19. February 2021 | 10:40 CET
Baidu, SKRR Exploration, Palantir - Caution!
The stock market is still celebrating, but the alarm signals are getting louder and louder. Inexperienced investors are rushing into penny stocks, Dow, Nasdaq and Co. are climbing to new heights and cryptocurrencies are celebrating one party after another. Since the beginning of the year alone, valuations have grown globally by almost USD 7 trillion. All the while, sovereign debt levels rise at a record pace and central banks keep filling the balloon with fresh money.
time to read: 3 minutes by Stefan Feulner
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
The perfect mix
The risks are apparent. Of course, the bubble can inflate further and further, but at some point, it will burst! Due to the current correction, it is time to take a closer look at the gold market. After gold has been correcting since September, a fall back to the area around USD 1,700 is still quite possible. However, due to the above-mentioned circumstance, one should look around first at gold or gold mine investments.
An exciting project has emerged in the past year in Saskatchewan, one of the world's most renowned mining areas. Sherman Dahl, the current CEO of SKRR Exploration, took over an empty shell company and gradually brought in high-grade precious metal deposits. Around him, he formed a team of experienced top mining industry experts. All of the projects are located in the Trans-Hudson Corridor. The Trans-Hudson Corridor is an under-explored and emerging gold-producing region that could become Canada's next great gold district. To date, two multi-million-ounce discoveries have been made in the area at Seabee and McLellan.
The journey begins
The experienced management team has acquired a total of five projects in this belt since the start. In February last year, the go-ahead was given with the Cathro Project's purchase, which has gold values ranging from 18 to as high as 100 g/t gold in a wide variety of rock samples. This was followed in March 2020 by acquiring the Ithingo Lake property from Edge Geological, which had previously drilled 57 holes. Directly adjacent to the high-grade Seabee Mine, they subsequently secured 6,500 hectares and the Irving Project. The Company rounded off the acquisition marathon with the Leland Project and the Olson Project. Thanks to several private placements, exploration work could begin as early as 2020.
Full speed ahead into the new year
Already in January, drilling continued on the January 2021 Lealand Project and the Olson Gold Project. At the beginning of February, SKRR Exploration reported successful results from the first five drill holes at the Olson Gold Project. Last week, the success stories continued. SKRR Exploration management announced intersected quartz veins at shallow depths in the first 3 holes completed as part of the current winter drill program in the Irving-Leland concession area. There were also further developments on the financing side. The Company announced a private placement with gross proceeds of up to CAD 3.5 million. The proceeds are to be used for further exploration and development work on the projects. The Company is currently trading at CAD 0.27 and has a market capitalization of only EUR 6.7 million.
Internet giant Baidu came up with strong results for the fourth quarter of 2020. Group revenue rose by 5% year-on-year to USD 4.65 billion. Operating income was 7% higher than the same period last year at USD 763 million. Net income of USD 795 million was nearly 20% behind the same period in 2019, with earnings per Baidu share of USD 2.31. For the full year, the Chinese Company generated total revenue of USD 16.41 billion, in line with the previous year. Net income was USD 3.44 billion, or USD 9.96 per share. For the first quarter of fiscal 2021, Baidu expects year-over-year revenue growth of 15 - 26%. Revenue is expected to be between USD 4.0 billion and USD 4.4 billion. The tech giant's numbers beat the stock market's low expectations for Q4. Nevertheless, the value corrected after it had climbed in the run-up to its all-time high at USD 326.50 significantly. In the course of trading yesterday, the share was at USD 291.50, a minus of more than 6%.
Red instead of black
The shares of the data analysis Company Palantir also had to correct after the figures presented. Despite insane growth, with sales up 40% year-on-year to USD 322 million last year, investors were less than impressed. The reason being, instead of the announced quarterly profit, there was a loss of USD 148 million. Much of which was due to the accounting for the compensation of employees with company stock. Despite positive analyst opinions, the share price fell by more than 15%. Goldman Sachs upgraded the stock from "neutral" to "buy" and raised its price target from USD 13 to the current USD 34.
A look at the lock-up
There is uncertainty until Friday at the latest due to the lock-up period for the founders' shares. During Palantir's IPO, the three founders Peter Thiel, Stephen Cohen and Alex Karp were only allowed to sell 20% of their shares. That restriction will be lifted on February 19, three days after Palantir's results on February 16. However, after the founders gave an outlook for 2025 with a revenue target of around USD 4 billion and new contracts RIO Tinto, IBM, Proctor & Gamble, etc., it is hard to imagine that they will say goodbye to the stock at least in large quantities.