Advanced Cell Technology, Inc. (OTCBB:ACTC) Gets Bullied

We last wrote about Advanced Cell Technology, Inc. (OTCBB:ACTC) a week ago when their financial report for the second quarter of 2013 came out. We mentioned that some of the figures in it look better compared to the preceding filings while other financials have deteriorated and we talked about the fact that unlike a lot of the small cap ventures out there, they do seem to have an unusually strong (for a biotech penny stock company) support from their shareholders. The reasons for this are still unknown to us.

Like so many other penny stock ventures, ACTC have been going through quite a struggle throughout the years to finally get their technology on the market and start making real money. Unlike a lot of their counterparts, however, cash hasn’t been that much of a problem. With the $35 million line of credit that they announced back in September 2012, it’s unlikely that it will become one in the near future, either. In addition to this, the management team seem very optimistic about the trials that they’ve been conducting.

At the same time, as we mentioned numerous times in the past, the whole development stage seems to be taking quite a lot of time which, on the one hand, is to be expected from a life science start-up enterprise, but on the other, is not always a good sign in Pennyland. The conclusion that we reached was that being an ACTC shareholder is, most definitely, not an easy task and one that requires a lot of patience and trust towards the management team.

With that in mind, we knew that fluctuations in the price are to be expected and that a consistent surge in the right direction will not happened in the near future (if at all). But what about factors that could depress the price?

As we all know, penny stocks are often vulnerable to influences from media (or in fact any other sort of) coverage. We’ve seen in recent months that sometimes contributors on Seeking Alpha tend to write articles that reveal some huge red flags around companies that are being targeted by paid promoters. It happened to Petrosonic Energy Inc (OTCMKTS:PSON) back in January and in July Northumberland Resources Inc (OTCMKTS:NHUR) went through the same treatment. As you can see from the charts on the right, the effects of the Seeking Alpha articles were pretty devastating.

Unlike PSON and NHUR, ACTC hasn’t been under the promotional spotlight for the last two years but despite this, a person by the name of Josh Ginsburg published his opinion on the company in a Seeking Alpha article and, just like the two examples that we gave you above, he doesn’t seem to be particularly fond of ACTC or, in fact, their management team.

Mr. Ginsburg’s exposé went online just minutes after the start of Monday’s trading session and it had its immediate effect. ACTC opened the day at $0.0685 and shortly after, it started sliding. By the end of the day around 14 million shares had changed hands resulting in around 7.6% in losses. It managed to recover a small portion of the lost ground on Tuesday, but yesterday it slid some more. As we mentioned, this kind of behavior is to be expected from a volatile penny stock, but the real question is: “Should you trust Mr. Ginsburg and his arguments?”.

It’s entirely up to you, but we should say that he is speaking about a lot of real problems around ACTC that we’ve mentioned in our own coverages over the years. He tells us about the overgenerous annual salaries among members of the management team, about the problems with the SEC, but the building block of his argument is the massive dilution.

ACTC recently announced that they want to add a further 1,000,000,000 to the number of authorized shares and currently they are also contemplating increasing the ratio of their planned stock split. Generally speaking, opinions are divided, but having seen the message boards, we are inclined to think that a larger portion of the shareholders reckon that, rather than bringing ACTC closer to uplisting on one of the national stock exchanges, these steps will simply create room for yet more share issuance and thus, further dilution.

At this point, nobody is able to say for sure what exactly is going to happen and there can be no guarantees that the aforementioned steps will even be approved by the shareholders. Despite this, we reckon that considering all the possibilities and dangers is crucial before deciding on your next move.