Remark Holdings (NASDAQ:MARK) is an unusual company. Although not widely known in the tech industry, it’s been in business since 2006 and MARK stock has been publicly traded since 2007.
Remark Holdings is involved in a variety of business lines. It’s a digital media company that operates banks.com and other websites. It has developed its own KanKan artificial intelligence (AI) system.
Most recently, it’s leveraged that AI technology in a thermal temperature scanning solution to detect fevers indicative of the novel coronavirus.
At this point, Remark Holdings stock is up 225% so far in 2020. That sounds impressive, but the full story is complicated and doesn’t look so positive for potential investors.
Thermal Temperature Scanning
Remark Holdings stock has been caught up in the excitement about anything related to a potential novel coronavirus pandemic fix. In this case, the ability to pinpoint people in a crowd who have a fever.
Remark Holding’s Remark AI Thermal Imaging solution promises to not only scan for fevers, but to leverage its AI capabilities to measure other critical information such as mask compliance among crowds. A penny stock that started 2020 at 62 cents, MARK suddenly surged starting in May on the promise of the company’s AI thermal solution.
That rumored adoption has yet to be confirmed.
MARK stock peaked at $3.40 on May 27, before suddenly collapsing. Trading was halted the next day after shares plummeted over 20% in value.
There are several problems with the focus on thermal temperature scanning.
First, virtually the entire biotech sector is focused on finding a Covid-19 vaccine. There’s no guarantee one will be found, and even then, it could take several years for the crisis to pass. But if and when that happens, thermal temperature scanning solutions like Remark’s will no longer be in the spotlight.
The other issue is that Remark Holdings is far from having the market to itself. Other companies like FLIR Systems (NASDAQ:FLIR) specialize in thermal imaging. Flir Systems, by the way reported $450.9 million in revenue in its last quarter, compared to $400,000 for Remark Technologies.
A Disappointing First Quarter
Remark Holdings reported Q1 earnings on July 6. That $400,000 in revenue for the water was down 200% year-over-year from the $1.2 million reported in Q1 2019. That resulted in a 27% one-day drop for MARK. Losses were cut from $5.9 million to $3.9 million, but that was primarily cost savings through layoffs.
Bottom Line on MARK Stock
For the first four months of 2020, Remark Holdings was a penny stock. The surge in its stock price started in May and is driven primarily by the company’s touch-free thermal scanning technology. That’s tied directly to the coronavirus pandemic.
There are two problems there. One is that — with any luck — the pandemic won’t last forever. The second is that there is plenty of competition for thermal scanning technology, including bigger companies like FLIR Systems.
We’ve already seen the volatility inherent in this combination, with MARK stock spiking and rapidly dropping based on rumors of a contract for thermal scanners. That volatility makes investing in Remark Holdings at this point a risky proposition. Throw in shareholder lawsuits now being filed against the Remark Holdings board of directors, and the rough ride seems likely to continue.
Yes, it’s possible MARK could claw its way back over $3 as it did in May. But since that time, it’s been trending in the wrong direction. At its current $1.69, a return to penny stock status is also a possibility.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.