SOS (NYSE:SOS), which is a Chinese language Bitcoin (CCC:BTC-USD) miner, has abruptly popped up on the radar of many traders, together with many redditors. Since December, SOS inventory went from $1.26 to opening at $15.01 on March 17. Though because the markets have cooled down, so has this inventory. SOS is now buying and selling at $4.99.
The corporate obtained its begin again in 2001, and since then there have been a number of pivots. The preliminary focus was on being a supplier of credit score analytics. This resulted within the creation of a lending market. Nonetheless, due to regulatory adjustments in China, the corporate exited this enterprise in 2018.
The administration workforce then pivoted into crypto mining. In any case, SOS had in depth expertise with subtle IT programs but in addition had shaped varied relationships with monetary companies corporations.
So with the shares off their highs, does it make sense to think about a purchase order? Effectively, I really suppose traders needs to be cautious of SOS inventory. Right here’s why:
The Crimson Flags
There have been a number of analysis studies which have come out on SOS inventory. Sadly, they’re removed from constructive.
Observe that Culper Analysis put out evaluation that the corporate is alleged to be a fraud. Then there was a extra detailed report from Hindenburg Analysis.
Now it’s true that each of those corporations have interaction in brief promoting. However then once more, they’re recognized to do deep analysis. Hey, that is obligatory due to the inherent dangers of a brief squeeze, as seen with corporations like GameStop (NYSE:GME) and AMC (NYSE:AMC).
Simply take a look at the report from Hindenburg Research. The agency’s analysts visited SOS’s headquarters, and it was apparently a lodge! Subsequent, they discovered that the corporate allegedly did a copy-and-paste of the pictures and press releases from rivals.
As needs to be no shock, SOS did refute the allegations. In a press release, the corporate known as these claims “distorted, deceptive, and unsubstantiated.”
But there are another nagging points. For instance, there’s skepticism concerning the firm’s announcement that it deployed 5,000 mining models and that there might be extra within the offing. However there seems to be shortages within the business, as demand has soared.
In reality, the deal for these rigs – which was with HY Worldwide — might have concerned a related-party transaction.
Backside Line On SOS Inventory
The prospects for Bitcoin proceed to look vibrant.
Tesla’s (NASDAQ:TSLA) $1.5 billion acquisition of bitcoin was undoubtedly an enormous catalyst. However there has additionally been wider adoption from conventional monetary companies organizations. Contemplate that Mastercard (NYSE:MA) is making ready to help varied cryptocurrencies on its world community. Then there’s the Financial institution of New York Mellon (NYSE:BK), which is the oldest U.S. bank, that is looking to provide transfer services.
Within the meantime, it appears to be like like asset managers and hedge funds are attempting to get publicity to crypto. Among the world’s prime traders – like Paul Tudor Jones, Invoice Miller and Stanley Druckenmiller – contemplate digital currencies to be a great way to hedge in opposition to inflation. Consider it as a modern-day model of gold.
So given all this momentum, there might be extra beneficial properties for SOS inventory.
However once more, there are a myriad of crimson flags. And apart from, there are different choices to play crypto, like Riot Blockchain (NASDAQ:RIOT) and Marathon Patent Group (NASDAQ:MARA). Or when you don’t wish to fear about potential firm dangers, you’ll be able to simply purchase cryptocurrencies instantly, which is pretty simple utilizing apps like Sq. (NYSE:SQ), Robinhood and PayPal (NASDAQ:PYPL).
On the date of publication, Tom Taulli didn’t have (both instantly or not directly) any positions in any of the securities talked about on this article.
Tom Taulli (@ttaulli) is the creator of assorted books on investing and expertise, together with Synthetic Intelligence Fundamentals, Excessive-Revenue IPO Methods and All About Quick Promoting. He’s additionally the founding father of WebIPO, which was one of many first platforms for public choices throughout the Nineties.