EFactor Group Corp (OTCMKTS:EFCT) Reluctant to Play the Pump Game
EFactor Group Corp (OTCMKTS:EFCT) registered a record-breaking volume of nearly 800 thousand shares yesterday. Let’s not beat about the bush, this whole thing was caused by nothing more than a paid pump.
The promotion actually started a few days ago. The first emails started flying around on Friday, but it’s pretty clear that they had little effect on the ticker. The latest batch did manage to draw investors in, but unfortunately, while the volume was impressive, EFCT‘s performance wasn’t.
The stock opened the day with a gap up at $0.385 and although it spent the first half of the session in the green, it faltered around noon and it hit its 52-week low of just $0.28. Later, it managed to recover some of the lost ground, but the closing bell stopped it at under $0.35 which is 3% in the red. Not exactly confidence-inspiring, especially in light of the copious publicity that EFCT has received over the last few days. Still, a couple of questions pop up: “Will it be able to register the same sort of volumes once the pumpers go away?” and “Can it put on a more stable performance in the future?”.
Unfortunately, nobody can give us a definitive answer to these questions and we reckon that the uncertainty is something you should definitely bear in mind while making your investment decision.
We do know for sure, however, that the second quarter of 2014 didn’t end well for EFCT. Here’s what the latest 10-Q tells us:
- cash: $126 thousand
- current assets: $365 thousand
- current liabilities: $6.1 million
- quarterly revenues: $148 thousand
- quarterly net loss: $1.4 million
As you can see, there are some revenues, but they have experienced a whopping 44% drop year over year. The 10-Q also says that EFCT has a monthly burn rate of around $200 thousand which goes to show that the cash reserves are anything but sufficient.
All in all, the company is still not ready to take on LinkedIn Corp (NYSE:LNKD) (although some pumpers appear to be convinced that it is). We should probably note, however, that things might just change in the future. Quite a lot of acquisitions of various businesses were completed since the beginning of 2014 and, at least theoretically, they should result in new revenue streams for EFCT.
The company said yesterday that on November 7, there will be a conference call discussing the Q3 results which means that investors should soon have more information on how well (or badly) the new subsidiaries are doing.
They mustn’t forget, however, that the recently acquired ventures really need to exceed if the stock is to stay afloat. Once you go through the SEC filings, you’ll see that the aforementioned acquisitions were done through the issuance of shares and a quick look at the chart at the beginning of the article shows that the dilution is already starting to take its toll on the ticker.
