Tiny Remark Holdings (NASDAQ:MARK) is one of the most scintillating stories among investment ideas related to the novel coronavirus. MARK stock price action confirms as much. Just look at the second-quarter gain topping 620%.
Underscoring just how impressive its run has been and how volatile the name can be, gains by MARK stock come despite the fact that the company’s name resides about one-third below its 52-week high, which was notched last month.
For the uninitiated, the Remark 2020 story goes something like this, and yes, this is an abridged version. The company and the share price rose from obscurity to talk of the low-price tag stock world because of Covid-19. Specifically, Remark frames itself as an artificial intelligence company. Alone, that would be enough to pique some investors’ interest because AI is a credible investment concept and one that’s rapidly expanding.
Wait. There’s more. Remark produces a thermal imaging scanner that consumer-facing businesses can use to test visitors before they enter the property. Again, on a standalone basis, that’s certainly something to get investors interested in a company in this climate.
Trust Goes Beyond Attractive Themes
In simple terms, AI is hot. So is almost anything rooted in Covid-19 defense and testing. However, it takes more than sexy themes to make a great company or even a profitable one.
As one of my InvestorPlace colleagues recently pointed out, and this is vital for those mulling Remark today, the company didn’t detail its AI-related revenue in 2019 and it hasn’t even released first-quarter results this year.
Adding to the mystery here is that there often isn’t much in the way of confirmation of new business for Remark, but there’s ample speculation.
MARK Stock Spikes
Here is a quick history lesson. The stock spiked in early May when a trader took to Twitter saying Wynn Resorts (NASDAQ:WYNN) was buying scanners from Remark in advance of the Las Vegas reopening. That Twitter user even posted a copy of an email from Wynn guest services directly mentioning Remark.
Here’s where things get more interesting. The same trader posted a picture of an effort by Wynn to rescind the message mentioning remark.
More recently, the @RemarkHoldings Twitter account has been somewhat active. The company posted tweets implying that it’s gaining business from other casino operators, including Caesars Entertainment (NASDAQ:CZR) and MGM Resorts International (NYSE:MGM). It’s plausible that between Remark being based in Las Vegas and the new safety protocols being implemented by casino operators that Remark is winning some business on this front.
I’m not saying there’s fibbing happening here. What I am saying is that it’d be instructive for investors if Remark could offer concrete confirmation about customers beyond Tweets. Aside from mentions of unidentified casino companies on its most recent earnings call, there is no clear confirmation that the company is providing products to any of the aforementioned gaming firms.
Bottom Line on MARK Stock
When talking about a company with a market capitalization of $240.47 million that’s up more than 600% in less than three months – the specs on Remark – risk has to be part of the conversation.
There’s risk that the company won’t drum up more new business. And, there’s risk that a Covid-19 vaccine will arrive sooner than expected or, conversely, that a second wave of cases will force another economic shutdown, rendering Remark’s scanners located at casinos useless.
Those points don’t mean Remark is a bad company, but they mean investors need to know what they’re getting into here. This is a stock that needs some babysitting, not a set-it-and-forget-it name.
Todd Shriber has been an InvestorPlace contributor since 2014. As of this writing, he did not hold a position in any of the aforementioned securities.