Echo Automotive Inc [OTC:ECAU] – Same Promotion, Different Round
When Providence Media Strategies LLC launched two months ago a month-long $75,000 promotional campaign in favour of Echo Automotive Inc [OTC:ECAU] with the option of extending the pump job for two more months, we warned you right away of the adverse impact it may have on the stock.
The inevitable occurred only a few days later when ECAU sank like a brick on the charts. However, the guys at Providence are obviously not giving up easily. Not only did they get a renewal for another month, but they have also secured yet another 30 days of pumping the stock starting from Mar. 14. As a result, The Bedfort Report and Five Star Equities, both owned and operated by Providence Media Strategies LLC, have embarked on a third and final round of pumps, thus bringing the total compensation budget to a whopping $225 thousand. What are they aiming at at this stage, though?
As you can see on the chart, ECAU shares did experience a significant boost in value within the first two weeks of the campaign as they got as high as $3.24 per share on Jan. 29. What followed was a massive nosedive that wiped out what ECAU had gained in the twinkling of an eye. By the time we received the latest batch of emails touting ECAU stock, its market value had already shrunk by a staggering 74% to $0.85 per share. Since a lot of investors have learned from bitter experience that paid promotions only have a short-lasting impact on the market value of the stock, we did not have any expectations for ECAU yesterday.
Needless to say, ECAU barely gained 0.82% yesterday, which undoubtedly shows there is not any potential left in Providence’s efforts. At the same time, the mere fact that the touting continues as fiercely as it began on Jan. 14 implies that the guys at DH Media LLC (the third party that is providing the money for the advertising campaign) have not got the most of it yet. In other words, they might still have a bunch of shares to get rid of. This in turn raises concern about the potential of the company’s business as a whole. After all, if ECAU were really sitting on a goldmine with its cost-effective conversion of fleet vehicles into hybrid ones, then why would its stakeholders seem so desperate to short their stakes?
Finally, let us once again remind you that while paid promotions are generally launched with good intentions, they are not meant to bring any benefits to regular investors. Rather, it is the insiders these campaigns are catered for. In ECAU‘s case, there are quite a few people that have already become insiders (check the company’s most recent Form 3 and Form 4 filings with the SEC for additional details). So, unless you are one of them, giving the stock a miss would definitely be a good idea.
