CleanSpark Inc (OTCMKTS: CLSK) sell-off has gained pace, even after management insisting they are well poisoned to continue delivering shareholder value. After an excellent start to the year that saw the stock rally by more than 100%, sentiments appear to have turned sour.
The stock has already shed more than 40% in value from this year highs. The sell-off has come on huge volume arousing concerns the stock could tank to this year lows. However, the company has served a string of updates that could go a long way in averting further slide of the stock.
Reports of an increase in new orders as well as backlog driven by a recent IP acquisition could shore investor sentiments on the stock. In addition, the company has touted a $900,000 contract with Bethel-Webcor that should strengthen its revenue base.
The company also boasts of a solid balance sheet, which provides a solid foundation for growth in 2019. CleanSpark has also sought to shore its sentiments in the market by confirming plans to list in a major national exchange.
Amidst a string of positive developments, the stock has continued to edge lower as part of an emerging downtrend. A violation of the $3.50 support level has since opened the door for short sellers to push the stock lower, with the next stop being the $3 a share handle.
A plunge below the $3 a share mark could result in the acceleration of the sell-off wave as the stock would have turned bearish. For CleanSpark to turn bullish, it needs to rise and stabilize above the $4.20 technical level.
CleanSpark is a technology company that provides energy software and control technologies. The company boasts of an integrated distributed energy management, control platform for energy generation. The company also provides turnkey microgrid implementation services.
Growing Sales And Equipment Backlog
CleanSpark has taken a significant hit after initially skyrocketing to highs of $6 a share. While the sell-off is a point of concern, there is no doubt that the company is doing well when it comes to the execution of its business strategy.
The company’s customer electrical equipment division appears to be doing well especially on the acquisition of intellectual property of Pioneer Critical Power early in the year. Following the closing, the company has delivered approximately $357,000 worth of custom electrical equipment to customers.
CleanSpark has also received new orders worth $438,000 set to strengthen its sells portfolio. The company’s custom equipment backlog has also increased to $3.9 million.
“These orders represent the ongoing demand for critical power systems that provide reliable, intelligent power to increasingly complex energy solutions. Our sales team is continuing to identify opportunities as we expand into this market segment. We anticipate reporting on new opportunities and further increases in our backlog in the upcoming quarter,” said CFO Zachary Bradford.
In addition to growth in the electrical equipment division, CleanSpark is also strengthening its growth metrics in the software division. The closing of a $5 million round of funding allows the company to strengthen its software team.
With an expanded team, the company intends to develop and release updated features of its mPulse and mVSO platforms. According to the Chief Executive Officer, financial stability allows the company to expand its team and streamline operations with a strong focus on revenue generation.
CleanSpark has also set sights on international markets as it continues to pursue new opportunities for growth. The company is currently serving as a technical consultant for an industrial park in Costa Rica, further affirming its international expansion.
The company has also set sights on the Brazilian market following the signing f of an MOU with VedantaESS.
“Our partners in Brazil are quite bullish on local market opportunities, and we’re pleased to be able to join a late stage development with our microgrid controller while also supporting their pipeline development with our advanced analytics capabilities,” said SVP of Projects for CleanSpark, Anthony Vastola.
While stock’s underperformance is a point of concern, it does not paint an accurate picture of the progress that CleanSpark has made as it continues to position itself as a technology giant. Growth in the electrical equipment division depicted by rising backlog orders attests to a company enjoying market acceptance.
Growth in the software divisions, as well as expansion into new markets, are other developments that affirm the company’s long-term prospects.
That said CleanSpark is an exciting pick as a long-term play, given the tremendous prospects of success in the technology sector.
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Disclosure: We have no position in CLSK and have not been compensated for this article.