Sometimes, I don’t understand America. From NASCAR to macaroni and cheese to wearing dirty shoes inside – and in your own home for goodness sake! – this is a strange land with strange people. Usually, it’s just superficial preferences so I don’t mind. However, with the case of Remark Holdings (NASDAQ:MARK), my lack of comprehension can have consequences. Here, it’s an opportunity cost in the form of MARK stock.
Early last month, I discussed my thoughts on Remark, a technology firm that shot to fame because of the novel coronavirus. Specifically, the company manufactures artificial intelligence-based thermal scanners. With the pandemic sweeping everywhere, there’s never been a greater need to quickly identify who possibly has Covid-19. And that’s exactly what Remark’s thermal scanners do – not only provide temperature readings but also in rapid-fire fashion.
However, I ultimately expressed skepticism about MARK stock. While the need is tremendous, it’s also ephemeral, relatively speaking. Sure, the new normal will dictate that people perform quick scans of patrons of large events and gatherings. However, I didn’t like the idea of holding the bag on what is essentially a penny stock.
But what really got me doubtful about MARK stock was the facial and behavioral recognition aspect of Remark’s business. Personally, I thought it was a tough sell to introduce a Big Brother platform to the American people. Furthermore, I was influenced by conservatives’ historical dislike for government overreach.
Back when Donald Trump was one of many candidates for President, Republicans routinely quoted George Orwell’s phrase to tap into conservative fears of an all-controlling, all-seeing centralized government. Surely, the American public would not want this mechanism, especially one that has strong connections to China.
Even the Political Winds Have Changed Favorably for MARK Stock
In 2015, a Pew Research Center report indicated that most Americans held strong views about their privacy. It’s not surprising. Many years ago when I was a corporate worker-bee, our company instituted “God’s eye” cameras in the work stations. None of my fellow employees favored it.
Plus, factor in the anti-China sentiment that has pervaded the full spectrum of American politics. I think you can at least sympathize with why I was pensive about buying MARK stock.
But then, the tragic death of George Floyd changed everything. Naturally, Black communities were up in arms over this egregious incident of police brutality. Thus, they protested, with social unrest continuing to this day.
Unfortunately, though, some bad actors infiltrated the protest movement, resulting in looting and random acts of destruction and violence. And with that, the narrative completely changed. As the Washington Post’s Joshua Tait argued, conservatives still want their limited government. But now, they also want aggressive policing.
Of course, with protests occurring throughout the country – and spilling over internationally – law enforcement agencies have limited human resources to address every act of insurrection, if you will. Therefore, the concept of facial and behavioral recognition will likely have a positive tone, at least among conservatives.
In other words, surveillance for thee but not for me.
It also potentially helps MARK stock in that competitors have dropped out of the facial recognition business. As InvestorPlace contributor Larry Ramer notes, Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) have halted sales of their facial recognition platforms to law enforcement. Ramer argues that “Remark can fill the void by selling its cameras to such entities.”
Based on where we are societally, he’s absolutely right. But does that mean MARK stock is a buy?
It’s Still a Cautious Case
Despite the turnaround in Remark’s fundamentals, I’m still cautious about MARK stock. At the end of the day, it remains a speculative bet. The idea of surveillance is a tricky subject for people across the political divide. We may have another shift here that could then unravel this narrative.
And that would lead us to Remark banking on the coronavirus. Yes, rising cases have made this plot line great again. Still, concerns exist. Namely, we have to wonder about the true effectiveness of these scanners. Also, detecting a fever isn’t a clear-cut sign that someone has Covid-19. It’s possible to wrongly quarantine someone with heat exhaustion, for example, if running hot became the standard bearer of coronavirus detection.
Therefore, my idea is this: if you must gamble on MARK stock, do so rationally and with money you can afford to lose. Otherwise, you may want to sit this one out.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.