Falconridge Oil Technologies Corp. (OTCMKTS:FROT) Remains Volatile

For nearly the entire session yesterday the stock of Falconridge Oil Technologies Corp. (OTCMKTS:FROT) was slowly climbing up the chart reaching a high of 1.21 per share. Just minutes before the closing bell however it plummeted downwards and closed the day nearly 3% in the red at $1.13 signaling that the volatility of the ticker shouldn’t be underestimated.

FROT has been propped up by a paid pump since early-October but interest in the stock remains high even now. Yesterday the traded volume reached 361 thousand shares nearly doubling the average of 190 thousand shares. Since the start of the promotion the stock has suffered two major series of crashes and if it begins sliding down once more the pumpers may have a hard time pushing it upwards for a third time. While the landing page crated by the Moskowitz Report is still active the last email alert is now over 10 days old. It was sent on November 30 by the Bull Report who received a disclosed compensation of $10 thousand.

In our articles we always warn you to never take the overly-enthusiastic statements made by the various pump outfits at face value. According to Mr. Charles Moskowitz, the editor of the Moskowitz Report, FROT is headed for at least $5 per share, and this is his initial price target. At the same time the financial results of Falconridge paint a much different picture. The latest financial report revealed that as of August 31 the company had:

• $979 cash!!!
• $11 580 total current assets
• $1.8 million total current liabilities
• $1497 revenues
• $57 thousand net loss

Thanks to the artificial hype of the pump FROT is currently commanding a market cap of over $55 million, a number that might be “a bit” unrealistic considering the atrocious financials.

But the red flags run much deeper. In 2008 3.5 million shares were sold to a group of investors at just $0.02 each. Then the 6-for-1 forward stock split from 2010 turned those shares into more than 19 million. Considering the limited trading volumes registered by the company these people might still own the majority of the shares and could reap massive profits if they unleash them on the open market. And they may very well be doing so thanks to the increased awareness created by the paid pump.

FROT should be approached with caution. The stock already crashed hard on two occasions and it may not recover after another one. If you are determined to play the pump be sure to set appropriate time horizons for your trades otherwise the losses could be significant.