Mech Tech (MKTY)* has rallied strongly over the past few weeks. Perhaps it was a Buy the Rumor – Sell the News reaction.
We are seeing $8.00 to $13.40 was possibly the “buy rumor” rally with yesterday & today’s news delivery being the “sell the news”.
We are not saying the run is over, but obviously there is profit taking on the news. We are close to $2.00 below the opening high of $13.48.
We see price support between the 50-day MA ($9.11) and the area of the prior top, $11 to $11.50.
What is the support area that holds, is any one’s guess. Out attitude is still buy weakness and accumulate a nice position. This up-move is far from over, but I can assure you it will be a very volatile ride. Buckle up – play the swings as you will – know what your core position is at all times.
- Our upside targets in six to nine months is $25 to $30.
- Twenty-four months to thirty months we believe there is a $70 to $100 dollar price target possible.
The biggest variables to valuation metrics are:
- Crypto prices, especially Bitcoin and Ethereum. This determines MKTY gross profit margins.
- Ability to finance and cost to shareholders in potential dilution. No issue here. Three raises in the $17 million area in the last year. Management is managing the capital structure in a low dilution way. It is greatly appreciated by shareholders – of which management is the largest shareholder.
- Management’s ability to execute their plan. At the moment they are ahead of schedule. End of Q2 2021 MKTY was using 3 megawatts of power. The company is ahead of schedule to be at 53 megawatts of power. At this time MKTY is forecasting additional power growth of between 100 and 200 megawatts. Each megawatt of power used generates about $175,000 in monthly revenue. Profit margin will vary on the types of partnership or deals MKTY utilizes in financing the coins. Of course, the price of coins is a big variable in profit margin because MKTY does not hold any Crypto. They sell asap following receipt of crypto. 103 megawatts targets monthly revenue of $26.7 million in monthly revenue and 203 megawatts projects a monthly targeted revenue goal of $35.5 million in monthly revenue. Again, this is by year-end 2022. Not so far away.
Volatile price on the stock but still exceptionally positive. If the price of crypto does not collapse, If financing remains readily available and Management executes, LOTM can see a $70 top $100 price on this stock in twenty-four months – plus or minus. The biggest risk as we see it is a crypto winter and bitcoin retreats to $20,000.
As always do what is best for your financial situation. Always be looking over your shoulder. With all due respect, don’t be Dumb, Stupid or Naïve. We can all get impulsive and caught up in emotions from time to time. We are human after all.
Best of success to you!
Tom
October 20,2021
By Tom Linzmeier, editor, LivingOffTheMarket.com.
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