On May 28, Remark Holdings (NASDAQ:MARK) released Q4 FY19 earnings results. MARK stock was a penny stock at the end of April, closing the month at 46 cents. On May 27, it hit a 52-week high of $3.56.
As I write this, it is hovering at $2.40. Therefore, today I’ll take a closer look at MARK shares and determine if long-term investors should consider investing in the stock.
How the Quarterly Results Came
Remark Holdings specializes in artificial-intelligence (AI)-based solutions for businesses and software developers. The company’s AI platform is named KanKan. According to Reuters, “KanKan offers various solutions, such as retail intelligence and customer analytics solutions, FinTech risk analysis and lead acquisition solutions and workplace and public safety management solutions.”
The website further highlights that the company “… owns and operates digital media properties that deliver relevant, dynamic content. The company is headquartered in Las Vegas, Nevada, with additional operations in Los Angeles, California and in Beijing, Shanghai, Chengdu and Hangzhou, China.”
Its market cap currently stands around $132.5 million. The results showed that revenue for FY 2019 was $5 million, down from $10.1 million during fiscal 2018. Due to regulatory changes in China regarding FinTech services, it saw a revenue decline of $3.7 million.
Total cost and expense for 2019 was $27.8 million, a decrease from the $54.6 million reported in FY 2018. The decrease is primarily attributable to a $12.4 million decrease in stock-based compensation expense including a large grant to the company’s CEO in 2018.
Net loss from continuing operations totaled $23 million, or 52 cents per diluted share in the fiscal year ended Dec. 31, 2019. A year ago, the numbers had been $18.6 million or 48 cents per diluted share.
And finally, on Dec. 31, 2019, cash balance balance was $0.3 million, compared to a cash position of $1.4 million a year ago.
Put another way, the metrics showed a company position that has fundamentally deteriorated within the past year.
Can MARK Stock Stay Over $2?
Although it was a penny stock until recently, in 2007, MARK stock was over $100. In 2006, HSW International was founded as a subsidiary of HowStuffWorks. As per the SEC filing in 2007, it then merged with INTC International.
However, by 2008, it was down to $25. By 2009, it was below $2. Then 2014 saw MARK stock go over $10. And to the delight of many investors, it spiked over $15 in 2018. But by the summer of 2019, it went below $1.
For long-term investors, MARK stock has obviously not been a good or reliable investment. Yet the recent jump in price is making many people wonder if their fortunes might be turning around.
On April 30, the company released a statement highlighting that there has been increased interest in its thermal imaging devices that are used to scan people’s temperatures on the go. The company said it has shipped products within the U.S. and to Japan. However, there were no more details on who these customers were or the size of the (potential) orders.
Yet following the news update, MARK stock jumped to levels it has not seen in a long time.
In the recent quarterly results, management also said that as part of 2019 business developments it has entered into agreements to provide similar temperature screening solutions in China, too. Once again, there was not much detail in terms of potential revenue figures.
Management also puts regular updates on its company account on Twitter (NYSE:TWTR). Since the release of the quarterly result, there has been profit-taking in the shares.
The Bottom Line on MARK Stock
Investor mood ebbs and flows with news headlines regarding the COVID-19 pandemic. Meanwhile, investors are not shy to put risk capital into small stocks that would not have been on their radar in a pre-coronavirus world.
If you are a long-term investor, you may want to see more specifics, i.e. customer and order details, on Remark Holdings’ recent business updates that have helped push MARK stock to a 52-week high. Most investors would also like to learn more about the Chinese operations and business developments.
Otherwise, it may be a speculative investment. In case there are no tangible customer orders that would bring in meaningful and sustained revenue, MARK stock may become a penny stock again in a few years. Therefore, if you currently hold paper profits, you may want to take at least some of them off the table.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities.
