Remark Holdings Stock Is Tumbling Following Microsoft Deal: What's Going On?

Remark Holdings Inc MARK shares are trading lower Wednesday after rallying more than 260% on Tuesday. Here’s a look at what’s going on.

What Happened: Shares of AI solutions company Remark Holdings surged Tuesday as traders circulated a social media post from the company about a partnership with Microsoft Corp MSFT. After the market close on Tuesday, the company provided more details on the partnership, which resulted in a steep selloff.

Initially, Remark said it entered into an "$80 million dollar initial partnership" with Microsoft. In a regulatory filing after the close, Remark said it entered into a five-year cloud services and marketing agreement with Microsoft in which the Remark AI business unit and its customers “will consume $80 million of Microsoft Azure cloud services.”

As part of the deal, Microsoft will provide Remark with $2 million of Azure cloud services credits and approximately $700,000 of consulting and migration credits.

Remark CEO Kai-Shing Tao provided some clarification on the agreement late Tuesday. Cloud services generally represent approximately 30% of cost of goods sold, which suggests that five-year revenue projections from operations could meet or exceed $240 million, Tao said. The future cash flows that naturally come with the projected revenue will allow the company to fulfill the $80-million cloud services consumption agreement, he added.

“This is just the first step of the numerous opportunities that we are concurrently working on,” Tao told Benzinga.

Benzinga also reached out to Microsoft for comment on the partnership. A spokesperson for the company confirmed that Remark is a Microsoft partner, as listed on the Microsoft Azure Marketplace, but declined to disclose any further details.

Remark uses artificial intelligence-powered analytics computer vision and smart agent solutions to deliver an integrated suite of AI tools that help organizations understand their customer demographics and behavior.

MARK Price Action: Remark Holdings shares closed Tuesday up 264.4% at $1.25 before falling in after-hours trading. The stock was down 40.9% at 73 cents at the time of writing Wednesday, according to Benzinga Pro.

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Photo: Pexels from Pixabay.