This week, another company reaped the benefits of adding blockchain technology to the company's business model. The publicly traded company, Ameri Holdings (AMRH), revealed on Jan. 10 that it would use emerging technologies in its operations. The company has Another Stagnant Company Reaps the 'Blockchain Benefits'benefited from a rapid market assessment through this announcement. According to reports, Ameri Holdings was previously considered unprofitable, and its cash reserves had decreased.
In recent weeks, we have reported that some companies are using hype around the blockchain to their advantage. For example, Long Island Iced Tea Corp. changed its name to "Long Blockchain", and the company's shares exploded. The beverage company is now planning to set up a mining facility and move away from the iced tea industry. Three days ago, we also reported a so-called "blockchain company" that the US Securities and Exchange Commission (SEC) closed because it had no income or proceeds. Now, Ameri Holdings (OTCQB: AMRH), a cloud computing company, is joining the blockchain bandwagon, but a columnist for Seeking Alpha is skeptical about the situation.
The researcher says the financial records of AMRH are worrisome.
"Core growth is completely stalled, operating profit has been significantly negative, liquidity levels have dropped, and the company is running a huge working capital deficit of $ 20 million," the recent report says.
We believe that nothing has changed in the fundamentals of AMRH. The company's revenue growth has stagnated over the last three quarters. In addition, losses continued to grow due to higher general and administrative expenses. Cash flow was negative recently and cash levels were $ 0.8 million. Working capital is a major concern.
Then, on January 10, the company announced that blockchain technology would be added to the company's business model. The press release promised AMRH shareholders that distributed record technology would bring more efficiency and transparency to its supply chain. Other smart contracts were mentioned for vendors, and the word blockchain was used frequently throughout the ad. The researcher notes that AMRH's shares jumped more than 71% immediately following the announcement of the use of the blockchain.
"Surprisingly, 13,615,785 shares were traded against the usual average of around 100,000 a day," the report says.
The report finds the rapid rise in the price of the stock worrying, especially when it concerns a company that has produced very little income.
"We believe the $ 39 million increase in market capitalization is unjustified and investors should be vigilant about the stock's trading potential, which is another short selling opportunity," notes the report. of research.
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Companies like these, and the recent regulatory crackdowns against blockchain companies without product, have caused a lot of skepticism about the initial coin offerings (ICOs) and the numerous "ledger distributed" technology announcements. There are certainly many people who believe that a $ 39 million increase in market capitalization is unusual for a "stagnant" business that suddenly becomes "blockchain," but many people see it as a sign of the times.
What do you think of companies that suddenly see their value increase thanks to the mention of the blockchain?