Altn Fuels America (OTCMKTS:AFAI) Jumps on the Marijuana Bandwagon
On October 17, Altn Fuels America (OTCMKTS:AFAI) announced that they have initiated a project called Jethorpa which should promote the use of biofuels in the aviation industry. Nobody could care less.
Three weeks later, they informed investors that they have signed a number of offtake agreements which could result in more than $14 million in “potential” revenues. Despite the huge figure, AFAI managed to shift just two thousand shares throughout the day. Another, equally optimistic press release got published at the beginning of December, but it too failed to capture investors’ imagination.
Yesterday, in an almost comical turn of events, AFAI announced that they’re entering the booming medical and growing recreational marijuana market and this time, traders’ reaction was quite a bit different.
A record-breaking 7.68 million shares changed hands while the ticker surged towards the higher end of the charts. When the closing bell rang, AFAI was sitting at $0.27 per share which represents 237% in daily gains.
Indeed, the sudden and violent change in the course is somewhat bizarre and it’s suspiciously well-timed with the current hype around the so-called “pot stocks” but the fact that AFAI registered more than $2 million in dollar volume means that a lot of people are putting their hard earned cash in the hope that the company is going to make it. So, is this going to happen?
Unfortunately, things are not off to the best of starts. For one, AFAI‘s latest 10-Q reveals that they are in a world of financial trouble. We reckon that the figures speak for themselves:
- current assets: $166 in cash
- current liabilities: $1.2 million
- no revenue since inception
- quarterly net loss : $81 thousand
To put things into perspective, according to CNBC, an ounce of medical marijuana costs about $200 while the prices of pot for recreational uses can reach $400 per ounce. This should give you an idea of AFAI‘s chances of success, at least with the above figures in mind.
Speaking of which, the market cap currently stands at around $18.4 million. But was it only the marijuana hype that gave it such a boost?
Unfortunately, the answer is no. The pumpers have also joined the party. A pop-up ad on Investors’ Hub leads us to this report which was put together by an entity called Wall Street Profit Search (WSPS). As you can see, it’s full of bright projections and general conclusions about the lucrative cannabis industry and it conveniently omits the fact that the profiled company is in a deep financial mess. The promotional budget, according to the fine print, amounts to $150 thousand and in case you’re wondering, AFAI isn’t WSPS’ first pick. Back in December 2012, they tried to tout PMX Communities Inc. (OTCBB:PMXO). During the peak of the pump, PMXO was hovering around $0.12 per share. Yesterday, it closed the session at $0.0079.
Currently, the only things keeping AFAI afloat are the paid pump and the general excitement around the marijuana industry that’s been going on for more than a week. Both those factors will lose their effect sooner or later and a drop seems inevitable. That’s why, proceeding with extra caution is absolutely essential.
