Elray Resources, Inc. (OTCMKTS:ELRA) Soars on PR
During yesterday’s trading the stock of Elray Resources, Inc. (OTCMKTS:ELRA) not only managed to stop its depressing chart movement but actually gained over 330% and from $0.0009 found itself at $0.0035 when the closing bell rang. The absolutely massive volume of 486 million traded shares was registered and as a result the dollar value for the day surpassed $1 million placing ELRA among the top traded pennystocks for the session.
So what got investors so excited about a stock that for almost all of the year has been going nowhere but down falling to its new 52-week low of just $0.0006 a little more than a month ago? Well, before the start of yesterday’s session ELRA issued a new PR article in which they announced that the wagering at one of their JV Licensed Live Dealer Casino Facilities in Manila has reached $10 million for the month of October.
The number is rather impressive but the company already announced an even bigger sum in their PR from September 16. Back then they reported wagering of over $68 million generated over a 45-day period. Investors were not impressed though and on that day ELRA crashed by over 22%. Still, the company issued four more PRs by the end of last month revealing new acquisitions and agreements and indeed they were able to push their stock to a high $0.009. When the press releases stopped coming though investors quickly began selling off their holdings and ELRA quickly slumped into the triple-zero price ranges once again. With a single PR that contains little substantial information how long will the positive momentum last this time?
Especially when investors take a look at the depressing fundamentals of the company. At the end of June they had:
• $99 thousand cash
• $193 thousand current assets
• $9.7 million current liabilities
• $45 thousand revenues
• $1.5 million net loss
Some might think that a working capital deficit of over $9 million coupled with the massive net loss of $4.6 million for the first half of the year are enough of a reason to skip the stock altogether but there is an even bigger red flag – the crushing dilution.
Since the start of 2013 ELRA have performed two reverse splits – first a 1-for-100 back in January, 2013 then a 1-for-10 one in May, this year. They even contemplated doing another one on September 22 but ultimately decided against it. In our previous articles we described the issuance history of ELRA in great details but the sheer amount of new shares is so astounding that it is worth repeating.
After the latest stock split the number of outstanding shares was around 5.6 million. Since then the printing presses have been working so hard that as of September 30 that number stood at 363 million. Just 3 days later a Schedule 13G was filed and it revealed that the outstanding shares were now 490 million. Investors who claim to have contacted the Transfer Agent of the company say that currently there are more than 780 million outstanding shares. ELRA should file their next financial report by November 15 and then we will see how much shares have been printed and at what price. The report will also show how much revenue the company generated from the wagering activities.
Until then be extremely careful when dealing with the ticker. The current excitement certainly offers opportunities for some quick gains but if you miss the right timing the losses could be significant. Do your own due diligence and decide on appropriate time horizons for your trades.
