Phase Space AI

Trade Construction

SharonAI Holdings [SHAZ]

SharonAI Holdings Inc. [SHAZ] — Trade Construction

As of: 2026-07-29 · Spot: $40.04 (2026-07-29 close) · Framework: v1.5.1 / criteria.md 2026-07-29

This memo issues no position verdict — no Long, Short, Watchlist or Avoid. It scores Criteria and outputs an analysis. Whether this analysis justifies a position is a question about a particular book, and the book decides. What follows are the constraints any position would face, not a recommendation.

1. Liquidity Criteria (BINDING)

Value
Shares traded 2026-07-29 259,461
Dollar volume $10.39m
Verdict *INDETERMINATE* — adequate in dollar terms, but on a 13.96m-share float, a five-month trading history and 127.3% realised volatility. Sufficiency depends on intended size, which this memo does not set

2026-07-29 was a high-volume down day across the entire complex, so this figure is generous relative to a normal session. Liquidity constrains position sizing, never admission (criteria.md).

2. Options — NO STRUCTURE PROPOSED

No options chain was pulled for SHAZ. Liquidity Criteria is explicit: "Any proposed options structure requires the actual chain pulled first — open interest and quoted size for the specific strikes and expiry… A vehicle that cannot be filled is not a vehicle." The HCA precedent (maximum open interest of 18 contracts across an entire March-2027 chain) is why this is a hard rule rather than a preference.

Accordingly no strikes, expiries, Greeks or structures are proposed. Doing so without the chain would manufacture an uninvestable vehicle. Pulling the SHAZ chain from data.alpaca.markets/v1beta1/options/snapshots is a prerequisite to any options expression.

3. Vehicle constraint if a position were taken

Common stock only, until a chain is pulled and open interest and quoted size are verified at specific strikes.

4. Sizing constraint — inverse volatility

criteria.md names inverse-volatility sizing as the active protection on the Downside Criteria, "because a fat-left-tail name is almost always a high-volatility name and is sized down automatically."

Value
252-day realised volatility (screen record) *127.3% (scan_v3 vol_252d_pct) — the highest in the cluster*
Implication among the highest in any book; inverse-vol sizing cuts this hard
One-day move, 2026-07-29 −10.9%

5. The correlation constraint that dominates everything else

On 2026-07-29 every name in this complex fell together:

HIVE HUT IREN CORZ BTDR WYFI SHAZ CRWV APLD NBIS WULF CIFR RIOT MARA CLSK
−11.1% −12.8% −13.5% −12.4% −13.1% −12.7% −10.9% −9.6% −12.7% −13.7% −12.8% −13.3% −14.0% −11.6% −10.8%

Fifteen names, one factor, a 4.4pp range. Any two positions in this cluster are effectively one position. This is a book-level exposure and correlation-limit question, not a single-name question, and it must be resolved by portfolio-book before any SHAZ position is sized. Treating cluster members as independent names would breach the correlation limit while appearing diversified.

6. Invalidation — the observable that would refute the thesis

Confirming observable — and it is a low bar, deliberately stated as such: revenue exceeding $294,014 in a quarter, with a positive gross margin. SHAZ currently sells GPU-hours for less than they cost. Beyond that: a named counterparty with a quantified contract, or the appearance of remaining performance obligations in a filing. WYFI publishes an audited RPO table; SHAZ publishes none.

Refuting observable, in priority order: 1. The ~29.6MW commencing "late 2026" as a fixed cost without matched contracted revenue. This is the classic neocloud failure shape — committed capacity ahead of committed demand — and SHAZ has disclosed the commitment while disclosing no offsetting contract. 2. A further quarter of negative gross margin. Q1 2026 cost of revenue was $526k on $294k of revenue. Scale makes this worse, not better, until unit economics invert. 3. A further decline in revenue. It is already −9.6% YoY on the only business it now has. 4. The share price staying below the $48.24 conversion price while the $350m of 6% notes accrue cash interest at ~17x revenue. That is the mechanism by which dilution becomes forced rather than opportunistic.

7. What must be resolved before any position

Stated first: on the evidence assembled here there is no basis on which this framework can size a position in SHAZ, and the Valuation Criteria is INDETERMINATE rather than passable. What follows is what would have to change, not a checklist toward a position.

  1. Obtain a named counterparty and a contract value. The 2026-05-13 agreement with "a global technology company with major Asia-pacific" presence is the entire forward case and not one term of it is disclosed. Without it there is no contracted book to value.
  2. Obtain the ~29.6MW providers, pricing and term. These are fixed obligations commencing late 2026 against no disclosed revenue. Price and term determine whether they are an asset or a liability.
  3. Establish whether gross margin can be positive at scale. −78.9% in the latest quarter. This is the single most important operational question and it is prior to any valuation question.
  4. Resolve the 10-Q's internal contradiction on whether the $350m offering closed.
  5. Confirm the post-April-2026 capital structure — whether the $199.4m of current converts were settled, converted or refinanced by the $350m issue.
  6. Pull the options chain before contemplating any non-linear expression. On a 13.96m-share float with a five-month history the prior probability of a fillable chain is low, and the HCA precedent (18 contracts of maximum open interest across an entire chain) applies directly.
  7. Resolve the cluster correlation limit with portfolio-book. Note that SHAZ carries the highest realised volatility in the cluster at 127.3%, so inverse-volatility sizing allocates it the smallest position of the seven — the correct direction, and the interim control criteria.md relies on.