On Monday the stock of Hemp, Inc. (OTCMKTS:HEMP, HEMP message board) burst forward and in just six and a half hours managed to add over 21% to its price in order to close at $0.715. As we said in our previous article the number of traded shares for the day was equally as impressive with investors exchanging over 82 million shares, more than 8 times higher than the volume of the previous session.
The spike was not caused by any new material event around the company so it was rather doubtful if the positive momentum can be maintained. Still, the industry-wide news of the legalization of medical marijuana in the state of New York followed by the first legal retail sales of recreational marijuana in Washington managed to at least sustain the current price with HEMP closing less than a percent lower on the next day.
Yesterday though the stock lost the ground under its feet and tumbled toward the bottom of the chart wiping 11% of its value and returning to $0.063 per share. During the trading hours a PR was published and it informed investors that the former subsidiary BioAdaptives, Inc. finally received its official ticker BDPT. HEMP had previously distributed around 2 million of BDPT’s shares as dividend to its shareholders. These shares were valued at $240 thousand but after just one day of trading the newly established public company fell down to the absolute rock-bottom of $0.0001, or in other words, at the moment the 2 million shares are worth close to $200.
For now HEMP’s volatility is more than likely going to remain heightened. The company is one of the oldest pennystocks to join the emerging marijuana industry but that doesn’t make them any less risky. Through numerous consulting deals the company was able to register some impressive revenues for the first quarter of the year but they too should be taken with a grain of salt. For all its consulting services HEMP were paid with over 2.9 billion shares from 8 of its clients and as we have often mentioned turning these shares into usable funds may be quite difficult.
HEMP’s own stock issuance provides a serious cause for concern. The CEO of the company owns over a hundred million preferred K shares that can be converted into 10 common shares each. Just for the three months covered by the latest financial report around 150 million shares saw the light of day through such conversion. Currently there are 2.1 BILLION outstanding shares out of the 3 billion authorized.
On May 19 the company announced that they have purchased a whole line of decortication equipment that was originally valued at $10 million. Along with the machinery Hemp Inc now also owns 15 million pounds of kenaf, a plant that is similar to hemp. It should be noted that the previous owners didn’t find much success commercializing the product and it remains to be seen if HEMP will fare any different. For now according to the press release from last Friday the company is disassembling the decortication line in order to move it to a more suitable location.
The various red flags around the stock demand the use of caution. Any investment should be precedent by extensive due diligence and careful planning.
HEMP was far from the only potstock to suffer corrections during yesterday’s trading. Minerco Resources Inc. (OTCMKTS:MINE) slid down by 11% and closed at $0.0089 while American Green Inc., f.k.a Tranzbyte Corp. (OTCMKTS:ERBB) lost close to 10% and dropped to $0.025 per share.
Hemp, Inc. (OTCMKTS:HEMP) Wipes Its Gains
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