Coates International Ltd (OTCMKTS:COTE) Takes a Breather
After two explosive sessions and a mind-bending 741% in gains, Coates International Ltd (OTCMKTS:COTE) finally stopped for a rest yesterday. It slipped by about 15% on a dollar volume of just under $600 thousand.
Some people are pretty disturbed by this fact. They reckon that this is just the beginning of a more serious drop and they are recalling the events from 1994 when George J. Coates, COTE‘s CEO, was accused of defrauding investors from a significant amount of cash. They are also referring to the company’s SEC filings which, as we mentioned yesterday, are not exactly confidence-inspiring.
Brokerbank Securities also saw the colossal volume spike COTE experienced this week and they decided to issue an analyst report. They tend to be quite optimistic about the companies they cover, and, as we’ve mentioned on these pages, in some instances, they’re a bit too optimistic. COTE, however, received a Hold rating mostly because of the dilution that has already occurred and the potential for a lot more share printing in the near future. This, by the way, is another thing we discussed in our previous articles.
All in all, a portion of the people following the ticker at the moment are not entirely convinced that COTE can pull it off, but there’s another group of investors who don’t appear to be worried about yesterday’s drop at all.
They reckon that the 15% slip is nothing more than a healthy consolidation and it must be said that despite the hiccup, the ticker managed to remain above the $0.01 per share mark which, considering its historical performance, is commendable.
COTE‘s supporters are still excited about the reason for the initial surge in the right direction. As you probably know, a press release from Tuesday announced that the company has received “four updated firm orders” worth more than $50 million. If the PR is to be believed, all the management team needs to do is hire some skilled workers and begin production.
It must be said that this sort of announcements don’t appear every day in Pennyland. But is jumping in simply because of a single press release such a good idea?
Well, people have done it in the past. In April 2013, the company announced that it has received “a firm purchase order” to manufacture a power engine generator that runs on a special type of hydrogen fuel. Several months later, they said that they are working towards merging with a Chinese manufacturing and casting company and announced that they have $57 million worth of confirmed purchase orders and provisional orders “estimated to be worth” $1.7 billion per year. These press releases came out approximately three years ago which means that we can now see what the results are.
The merger with the Chinese company was never completed. COTE‘s cumulative revenues for 2013 and 2014, on the other hand, amount to… $38 thousand.
You should decide for yourself what to make of these facts.
About fifteen minutes after today’s opening bell, COTE is sitting at $0.0109 (11% in the red).
