Arguably, the unfocused, disjointed cryptocurrency-mining firm SOS (NYSE:SOS) is one of the most heavily criticized investments on InvestorPlace. To be clear, each contributor on the platform has their unique take on SOS stock. Therefore, I’m not speaking for everyone. Nevertheless, you must dig deep to find a decisively positive take, if one even exists.
Push comes to shove, if I had to propose an optimistic argument for SOS stock, it would come down to the fact that centralization has its own strengths. Yes, crypto and blockchain proponents will proclaim to the heavens the beauty and the brilliance of decentralized financial networks. But decentralization necessarily requires self-responsibility as the term also denotes deregulation. For millions, that’s a problem.
For instance, a recent poll indicated that “memorizing passwords is so difficult that two in three respondents (65%) say they will forget it unless they write it down somewhere. More than half of Americans say they have to execute at least five password resets each month on average; spending at least 10 minutes each time doing so.”
Now here’s the rub. If you’re a true crypto proponent, you need to do whatever it takes to memorize your password. You forget, you lose everything. Yet Americans (and I’m sure citizens of other nations) consistently require a centralized service to remedy their memory. Certainly, that makes crypto-related investments like SOS stock attractive.
And don’t make the assumption that forgetfulness in mundane or inconsequential digital accounts doesn’t translate to crypto markets. As The New York Times once mentioned, lost passwords have locked millionaires out of their Bitcoin fortunes.
Believe me, if it can happen to these folks, it can happen to all of us.
Luckily, if you forget your password to the account holding your stake in SOS stock, you just need to undergo an automated recovery process. So there’s that.
SOS Stock Looks Like a Perennial Losing Bet
But the problem is, that’s about the only thing that there is to like about SOS stock. If you forget your password, you can get back into your account. Or, if you happen to get hacked, you can report the incident and procedures are available to redress this criminal activity.
Centralization received a bad rap as folks went crypto crazy but it’s not deserved. You get unprecedented confidence, security and insurance with centralized protocols tied to reputable government agencies. It just costs more for that security; hence, the high charges for wire transfers as opposed to crypto transfers.
But centralization is not an exclusive benefit to SOS stock and it’s largely where the positive argument for the underlying mining firm ends.
As our own Stavros Georgiadis, CFA, mentioned, SOS bills itself as a crypto miner, artificial intelligence-based services provider and an insurance market business, apparently. How will these disparate divisions work out in the future?
“I do not know, but I do not consider this mix of business activities a positive,” wrote Georgiadis. “On the contrary, it increases the riskiness of the company overall.”
Stop right there. If a chartered financial analyst is at a loss for words regarding the sensibility of a business strategy, then you’re probably not going to receive lucid intelligibility from a lesser-educated source. And while I like to view myself as an out-of-the-box thinker, I’m not finding any redeemable quality in SOS stock, other than the tired and boring centralization-as-an-asset argument.
Again, not that’s a bad argument but it’s not specifically tied to SOS. You can find any number of crypto miners that can offer you a credible business and fiscal resilience that won’t have you stirring in your sleep.
Avoid Getting Trapped in Technical Gyrations
To be fair, I did notice that in recent sessions, SOS stock appears to have bottomed. Theoretically, extreme risk-takers can take a bet that sentiment will again return to the mining firm.
However, investing in miners right now is a huge risk considering that these stocks have already priced in the gargantuan expectation for higher digital asset prices. That means if the blockchain market crumbles, it will be devastating to the mining firms that invested big dollars for expanding their rigs’ capacity.
Plus, I believe there are some nagging questions about whether SOS is on the up and up regarding its claimed capacities. Therefore, the smart bet is to simply avoid it. But if you do engage, caveat emptor.
On the date of publication, Josh Enomoto 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.
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.