Alkame Holdings Inc (OTCBB:ALKM) Squashed by a $1.5 Million Pump

Alkame Holdings Inc (OTCBB:ALKM) went through a reverse merger in June 2013 and it officially entered the trendy alkaline water business. Nobody seemed to be paying attention. Volumes were pretty much non-existent and the price movement was excruciatingly slow.

In January, ALKM‘s management team decided that it’s finally time to change the company name and ticker symbol and that’s when people finally showed some interest. A 1 for 3 reverse split was also effectuated which improved the share structure and resulted in a slow but steady run for the stock.

In a matter of just one month, ALKM managed to climb from under $0.50 all the way to around $0.80 and although it did hesitate every once in a while, the performance was pretty consistent. Some people, however, were not happy with the volumes an, indeed, a quick look at the historical records will show you that although the ticker was climbing, not everyone seemed to be interested.

In March, an entity called Wall Street Giants received $20 thousand from an unnamed third party and wrote an exciting stock report on ALKM. Unfortunately for the said third party, the market’s reaction wasn’t as explosive as everyone thought it would be. The ticker made a few wild swings in both directions, but once again, the trading volumes were nothing to shout about.

It was clear that if people were to start paying attention, some more drastic measures would be needed. Last month, the third parties decided to act.

Investors started reporting online ads that lead to this landing page. As you can see from the link, the page was once again written by Wall Street Giants who once again try to convince investors that ALKM has some true potential. The disclaimer, however, is a little bit different. Apparently, an entity called Luckymane Venture Capital Corp. has set aside a budget of $1.5 million for the promotional campaign.

With that sort of money being splashed out, you’d expect to see quite a lot of commotion on the market. For some reason, however, ALKM didn’t seem that affected. Indeed, the stock broke through the $1 per share mark and the volumes did pick up a little bit, but they remained way below the levels associated with this sort of pumps. Not a whole lot of investors seemed interested and after yesterday’s session, we’re quite sure that the ones who preferred to remain on the sidelines are pretty happy about their decision.

The volume suddenly exploded and in just six and a half hours, ALKM managed to shift more than $700 thousand worth of shares. At the same time, the ticker slashed 42% of its value and finished the day at $0.55.

The drop (and the volume surge for that matter) doesn’t seem to be caused by anything immediately obvious, but it goes to show that promoted penny stocks can be extremely unpredictable. But what about the future? Is ALKM capable of making a full recovery?

With the substantial budget in mind, we won’t be at all surprised to see some more promotional action around the ticker. Another climb is not out of the question, but even if it happens, the risks of a fall similar to the one witnessed yesterday remain.

Some might argue that ALKM is now out of the development stage which should help the company weather the difficulties in the long run. Indeed, this is the case, but according to the 2013 10-K, they registered just $17 thousand in revenues last year while the net loss stood at over $5.2 million.

All in all, we reckon that yesterday’s crash shows pretty definitively that basing your investment decision on the optimism coming from the promotional materials and press releases is never a good call. Doing a lot of due diligence and weighing the risks carefully is, as always, absolutely crucial.