Axion International Holdings Inc. (OTCMKTS:AXIH) Stirred Up by a PR and a Paid Pump
It’s not that difficult to make a penny stock move in the right direction. In fact, all you need is an optimistic press release and a paid promotion. Axion International Holdings Inc. (OTCMKTS:AXIH)’s performance from yesterday drives the point home perfectly.
First, a couple of hours before the opening bell, AXIH issued its first press announcement in more than a month. It was actually a letter from Claude Brown Jr., the company CEO, and it’s not completely new. It was first published last week through an 8-K form, but the investment community didn’t pay any attention to it.
Yesterday, however, the paid pumpers helped spread the word around. Club Penny Stocks (who pocketed $5 thousand) and Stocks Impossible (who received $30 thousand) sent out a total of five emails which might not sound like much, but they did help the ticker gain no less than 48%. AXIH hit an intraday high of more than $0.70 and it finished the session at $0.55 per share on a dollar volume of around $683 thousand.
The burning question now is: “Will it be able to stay calm at these levels?”.
If the historical performance is anything to go by, things are not looking good at the moment. This isn’t the first promotional campaign for AXIH. It was pumped back in December 2013, but instead of giving the stock a boost, the promoters pushed it down in the sub-dollar levels. As you can see, it hasn’t recovered fully since then.
Truth be told, the SEC filings reveal that the stock performance isn’t the only problem. Here, for example, is what AXIH recorded at the end of the third quarter of 2014:
- cash: $2.7 million
- current assets: $8.5 million
- current liabilities: $8.4 million
- quarterly revenues: $3.1 million
- operating loss: $2.4 million
The figures don’t look too horrific on their own, especially by Pennyland standards, but once you compare them to the results found in the previous reports, you’ll see that the revenues, for example, have dropped by a scary 29% on a quarter-over-quarter basis.
Of course, Mr. Brown said in his letter that all this will change in the future, but while they’re waiting to see if he’s right or not, investors might want to take a look at the share structure and see what has happened to it over the last few months. Back in June, the company made a tender offer to some warrant holders which resulted in the issuance of nearly 35.5 million shares of common stock. As a result, the O/S count grew from under 32 million on December 31, 2013 to more than 70 million right now. In addition to this, there are some convertible notes and preferred shares which could cause even more dilution.
If you’re contemplating a potential investment, you mustn’t also forget that the company is preparing itself for a reverse split. The ratio is not decided yet, but it will be between 1-for-8 and 1-for-20 and AXIH said that they will complete it before the end of the first quarter of 2015 with the hope of getting the ticker up-listed to one of the national exchanges.
Being traded on the NASDAQ or NYSE MKT should, theoretically, stabilize both the company and its stock. No guarantees can be given, however, and if something goes wrong, the consequences could be quite severe. The people who put too much faith in Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) are painfully aware of this.
