Electronic Cigarettes Intl Group LTD (OTCMKTS:ECIG)’s Tumble Continues
Electronic Cigarettes Intl Group LTD (OTCMKTS:ECIG) lost another 5.94% of its market value yesterday, as its winding decline continued for the sixth session in a row.
Although this enduring tumble is certainly unpleasant to behold for ECIG‘s loyal supporters, it wasn’t all that difficult to predict. One would be hard pressed to deny that the ticker’s previous slide was indeed warranted by the rate with which ECIG stock is being dumped on the market.
On Mar. 24, 2015 ECIG performed a 15-for-1 reverse split that shrank the number outstanding shares to approximately 20 million. That move, in and out itself, smelled of desperation, however the company’s management evidently thought it was necessary.
Unfortunately, if ECIG‘s goal was to lift and stabilize prices per share and create investor value, it failed utterly, and the reason for that is simple enough – the issuance of shares did not stop, or even slow down. A month after the reverse split, ECIG reported approximately 65 million SO.
Add the horrendous results in the company’s 10-K, and a disastrous fall was inevitable:
- Cash – $2 million
- Total current assets – $18.6 million
- Total current liabilities – $164.7 million
- Annual revenues – $43.4 million
- Annual net loss – $381 million
True enough, the news of the restructuring of debt and the steps taken by the company to prevent further dilution are certainly good, but a perceptive investor would have surely noticed that the market’s reaction to said news was severely exaggerated.
The ticker jumped nearly 70%, in spite of the fact that the change ECIG presented is just the insufficient and long overdue first step towards actually remedying the company’s sorry state.
And while this effort for salvaging ECIG‘s wrecked investor value is certainly commendable, it hardly warrants such a drastic jump.
Which is most likely why ECIG has lost all its gains and is now continuing painting the charts red, now that the hype has dissipated.
