark’s own website is sparse with information.
It’s also important to point out that Remark Holdings is unprofitable. The company posted a net loss from continuing operations of $23 million, or 52 cents per diluted share in the fiscal year ended Dec. 31, 2019. That was worse than the net loss of $18.6 million, or 48 cents per diluted share, posted for fiscal 2018. At the start of this year, Remark Holdings has only $300,000 in cash and cash equivalents on hand.
Given the size and financial performance of Remark Holdings, some market observers have chalked up the company’s stock price increase to speculation among day traders who are looking to cash in on the global pandemic and have sent stocks trading below $1 per share to an average gain of nearly 80% recently. Such speculation may give seasoned, long-term investors reason to pause before investing in Remark Holdings.
The Bottom Line on MARK Stock
Remark Holdings is not without risk. The company could use its patented thermal scanners to ride the Covid-19 economic recovery to new highs. Or MARK stock could crash in flames as speculative investors take profits and flee in droves. Time will tell which scenario plays out.
Cautious long-term investors may want to take a wait-and-see approach. However, given its relatively cheap price and the potential growth of artificial intelligence applications worldwide, MARK stock might be worth the risk for investors who have cash on hand and can stomach the risks.
As of this writing, Joel Baglole did not hold a position in any of the aforementioned securities.