MARK Stock is gearing up for an epic short squeeze. Just before the weekend, Remark Holdings dropped huge news on Twitter that the company is working with Intel.
— Remark Holdings (@RemarkHoldings) October 23, 2020
The news dropped just before the last hour of trading and as you can see, the news created a lot of excitement. More importantly, it was done on a Friday just before the market closed with the goal of catching the shorts off guard.
We love this move as the shorts have been piling on and trashing MARK stock all summer. We believe the recent news is the start of a new bull run in MARK that will reward shareholders that stuck with the company through the nonsense that drove shares to under $1. In this article, we at Insider Financial take a look at the bull case for MARK stock and why we believe shares are heading to new highs.
First up, here’s a little background info for those looking at MARK stock for the first time. Remark Holdings, Inc. delivers an integrated suite of AI solutions that enable businesses and organizations to solve problems, reduce risk, and deliver positive outcomes.
The company’s easy-to-install AI products are being rolled out in a wide range of applications within the retail, financial, public safety, and workplace arenas. The company also owns and operates digital media properties that deliver relevant, dynamic content and e-commerce solutions.
The company is headquartered in Las Vegas, Nevada, with additional operations in Los Angeles, California, and in Beijing, Shanghai, Chengdu, and Hangzhou, China.
MARK Stock Short-Sellers
Short-sellers in MARK stock have been led by Dan David of Wolfpack Research. He laid out some very damning allegations on Twitter.
1/ We are short $MARK because we believe it is defrauding investors and customers alike. Its thermal kit appears to be relabeled from Hikvision, a blacklisted Chinese SOE. $MARK doesn’t own KanKan in China and had its Sharecare stake repossessed in Jan '20 https://t.co/5Wp4euZwJC
— Wolfpack Research (@WolfpackReports) August 11, 2020
However, the company has refuted and denied all allegations. For those asking, why are we bringing this up, it’s because when you invest in a company, you need to have all available information at your fingertips. If someone is bearish on a company, you at least want to hear them out because the allegations may have merit and you can get out and avoid a total loss.
However, with MARK stock, this is not the case. The assertions by Dan David have been pure short and distort with the sole purpose of hurting MARK stock and its shareholders. We hope the SEC will one day put a stop to these types of tactics because they enrich short-sellers at the expense of shareholders.
As you can see from the chart below, Dan David issued his report when MARK stock was $2.
MARK Fights Back
MARK came out and denied all the allegations. Here is what the company said:
- Wolfpack Research’s key allegation is that we do not actually own shares of Sharecare as we report in our filings with the Securities and Exchange Commission. Such an assertion is absolutely false. As of June 30, 2020, we owned approximately 4.5% of the issued shares of Sharecare and our CEO, Kai-Shing Tao, occupies a seat on Sharecare’s Board of Directors. Additionally, as of this writing, the litigation that we previously reported in our SEC filings that could have potentially resulted in our loss of control over the investment in Sharecare has been resolved, as we recently paid in full all amounts owed in satisfaction of the judgment entered into against us during the litigation.
- Remark never ceased to own its approximately 4.5% Sharecare stake, as the ability to settle the legal matter without loss of control of the Sharecare investment was always under our control. The payment in full of the underlying judgment against Remark means that there is no longer any basis for the potential seizure of the Sharecare investment owned by Remark.
- Wolfpack Research alleges that we must not have control of our China subsidiaries that we report, for accounting purposes, as variable interest entities (VIEs) simply because we did not publicly disclose the contents of the contracts that give us control over the VIEs; the allegation is simply wrong. We have standard VIE contracts in place, including related loan agreements, that were drawn up and executed several years ago with the assistance of Arnold & Porter, an internationally well-regarded law firm. VIE control may not be the same as direct equity ownership, but it is a very common framework with Chinese companies controlled by foreign entities. In fact, Alibaba, Tencent, Netease, JD.com, and Baidu are some of the many examples of major companies that have structured their China business using VIEs.
- Though we initially sourced cameras and other components from various third parties, including HIKvision (whose cameras are still readily available on websites like Amazon.com), we never shared any of our AI technology with them nor did HIKvision at any time have access to our technology.
- We are now an original design manufacturer for our thermal cameras and thermal pads. We design the cameras and pads and have hired a contract manufacturer to produce the products. The manufacturers build according to our design and specifications, which is why the products are now Remark-branded products. Remark has always maintained control of the technology and intellectual property.
- Regarding our investment in AIO, we originally planned to invest $1 million in the company, but after funding $500,000, we determined that we would need to work with AIO to improve their results before we further funded the company. One of our China subsidiaries subscribed for AIO’s 20% equity interests at a post-money valuation of $5 million and paid in $500,000. In connection with that, AIO increased its registered capital from one million Chinese Yuan to 1.25 million Chinese Yuan, and the difference between $500,000 and 250,000 Chinese Yuan was deposited to the capital surplus account which is not reflected as AIO’s registered capital. Such a transaction is very typical. The comment from Wolfpack regarding our China subsidiary’s capital contribution based on their purported review of the SAIC filing is flawed and seems intended to mislead or confuse Remark’s investors.
- Finally, they allege working capital and cash issues, each of which we address in every one of our SEC filings over the past few years, but they inaccurately calculate working capital and they do not provide any source material, other than referring to obtaining tax documents in China, that would allow us to refute their inaccurate assertion that we do not consolidate our Chinese subsidiaries under GAAP. We are a public company with well-regarded auditors who regularly review and audit our financials.
- As of June 30, 2020, our cash balance exceeded $10 million and our debt had been paid down substantially.
REMARK HOLDINGS THERMAL TECH
With COVID-19 running rampant, there is a strong demand for thermal imaging tech. Remark’s Thermal Imaging is used to scan high traffic areas to detect individuals with higher than acceptable skin temperature and track the subject for secondary screening. Each of the Thermal Imaging products is customizable and can operate as a standalone or integrated into centralized control systems, specific to the needs of the customer.
The coronavirus outbreak and a difficult flu season highlight the utility of KanKan AI’s thermal detection technology, as increased body temperature is a common symptom that allows for early detection of flu and other contagious diseases where widespread transmission is a concern. The new and improved capabilities of KanKan AI’s Smart Monitor technology allows for non-contact fever screening, which is more efficient and faster than manual methods and which reduces the risk of cross-contamination from human contact.
Smart Monitor’s facial recognition, which includes mask detection, may also be used to enforce compliance with health and regulatory laws on a real-time basis. The upgraded technology, when combined with Smart Monitor’s existing capabilities, allows for traffic monitoring, crowd monitoring, intrusion detection, and other monitoring and detective functions, and could allow public safety managers to operate with more efficiency, to reduce manpower, and to increase public safety.
Hotels, casinos, stadiums, schools, government agencies, shopping malls, airports, and every other public venue that you can think of is going to need Remark technology.
$50 MILLION CONTRACT
Remark Holdings signed a deal over the summer for its KanKan AI with Hanvon Technology, a publicly listed Chinese systems integrator. The two companies successfully won the second phase of China Mobile’s Smart Telecom Operator Store Project.
The project is expected to be delivered over the next two years. Phase 1 includes the upgrade of more than 17,800 stores across the entire country and is valued at $50 million to Remark. The second phase of the project will deliver an additional several million dollars to Remark resulting from a multi-year recurring software license for the new software application modules.
MARK Stock Bottom Line
Currently trading with a market cap of $150 million, MARK stock is a steal at these levels. This is the first time Remark and Intel are selling their technologies together. This is the first collaboration of many, many more to come. Furthermore, Remark’s 4.5% stake in Sharecare keeps getting more valuable.
“Our ownership in Sharecare continues to grow more valuable each quarter, especially in light of Teladoc Health’s recent acquisition of Livongo Health for $18.5 billion, which validates Sharecare’s strategy of creating a platform versus a point solution,” said chairman and CEO Kai-Shing Tao.
About five to six months ago, Remark’s stake in Sharecare was valued at around $200 million. With the stake continuing to increase in value, the new Intel collaboration, and its thermal tech business, MARK stock is a discount entry opportunity. Shares won’t remain this cheap for much longer, especially as the shorts scramble to cover and get burned by MARK. Payback is coming!
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in NASDAQ:MARK or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.