Today, investors in Support.com (NASDAQ:SPRT) and SPRT stock are seeing another green day. Indeed, the fact that shares of this customer and technical support software company held a majority of yesterday’s gains is impressive.
Shares breached their 52-week high on impressive volume yesterday, shooting higher after an update on the company’s pending merger with crypto miner Greenidge. That said, shares still remain approximately 25% below yesterday morning’s peak on this news.
Investors appear to be intrigued by the fact that Support.com has indicated it is on track to complete this merger. Given the difficulties various mergers — particularly special purpose acquisition company (SPAC) mergers — have been seeing of late, this is very good news for investors bullish on the transaction. In the update, Sept. 10 was the announced date for the upcoming shareholder vote on this deal.
Let’s dive into why investors are so bullish on this transaction.
SPRT Stock Higher on Pending Merger
The upcoming merger with Greenidge is something of an intriguing move for Support.com. Indeed, crypto-mining plays have been highly volatile, though a winning bet of late. Investors betting on SPRT stock are making an implicit bet on a robust outlook for crypto-mining stocks moving forward.
However, according to the initial press release on this deal, it appears there’s reason to like Greenidge in this space. Among the key factors investors are digesting is the fact that Greenidge has a wholly owned power plant supporting its operations. This appears to have improved this miner’s unit economics, with relatively robust financials of late.
Greenidge reported it expects to end the 2021 calendar year with $50 million in EBITDA (earnings before interest, taxes, depreciation and amortization). The company expects this run rate to improve to $160 million by 2022. As part of the deal, Support.com will provide $33 million to the combined entity. At closing, it’s expected investors in SPRT stock will have 8% of the merged company.
With this deal set to close in Q3, investors betting on a bright future for crypto miners are getting in today. Indeed, this likely remains a highly volatile bet from here. However, aggressive investors seem to like the risk-reward with this trade today.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
