Market Overview

Remark Holdings Refutes Accusations Of Shareholder Deception

Remark Holdings Refutes Accusations Of Shareholder Deception

One financial analyst didn’t pull any punches Tuesday in calling out Remark Holdings, Inc. (NASDAQ: MARK) as nothing more than smoke and mirrors and warning investors the stock has significant downside.

J Capital Research analyst Anne Stevenson-Yang said a generous valuation for Remark is about $2.23 per share, well short of the stock’s current $6.95 share price.

The Thesis

Remark has changed its business strategy so many times that it’s difficult to keep up with its latest ventures, according to Stevenson-Yang. She said the company repeatedly releases press releases boasting of major future developments without ever delivering tangible results. Much of this promotion has to do with Remark’s business in China, where the company claims it has developed language recognition software, 3D face recognition technology and big data analytics software.

“MARK claims to be a major player in credit checks, but some of the biggest private lenders have never heard of the KanKan credit platform and say they wouldn’t use it if they had,” Stevenson-Yang wrote.

She also said Remark management has a long track record of making unverifiable claims about patent applications, the popularity of its platforms, and its business relationships with other companies.

“The real driver behind share appreciation seems to be that management is looking to cash in on options,” Stevenson-Yang wrote.

After conducting in-depth research on the business, Stevenson-Yang said investors should value Remark’s China businesses at $0.

In a statement on Wednesday morning, Remark refuted the J Capital claims.

“"The claims made in the J Capital Report are completely false and unsubstantiated," CEO Kai-Shing Tao said in the statement. "It's unfortunate that we have to even respond to such baseless accusations, but we believe it is necessary to prevent this cowardly attack from creating further damage to Remark's strong, hard-won reputation as a global technology leader.”

Price Action

Remark stock plummeted more than 24 percent Tuesday, but has bounced back by 6 percent in Wednesday morning trading.

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Latest Ratings for MARK

Oct 2016Roth CapitalInitiates Coverage OnBuy
Jul 2015Maxim GroupInitiates Coverage onBuy

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