Remark Media (NASDAQ:MARK) held its quarterly earnings conference call on Friday 8/10, the day after it released its' 10-Q. Some panicked selling greeted the 10-Q with nearly 30K shares being dumped near the open, and the stock getting as low as $1.86.
The stocked rebounded after the call on Friday, trading as high as $2.30. There were a number of key takeaways from the call.
Carrie Ferman, the Remark CEO, went over their current plans. They've launched Dimespring.com in beta, and intend for it to go into a full launch in September. They also intend to relaunch Banks.com in September.
Remark owns a 10.9% stake in Sharecare. Sharecare is best known as the site started by Dr. Oz, Jeff Arnold (WebMd), Harpo (Oprah), and Discovery. As a founding tech partner, Remark aquired the stake about two years ago.
Ferman was very excited about the metrics and growth of Sharecare, although understandably tight lipped. For the first time, they were able to disclose that Sharecare's revenue hit $8M in Q2, a significant jump from the $3M in the year ago quarter. That kind of growth, even without hitting profitability, helps to justify the reported $350M valuation of Sharecare. In addition, that growth provides a template for the launch of Dimespring.com, as Remark is using the same technology that they used to build Sharecare.
From the bear perspective, there are several significant questions. There are a) the cash flow position, b) the relative illiquidity of the major assets and c) the future business model.
The most significant of these is the cash flow issue, which is also mentioned in the 10-Q as an issue. During the call, it sounded like plans are well underway for Remark to raise funds to take the company well into 2013. Hopefully, those will be asset-based loans, as opposed to an equity raise at what seems like a temporarily depressed stock price.
In the next few days, we'll be able to see reports from the major holders, and I suspect we'll see that a continued liquidation from one of the previous major holders in Banks.com is nearly finished up, which should set the stage for a nice rally into September.
The other major question mentioned above is the business model. It's encouraging Sharecare seems to be succeeding with it. Additionally, there's now such a gap between the projected value of the Sharecare stake and the market cap, that if the stake was monetized, there's enough runway for 3+ years of funding operations, which should be enough time to settle on a model, or find an exit event.
Disclosure: I am long MARK.