I first wrote about Remark Media (MARK) on March 19th, and then again on April 23, revisiting my thesis. So far, the stock has not performed well, continuing to drift down from $6, all the way to $2.50, before bouncing back up to around $3.40/share at this writing.
There are a number of potential catalysts on the horizon that could quickly boost the stock price back over the $4.50/share. A secondary was done at earlier in the year.
The first catalyst is the valuation of the entire company. Currently, the market cap of Remark Media is about $22M. The major asset of the company is an 11.2% stake in Sharecare, which as a company has a valuation of $350M. That makes the 11.2% stake worth approximately $39M. Sharecare continues to make acquisitions, such as the June acquisiton of PKC, a provider of healthcare decision support software. Sharecare was co-founded by Dr. Oz, as well as a list of impressive partners (Harpo Studio, Discovery, Sony, etc.). Dr. Oz continues to receive publicity, as someone capable of driving traffic, including this article from the NY Times about his impact on magazine sales.
At the end of June, Remark closed on the acquisition of BNNX. Remark acquired two domains that are likely worth more than the 3M acquisition price. Those were Banks.com and IRS.com. Those are a traffic firehose that can be directed to the newly launched Dimespring.com. Compete.com information for Banks.com shows over 200K uniques per month. IRS.com was purchased for 11M in 2007. The Remark team intends to break this out as its own domain. Along with those domains, they acquired FileLater.com as well as a national broker security license. Traffic on Filelater.com spikes traditionally in April with tax season, as does IRS.com
Remark also has launched Dimespring in a soft beta, with a full launch with new partners coming soon.
Remark's financial position is also good for a relatively small cap company. As of March 31st, they had $4.2M in cash, enough to last for at least 12 months. The last cash raise, done for Remark, was at $4.50/share to a variety of sophisticated investors. That implies that once the issuing of new stock is done as part of the merger, and the market is familiar with the look of the new organization, there's an opportunity for a quick move.
Also, intriguingly, Remark owns the international rights to How Stuff Works content (owned by Discovery) in China and Brazil. Discovery paid $250M several years ago for the entire company, so there's the possibility that they'll acquire the remaining international rights. At the very least, it ensures ongoing interest from Discovery corporate headquarters in Silver Spring, MD.
With the quarter just closed on June 30th, there should soon be an opportunity for the new investor-friendly management to release information on the company with the Banks.com assets included, specifically highlighting all the tax season traffic, and an opportunity to buy at a price lower than a number of sophisticated investors bought in.
Disclosure: I am long MARK.