MGT Capital Investments Inc. (OTCMKTS:MGTI) is stock on the move in recent trade, up nearly 50% in the past week. Why? The answer this time is pretty simple: Bitcoin. MGTI, in addition to being in the process of acquiring a diverse portfolio of cyber security technologies, recently pivoted aggressively into Bitcoin mining. OTC traders have responded, embracing the company’s shares, which represents an embrace of its colorful and controversial CEO, former cybersecurity all-star, John McAfee.
McAfee recently caught some media attention as the price of Bitcoin launched 400% higher in a short span of time, commenting in a Bloomberg piece: “We will definitely be profitable before the end of the year,” McAfee said in a phone interview Wednesday. “From bitcoin mining, we will get the experience and expertise to apply the blockchain to our security products.”
MGT Capital Investments Inc. (OTCMKTS:MGTI), as noted above, is in the process of acquiring a diverse portfolio of cyber security technologies and ramping up its Bitcoin mining operations in the state of Washington.
MGTI is currently in the process of acquiring D-Vasive, a provider of leading edge anti-spy software, and Demonsaw, a provider of a secure and anonymous file sharing software platform.
According to company materials: “MGT Capital Investments, Inc. (MGTI) is in the process of acquiring and developing a diverse portfolio of cyber security technologies. With industry pioneer John McAfee at its helm, MGT is positioned to address various cyber threats through advanced protection technologies for mobile and personal tech devices, as well as corporate networks. The Company’s first product, Sentinel, an enterprise class network intrusion detector, is scheduled to be released by the end of June 2017. The Company also has entered into a joint venture with Nordic IT to develop and market a mobile phone with extensive privacy and anti-hacking features. The Privacy Phone has a tentative release date of February 2018. Also as part of its corporate efforts in secure technologies, MGT is growing its capacity in mining Bitcoin. Currently at 5.0 PH/s, the Company’s facility in WA state produces about 80 Bitcoins per month, ranking it as one of the largest U.S. based Bitcoin miners. Further, MGT is in active discussions with financial partners to grow Bitcoin output materially. Lastly, MGT stockholders have voted to change the corporate name of MGT to “John McAfee Global Technologies, Inc.” Following a dispute over ownership and permitted usage of the name McAfee, The Company and Intel have agreed to a mediation process to avoid unnecessary legal costs.”
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As noted above, MGTI shares are popping in recent trading due its aggressive move into the bitcoin mining space and the recent explosion higher in Bitcoin prices. MGTI’s bitcoin venture generated $312K in sales for the three months ended March 31, 2017, according to a government filing. It had a net loss of $5.89 million.
Traders will note 48% tacked on to share pricing for the company in the past week, but that move comes in the context of a larger bearish trend. This is emblematic of the stock. MGTI has a history of dramatic rallies. What’s more, the stock has benefitted from a jump in recent trading volume to the tune of above 410% beyond its prior sustained average level.
This is a particularly important point with the stock trading on a float that is tight at just 33.8M shares. Traders should not overlook this combination, as ramping trading activity can overwhelm available supply in a stock with this type of small float, leading to an upward burst in prices.
Earning a current market cap value of $32.8M, MGTI has a store ($353K) of reported cash on the books, which must be weighed relative to about $411K in total current liabilities. One should also note that debt has been growing over recent quarters. MGTI is pulling in trailing 12-month revenues of $625K. In addition, the company is seeing recent top line growth, with sequential quarterly revenues growing at 20%. We will update the story again soon as further details emerge. For continuing coverage on shares of $MGTI stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!
