MGT Capital Investments Inc. (OTCMKTS:MGTI) is a penny play in the cyber defense space that has really started to garner attention as the stock launches off recent lows. The key catalyst behind the surge is the company’s announcement that it has just closed on financing to allow it to materially ramp up its Bitcoin mining operations. Unless you’ve been living under a rock, you know that bitcoin just passed gold in price (on a coin-to-ounce comparative basis), so this announcement is well-aligned with market zeitgeist at the present moment.
According to the most recent release, the financing consists of a $1.35 million 10% convertible note (convertible at $1.05 per MGTI share) issued to a single institutional investor. The note is self-amortizing with a maximum repayment of $90,000 per month. In conjunction with the note, the Company also issued the investor 1.2 million warrants with an exercise price of $1.05 per MGTI share.
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.
The Company 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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John McAfee stated, “Today’s announcement is transformational for MGT. Not only does it vastly improve our financial profile, but it positions us as the only public company in the space at a time when Bitcoin has enormous momentum.”
The chart shows 26% piled on for shareholders of the name during the trailing week, a bounce that has taken root amid largely bearish action over the larger time frame. Market participants may want to pay attention to this stock. MGTI has evidenced sudden upward volatility on many prior occasions. What’s more, the stock has benefitted from a jump in recent trading volume to the tune of just shy of 110% beyond what we have been seeing over the larger time frame.
This is particularly important with the stock trading on a float that is tight at just 33.8M shares. This type of thing is something to watch out for: a jump in average daily transaction volume in a stock with a restricted float can unleash fireworks as supply is squeezed.
Now commanding a market cap of $33.8M, MGTI has a store ($353K) of cash on the books, which compares with 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%. You can bet we will update this one again as new information comes into view. 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!