America Resources Exploration Inc (OTCMKTS:AREN) Drills a Hole in the Ground
Some promoters are pretty stubborn, but few are as mulish as the ones who were tasked with pumping America Resources Exploration Inc (OTCMKTS:AREN). Yes, Best American Stocks and Smart Stock Winners, we’re looking at you.
Their pick had dropped from nearly $1 per share all the way down to $0.58, but instead of letting it sink into oblivion (which, as you probably know, is what usually happens to promoted penny stocks), they sent out some more emails saying that the horrifying crash had actually presented investors with a huge buying opportunity.
Those who trusted them are probably in a bit of a mood at the moment. The alerts hit our inbox minutes before the end of the Labor Day Weekend and as soon as the market opened, AREN started sinking fast. Not even a press release from September 8 was enough to stop it.
A 22% drop on Tuesday was followed by a massive 46% crash on Wednesday, and instead of bouncing during yesterday’s session, the ticker wiped out another 14% of its value and stopped at a little over $0.20 per share.
Quite a severe crash, but is it really a surprise?
Well, about a month ago, when AREN was playing with the $1 mark, its market cap hovered around $130 million. At the end of last week, immediately before the latest batch of emails, it was sitting at $75 million. Right now, it’s hanging on to a little less than $27 million.
Neither of these figures corresponds too well to AREN‘s financial statement which looked like this on June 30:
- current assets: $145,911 in cash
- current liabilities: $63,738
- NO revenue
- quarterly net loss: $16,580
The virtual office which serves as a location of AREN‘s headquarters doesn’t really help with the company credibility which, thanks to the dreadful-looking 10-Q and the pitiful stock performance, is quite battered.
But even if you disregard all those red flags, the mere fact that AREN is in the pumpers’ sights leads to many more problems. Short sellers love pumped OTC stocks and they love to write negative articles about them on popular financial websites while they make money during the crashes that ensue.
A certain George Sharp has also been involved with penny stocks for quite a while and he seems to be particularly interested in the promoted kind. Sure enough, AREN caught his attention and he recently announced that he has filed a lawsuit against the company and the people promoting it.
All these things have put quite a lot of pressure on the ticker over the last few days. The question now is: “Is the drop over, or is AREN about to continue digging a hole in the ground?”.
That’s up to the people who bought 35.4 million shares for just over $20 thousand a few years ago. If they are still holding the discounted stock, and if they release it on the open market, AREN will be in trouble. If they stay quiet, the ticker might just be given some room to breathe.
Considering the pending lawsuits, the threat of further promotional action, and the company’s shattered reputation, however, a significant run in the right direction seems unlikely.
