A lot has been happening at MGT Capital Investments Inc (OTCMKTS:MGTI), most of it having negative repercussions on them.
The year has seen the firm operate in a very bearish manner. This, attributable to a number of events, has caused their share price to plummet drastically, driving down the value to their shareholders. Over this period – trailing twelve-month period – the firm’s share price continued to dwindle, and drastically so. This followed a period of massive sell-off back in late 2017 and into early 2018 after which the price of the stock began plummeting and never recovered since.
Readers can review the above-mentioned price action in the chart below:
However, the past 24 hours have seen the price direction change. The firm which has operated in the red zone over the past year has taken a drastic turn to the green zone in price. During this period, the price has moved from a low of $.082 to their current price of $.15, a near 85% surge. Furthermore, the number of shares traded during this period has also risen to over 17 million, significantly higher than the average number which stood below 5 million.
Readers can also review this price action in the chart below:
This, speaking to momentum being experienced by the stock especially during a period of turbulence – discussed later in this piece. Therefore, we opted to take a look at MGTI and evaluate what has been happening in the company prior to offering an outlook as to the expected future prospects for individuals hoping to invest in the firm.
History of MGTI
MGT Capital Investments Inc was founded back in 1979 and was headquartered in Durham, North Carolina. Since then, it had undergone significant morphosis and between 2013 and 2016, it prided itself as being engaged in the acquisition, development and monetization of assets in the online and mobile gaming space. The firm thus also operated in the social casino industry at the time.
However, since the rise in the cryptocurrency market, the firm began mining the coins with a specific incline towards Bitcoin. Currently, they operate both within Washington State and Sweden as one of the largest United States Bitcoin miners. They own about 6,800 Bitcoin S9 miners as well as 50 GPU-based Ethereum rigs. Currently, the firm is working towards its expansion model so as to reduce costs as well as grow its cryptocurrency assets materially.
As previously stated, the firm has been experiencing a bit of turbulence over the past few months. However, there has been a lot the firm has also done to ensure they stay afloat. This segment reviews the two and goes further to conclude on the firm’s future prospects.
The Venture into Cryptocurrencies
MGTI chose to venture into the cryptocurrency space during a period when the currencies were most wanted in the market. This sector provided them with the ability to grow their capital gains significantly especially given that the market was them swarming with investors. This was especially so for Bitcoin which grew by over $10,000 in price over a one-year period.
The firm has been conducting mining activities over this period. This has ensured that they make significant revenue – discussed later. However, courtesy of the fluctuating Bitcoin prices in the market, the firm has been negatively affected by market risk. This has affected the revenue thus their profits.
Despite this and other problems faced by the firm, they have continued to place emphasis on this venture. Earlier last month, they went ahead to announce a partnership with MMH Blockchain Group which would provide them with advice in relations to public relations and marketing. The move was especially necessary to ensure the brand remained strong during this time. MGTI seeks to remain steadfast in their quest to dominate the blockchain market.
In support of the later, their Chief Operating Officer, Mr. Stephen Schaeffer was quoted saying:
“We will not be distracted in our mission to grow our cryptocurrency mining operations. We have been analysing several low-cost energy opportunities in the U.S. and Sweden and look forward to updating shareholders more fully in the near future.”
The Legal Quagmire
Currently, one of the biggest headaches affecting the firm is the legal battle currently being faced by the firm. A class action lawsuit was filed by Pomerantz LLP against MGT Capital Investments Inc and other defendants. The lawsuit covers investors in MGTI who are seeking compensation for the defendants’ violation of federal law.
The lawsuit charges Barry Honig who chose to invest in MGTI, engage in a misleading stock promotion which led to a surge in the company’s prices and eventually dump the shares at a profit. Honig further hid their control over the company and perpetuated the firm’s control was still held by the CEO. The result, among other things, was that the firm was delisted from the NYSE securities exchange. As a result of the above, there have been a lot of upheavals in the firm. First was the restructuring of the firm where some of the previous managers left pending the case and new managers were brought in.
The aforementioned uptick speaks to some form of redemption expected of the firm as they work towards beating this case. It may allude to some investors believing in the recovery of the firm and expectations that they will win this case. However, there is a lot that’s at play. Given their investment in the cryptocurrency space, the firm is prone to market risk. With the movements in the market being volatile, their share price is prone to similar fluctuations as well. However, upon the stabilization of the market, the company will have grown. Thus, if this case is won, the firm is poised for growth.
The path for MGTI seems pegged on a specific case. The firm is working tirelessly to ensure they come out on top and have made significant changes to ensure this happens. Given the latter, we believe that their long-term prospects, similar to their current price movements, look only upwards.
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Disclosure: We have no position in MGTI and have not been compensated for this article.