Short-seller Boatman Capital has looked to sink the ship of the strong performing Argo Blockchain with a raft of unsubstantiated and questionable claims as the crypto miner revealed a bumper first-half performance.
London-listed mining firm Argo Blockchain recently saw revenues to triple to over £31m and profits soar to over £10.7m which would obviously be concerning to short-sellers.
And relatively unknown research firm Boatman Capital has sought to strike with a series of rumours and likely try to boost its profile due to the popularity of Argo Blockchain.
Looking at the reports it has recently produced – it is clear that it needed to look to take down a star name as very few would care about ‘Thungela Resources’ or ‘AZV Resources’.
In a report entitled ‘Argo Blockchain: Who Benefits from Texas Deal? – the firm cooks up a variety of conspiracy theories:
“Why did Argo Blockchain agree to buy 160 acres of land in Texas for up to $17.5m when the land is valued at $168,000? Who benefits from this deal – and are they Argo shareholders? How will a legal dispute between Argo and Celsius Network impact future bitcoin mining capacity and revenue given that Argo leases about 40% of its mining fleet from Celsius?”Boatman Capital Research
Having a closer look at the report, it becomes clear that this research report is not worth the digital ink that was used to print it.
A personal and misleading attack from the start of the report
From the very start of the report, you can sense a very personal attack and some questionable statements especially from a firm that should know how the markets work and how high-growth technology companies often trade at high valuations:
“Argo Blockchain joined the main board of the London Stock Exchange in 2018 and, for most of the period since, its stock price has bumped along at a few pence per share. When bitcoin prices took off earlier this year, so did the Argo share price. The company’s stock hit 282p in February but has since dropped back to about 130p, valuing it at roughly £500 million. We think £500 million is an exceptionally high valuation for a company that has consistently made operating losses and has generated only £35.5 million of revenue so far this year.”
The above paragraph is from the introduction of the report and is a contradiction in itself – of course the price of a cryptocurrency miner will increase when the price of cryptocurrency increases and there is a fundamental shift in payment networks!
Perhaps Boatman Capital need to do some more work around valuation methods within the technology space and also basic comparable analysis ( Argo Blockchain still looks seriously undervalued, here’s why…).
Argo Blockchain hits back at the conspiracy theories
Over the weekend, Argo Blockchain looked to distance itself from the claims by the ‘identified short-seller’ but had not yet seen the report.
However, after seeing the report, Peter Wall indicated that the Texas land deal was a ‘really stable deal’ and according to The Telegraph vehemently denied that the purchase of the land had an ulterior motive given the notion that it will allow Argo to move forward at a much faster pace in a rapidly moving industry:
“It was a shovel-ready project that allowed us to skip 12 to 18 months of work that Argo would have had to do, had we not acquired this project. Our feeling was that the opportunity cost to wait, to try and find our own piece of land to do all of that legwork ourselves would be too big. The cost of waiting would be too big. We feel that it was a very solid deal.”Peter Wall as quoted by the Telegraph
The Argo Blockchain share price is currently trading at £1.28 per share as it prepares for a dual-US listing.
Our View: Boatman Capital should not continue to row the boat
Boatman Capital is a relatively unknown or ‘low-profile’ research firm as The Telegraph puts it and is an identified short-seller according to Argo Blockchain themselves.
Should you put the two together, one could develop another conspiracy theory…
The theory is that this research firm is looking to increase its profile through attacking a high-profile stock and in the process profit from short-selling as it fights against strong performance of Argo Blockchain and stable / recovering prices of Bitcoin.
Nothing to see here, technology firms and Bitcoin miners have high valuations due to the disrupting ability they have – the Texas Land deal has allowed Argo Blockchain to move faster at a time where it needs to and address industry-wide environmental concerns.