After it tripled its share price over three sessions, on Friday United Cannabis Corp., f/k/a MySkin Inc (OTCBB:CNAB, CNAB message board) dropped 31%. Share volume remained well above the average, at over 120 thousand shares changing hands.
We last covered CNAB on Friday, when it was still hurriedly climbing the charts. Then came the pullback, but the question is what caused it. It’s safe to assume that the ticker was just getting ahead of itself and climbing a little too fast. Historically, such steep climbs have proven difficult and often impossible to sustain.
CNAB changed its course in April 2014, acquiring assets and intellectual property and later appointing new management. The newly born pot stock hit a rough patch after banging its head against the $11 mark. CNAB’s share price spent the last two and a half months declining slowly but surely. This serves as more proof that marijuana PR alone is not enough to sustain a price run. Additionally, the overall level of excitement surrounding pot stocks has gone down. The commotion over the last few sessions could be attributed to a couple of press releases concerning the newly appointed management and president, as well as CNAB’s participation in the Weedstock investor conference.
The company last reported the following figures as of March 2014:
- $1.5 million in cash
- $11 thousand in liabilities
- zero in quarterly revenues
- $138 thousand in quarterly net loss
With a sizable amount of cash on hand, insignificant debt and modest losses, CNAB’s balance sheet is by no means atrocious. This is no guarantee for success on its own. The company did a 4-for-1 forward split of its common stock in March 2014 and even after the split there were a modest 43 million shares outstanding as of early May. CNAB may still get its shot at glory but at this point nothing is certain and many of the risks associated with OTC penny stocks are still relevant.
The most heavily traded pot stock on Friday was Terra Tech Corp. (OTCMKTS:TRTC). The ticker remained nearly flat after shifting 1.7 million shares, stopping at $0.50 by the closing bell.
United Cannabis Corp., f/k/a MySkin Inc (OTCBB:CNAB) Gets Ahead of Itself
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