Remark Holdings Update – Q4 Results Tomorrow Morning

March 28, 2018 at 3:31 pm 1 comment

With the largest short interest in Remark company history (3.54m as of Monday afternoon’s most recent NASDAQ report) outstanding, tomorrow’s full year earnings report and conference call should be interesting. Remark management has largely been muzzled over the last few weeks leading up to this report and we will get to hear from CEO Shing Tao for the first time since the company’s initial response to the ridiculous short seller report accused him of trying to steal Kankan while also claiming that Kankan and Remark’s other businesses are “not really there” (do not exist). While the content of that report was clearly ludicrous, the effect it had on Remark’s stock price was very real and the stock still trades in a range 25-30% below the range it traded prior to the short seller report despite very significant good news in the form of the company’s most significant AI deal to date with its CP Group contract to equip over 11,000 7-Eleven shops with Kankan technology.

We expect Kankan’s results and forward guidance to be the key driver of investor sentiment. Kankan is expected to produce approximately $2.7m in Q4 revenue, pushing the full year total to $6m. We are hoping for update on the Q1 revenue trend for Kankan and expect to see sequential growth over Q4 suggestive of a growth trend that will allow the company to achieve its $30m projected revenue run rate. We are also hoping that management will provide more color on the expected revenue implications of recent deals including the 7-Eleven partnership with CP Group.

Remark’s Vegas.com business is expected to show some impact from the tourism disruption following the mass shooting incident that occurred October 1. Management previously indicated an expectation of supplier cancellations in the wake of that tragic event and an impact in the $500k range below their previous estimates. We will be interested to see if Remark’s tourism business has been able to get back on track or if there is still some lagging impact. We believe the Q1 to date trend with the tourism business will be much more important than the Q4 figures with investors focusing on management’s outlook on the company’s ability to achieve its previous guidance of $325m in gross bookings generating $65-$75m in revenue. As for the company’s other businesses including Bikini.com, IRS.com and Fanstang, we do not believe that the revenue contribution is significant enough to move the needle and we are not sure that these will be discussed on the call.

We believe that Remark in the low $7 range represents a tremendous value for both long term investors and short term traders. We cannot fathom how short sellers will be able to exit their positions without significant losses given the enormity of the outstanding short position and what we expect to be an increasing realization by investors that Remark’s Kankan business alone may be worth more than $10 per share. We believe the ever increasing disconnect between the value of Kankan’s business and Remark’s stock price may ultimately lead management to take steps that will lead to a fuller realization of the value being created there.

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Entry filed under: Uncategorized.

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1 Comment Add your own

  • 1. Colt  |  March 29, 2018 at 3:20 pm

    LOL – This company is a scam. I think this blog should steer clear of chinese companies as many are outright frauds.

    Reply

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