Stock Sphere 3D up 178% in August – Time to buy ANY stock?

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The price of Sphere 3D Stock rose 178% in August, while shares of the Canadian virtualization solutions developer have racked up gains of more than 500% so far this year as it gradually pivoted into crypto mining-related businesses -cash.

In early August, Sphere 3D announced that it had acquired exclusive rights from a company called Hertford Advisors Ltd. to assume the operation of more than 220,000 cryptocurrency mining machines, which is expected to bring the company’s total computing power to 5.7 Exahash.

Additionally, the agreement included the rental of a 200,000 square foot facility that is expected to provide over 1 gigawatt of carbon neutral electricity to power this mining equipment.

Could this latest pivot to the crypto mining business lead to a significant increase in the company’s revenue and bottom line results in the future? In the following article, I’ll take a closer look at the company to possibly see where it might be headed once the dust settles.

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Stock Sphere 3D – Technical Analysis

3D Sphere Price Chart (ANY) – 1 Day Candles with Multiple Indicators – Source: TradingView

Sphere 3D shares have seen above-average trading volumes over the past five sessions, while trading was recently halted by the Nasdaq Stock Exchange on August 30, a day that saw shares rise by more than 22%.

Just yesterday, the stock broke an upper long-term trendline after a few failed attempts during a session that saw the stock price soar almost 80.6% in the price of the day at $12 per share and then settled at $9.4 for a daily gain of 42%.

As expected, the momentum oscillators were pushed to the extreme with the Relative Strength Index (RSI) reaching its highest level since July 2020 while the MACD hitting its highest level since November 2018.

Comment volumes on ANY on popular Reddit messaging forum Wall Street Bets have not seen a significant increase as a percentage of total daily comments on the forum. However, social media posts about the company skyrocketed after the hedge fund manager Will Meade started tweeting about the company.

It looks like ANY has become the latest short-term target for the retail army. Nasdaq Stock Exchange Data reported that the stock’s short float was 1.15 million, representing nearly 7.8% of the total float of 14.6 million shares, as reported by MarketBeat.

Other data providers reported a lower free float for the stock, possibly due to the company’s recently issued shares not yet counting.

Notably, trading volumes reached as high as 248 million shares traded in a single day – a number that exceeded its already stretched 10-day average by more than 6 times.

Going forward, it is difficult, if not impossible, to determine whether the stock will continue to soar as multiple technical factors are at play. Given the significant volumes the stock has seen, short sellers have may have already closed their positions.

However, the option’s next expiration date is set for September 17, and given the latest rise in the share price, brokers may be forced to continue to hedge their exposure to these short-term contracts. if the price continues to rise then more and more of them will be in the money.

According to Volafy dataput-call ratios currently sit at 0.18, meaning there are more than 5 call options for every put contract held, meaning that margin requirements are likely high in the absence of put holders.

Stock Sphere 3D – Fundamental Analysis

Sphere 3D’s revenue has been steadily declining over the past five years, from $76.4 million in 2016 to just $5 million at the end of last year. Meanwhile, the company’s results have remained quite depressed this year, as the company has racked up just $1.8 million in revenue since the start of 2021.

During this same period, operating losses have reduced from minus $29.4 million in 2016 to minus $5.7 million last year, while net losses have reached $5.8 million. dollars at the end of 2020.

Additionally, Sphere’s share count fell from 200,000 to nearly 10.1 million, while the company’s total diluted number of shares outstanding soared to 16 million by the end of the year. second quarter 2021.

Sphere 3D has been gradually raising capital to fund its pivot to cryptocurrency mining after merging with Gryphon Digital Mining on June 3. Gryphon is a private company that uses renewable energy to mine Bitcoin (BTC).

The company could continue to take advantage of the positive momentum in its stock to raise more funds to further strengthen its balance sheet. However, this would likely result in further dilution for existing holders.

The company’s market capitalization currently stands at $298 million according to Koyfin data, while its total assets stood at $15.8 million at the end of Q2 2021. Its merger with Gryphon is expected to be completed by the end of the third quarter of 2021. .

This latest anomalous trading activity appears to have caused a deep disconnect between ANY’s fundamentals and its valuation and investors should be aware that they may lose a significant portion of their capital by engaging with the stock at this stage. So far this morning, ANY shares are slipping 25% in pre-market action.

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About Alejandro Arrieche PRO INVESTOR

Alejandro is an independent financial analyst with 7 years of industry experience. He writes technical content on economics, finance, investments and real estate and has also helped financial companies develop their digital marketing strategy. His favorite subjects are value investing, macro analysis and technical analysis. Other publications Alejandro has written for include The modest walletand Capital.com.

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