Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) Crashes To Record Lows
Yesterday’s session was nothing short of a complete disaster for the stock of Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG). In just six and half hours the ticker managed to wipe close to a third of its value, closing at $0.171 per share. Investors were so eager to shed their holdings that the daily volume reached 5.1 million traded shares. The last time ECIG registered a bigger daily volume was over a year ago in April 2015. Yesterday’s intraday low of $0.133 marked a new 52-week low for the stock.
What sparked the unmitigated sale of shares by investors were the quarterly results for the first three months of the year that ECIG announced after the end of Monday’s session. Are the numbers really that depressing, though? Opening the quarterly report reveals that as of March 31, 2016, ECIG had:
• $950 thousand cash
• $10.1 million total current assets
• $108 million total current liabilities
• $11.7 million net sales
• $20.4 million net loss
While having nearly a million in cash reserves and close to $12 million in sales would be a truly impressive achievement for many of the other pennystock companies for ECIG these results are truly disappointing. Compared to the same period last year the net sales of the company show a meager increase of just 1% while the gross profits is up by around 5%. The fact that the operating expenses of the company were cut in half on a year-over-year basis is simply not enough to offset the underwhelming revenue growth.
During the conference call that took place on Monday ECIG‘s management attributed the disappointing results to the limited funds available to the company, which stifled their growth opportunities, and the high interest rates on some of ECIG‘s outstanding debt. According to CEO the current quarterly interest payments stand at around $2.7 million. ECIG suffered another huge blow when in January they lost Walmart as a customer.
Soon the company may be facing even bigger troubles, though. Outstanding notes with a total value of over $19 million are going to reach maturity in July and August. ECIG‘s management team has stated that they will try to renegotiate the debt but the terms of such restructuring may be far from favorable.
The risks surrounding the stock are indeed quite serious and any trades should be preceded by careful planning and thorough due diligence.
