HyperBlock Inc (CNSX:HYPR) has bounced back from all-time lows after coming under immense pressure from short sellers. Investors could heave a sigh of relief, as a surge of 50%, could as well trigger a bounce back from all-time lows. However, the stock is still down by more than 90% from this year’s highs.
HyperBlock Price Analysis
A lack of new updates needed to gauge the company’s long-term prospects remains the biggest headwind. Short sellers have continued to push the stock lower, on the company failing to reiterate long-term prospects. The last piece of information came in October when the company announced management changes and plans to launch a custodial storage product.
HyperBlock needs to serve a string of groundbreaking catalysts, to prevent a further slide in the stock especially after the recent bounce back.
The stock is currently hovering at the CA$0.045 level despite a 50% bounce back from all-time lows. A closer look at price action, it is clear the stock needs to rise and stabilize above the CA$0.1 mark if investors are to consider it a long-term play.
Above the CA$0.1 mark, the stock should be on its way to the CA$0.2 mark, seen as the next substantial resistance level. Below the CA$0.1 mark, the stock remains susceptible to further declines; amidst the recent 50% spike as short sellers remain in firm control. On the downside, the stock faces immediate support at the CA$0.03 mark, below which short sellers could push the stock lower.
What Does HyperBlock Do?
HyperBlock bills itself as a diversified crypto-asset company operating one of the largest and most efficient cryptocurrency data centers in North America. The company strives to help people and businesses create, safeguard and manage crypto assets. Its offerings include server hosting, server hardware sales as well as Mining-as-a-service and proprietary Custodial vault product.
Crypto Custodial Product development
It is still unclear what triggered the 50% rally after a period of consolidation, on the stock coming under immense short selling pressure. The last time when the company was on the news, was when it announced management changes as it sought to streamline its operations. The company also announced it was on schedule on the launch of a crypto custody product.
The company also confirmed successful exit of four Canadian locations as it continues to execute its consolidation plans in Eastern Canada. The exit was part of a plan that sought to weather the difficult market condition as the company continues to pursue lower and efficient power costs.
According to the Chief Executive Officer, Sean Walsh, they remain on course to launch a proprietary crypto custodial solution before the end of the year.
“A key pillar in our diversified vision to build long-term value for HyperBlock shareholders is the development of a proprietary crypto vault solution for banks and institutional investors, which HyperBlock expects to launch later this year,” said Mr. Walsh.
HyperBlock also confirmed the appointment of Brent Arsenault as the interim Chief Financial Officer. He joins the company with in-depth experience in matters public markets as well as business ethics and philosophy of prudence.
Q2 Financial Results
HyperBlock did deliver impressive Q2 financial results helped by its increased focus on cost reduction and capitalization of post-merger efficiencies. EBITDA in the quarter came in at CAD$3 million awaiting to see the kind of results it will report for the third quarter. The company ended the quarter with revenues of CAD$10.1 million.
According to the Chief executive officer, the company remains well positioned to navigate challenging market conditions thanks to its diversified business. When it comes to operational efficiency, the company has already begun the first phase of a 20 MW upgrade as it seeks to double the capacity of its U.S data center.
However, the company’s top priority is coming up with a custodial storage solution that it plans to use to target institutional investors.
HyperBlock has taken a significant hit in the market over the past four months. While the stock has bounced back, it is still languishing near all-time lows. The underperformance, however, does not paint a clear picture about the company’s long-term prospects.
The company has every reason to succeed going forward. The unveiling of a crypto custodial solution should get things rolling as it will allow the company to target institutional investors. When it comes to price action, it might be wise to wait for the stock to rally and stabilize above the $0.1 mark to consider it a long-term cryptocurrency play.
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Disclosure: We have no position in CNSX:HYPR and have not been compensated for this article.