About a month ago, after months of sliding lower, Remark Holdings (NASDAQ:MARK) became a hot play again among traders. Trading for less than $1 per share on Oct. 20, MARK stock zoomed to as much as $6.70 per share on Oct. 25.
What was the cause of this incredible rally? It may or may not have been the work of the meme stock community. It’s not for certain. I will say, given this stock’s relatively lower levels of liquidity, such extreme price moves aren’t out of the ordinary.
But whatever the reason, it didn’t last long. After making such “remarkable” moves in late October, it quickly gave back most of these fast gains. Trading for around $1.28 per share today, it’s clear short-term traders have made their exit. I wouldn’t count on them stampeding back into it out of the blue.
However, that doesn’t automatically throw Remark shares into the “avoid” pile. Taking a closer look, it’s clear this company has a lot more potential than many would give it credit for. As a diversified tech company with a heavy focus on artificial intelligence (AI), improved results could one day send it to much higher prices.
Having said all this, keep in mind that it will likely remain highly volatile. If you can handle that and have done your own research on the company and its varied operations, this may be a worthwhile opportunity to pursue.
A Closer Look at MARK Stock
You may be familiar with Remark Holdings as a stock. But you may be less familiar with its operations. Before discussing more about its future prospects, let’s take a closer look at its varied operations.
What do you get when you buy MARK stock? The company is made up of multiple operating units. One of them, KanKan AI, appears to be the one it’s focusing the most on right now.
Based in China, KanKan AI provides AI-based solutions like facial recognition, key point detection, and target recognition. It also has a wide range of customers. The sectors it serves include education, government, and retail. As you can see in recent press releases, this unit is steadily adding new contracts to its backlog.
Along with KanKan AI, the company also holds equity positions in several digital ventures, including a Chinese media business. Additionally, they hold an interest in Bikini.com, an e-commerce site. This includes another investment that could play a big role in the company’s overall success going forward.
Remark Has The Growth Capital It Needs
Given its volatile trading history, you may believe that MARK stock is some sort of floundering operation. Nothing could be further from the truth. Yes, the company continues to post operating losses. This will likely remain the case as it scales up KanKan AI.
In the most recent quarter (ending Sep. 30), the company posted an operating loss of around $6.7 million. Year-to-date in 2021, the company has posted operating losses of around $12.8 million. But I wouldn’t worry about it not having enough cash to keep the lights on anytime soon. Why? Its other digital investment that I mentioned above: a 4.4% stake Remark holds in Sharecare (NASDAQ:SHCR).
Valued at $77.6 million (as of Sep. 30), this asset is large compared to the company’s overall market capitalization (around $138 million). By monetizing this asset, the company could plow the proceeds into KanKan AI and other opportunities. With this, it could grow its operating business and finally get out of the red to the point of consistent profitability.
That’s not to say this will happen quickly, if at all. But if it plays out like this, the same investors who have recently bailed on it could come back in a big way, willing to bid up shares to prices far above where they change hands today.
The Verdict on MARK Stock
As a small-cap company working to get its main operating unit off the ground, it goes without saying this is a risky play. Expect it to continue to have the same sort of high volatility that was on full display with its recent six-fold rally and the subsequent over-80% price decline.
However, thanks to the capital it could unlock from its stake in Sharecare, it has more than enough cash on its hands to expand its operations. I recommend you take a closer look at this company before you decide to enter a position.
If you still like what you see after conducting your own due diligence, consider MARK stock to be a worthwhile speculative play for your portfolio.
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On the date of publication, the author did not hold (either directly or indirectly) any positions in the securities mentioned in this article.