Fortitude Group Inc (OTCMKTS:FRTD) Slips Below $0.02
Three weeks ago, Fortitude Group Inc (OTCMKTS:FRTD) decided to follow the herd and did what many other penny stock companies have done over the last three and a half months – they entered the marijuana industry. As you probably know, the craze around the pot business is absolutely astonishing at the moment and FRTD‘s new direction was bound to cause quite a lot of stir around the market. So it did.
Several other press releases kept investors excited over the last few weeks and the volumes displayed on the chart show that FRTD is still enjoying some rather active trading. Unfortunately, the performance leaves a lot to be desired. The ticker logged five consecutive red sessions during which it wiped out nearly a third of its market cap.
Yesterday was particularly painful. FRTD opened at $0.024, made a short climb to $0.0268 and then plummeted below the $0.02 mark. It registered a close of $0.0191 per share and a dollar volume of around $406 thousand. But what could be the reason for the slide?
If you take a quick look through the recent announcements, you might be a bit baffled. Things seem to be moving at a break-neck speed at the moment. As we mentioned in our previous article, just three days after announcing their new business direction, they said that they have acquired a couple of domain names which should soon be turned into a special online payment platform catered to the pot industry. On February 26, they informed us that they will be launching a share buy-back program, as a result of which, 100 million shares should be returned to the treasury. A new medical marijuana product called MariMist was announced a couple of days later and, over the last few days, they have really tried to cheer their shareholders up. They said on March 4 that they have negotiated a master funding agreement with an OTCBB listed company and yesterday, they revealed the name of their partners.
The company is called Affinity Mediaworks Corp (OTCBB:AFFWD) and it’s a public shell which is currently traded at $3 per share. Apparently, each FRTD shareholders will receive 1 newly issued AFFWD share for each 92 shares that he or she owns. Since AFFWD is currently traded quite high, the shareholders could be in for some tasty profits. And yet, despite this, FRTD is slipping further. Even today, about an hour and a half after the opening bell, it’s hovering around $0.0150 which is a further 21% down compared to yesterday’s close.
But if it isn’t the press releases, then what is the reason for the drop?
Apparently, FRTD think that the blame can be placed at the feet of short sellers. Earlier today they announced that they have entered into a six month contract with an entity called Buyins.Net – a provider of short sale statistics. Buyins put together a report according to which FRTD has had a persistent problem with short sellers who have been particularly aggressive recently.
You can have a look through the report and decide for yourself whether the people who compiled it are right or not, but you should probably bear in mind that they didn’t do it for free. The document contains a disclaimer situated on the left-hand side of the last page and in it, we read that a compensation of $1,116 per month will be paid by a third party. Which, by the way, is quite interesting since the press release would have you believe that it was FRTD themselves who hired Buyins.
In any case, the current drop (whether caused by short sellers or something else) means that the stock isn’t in great shape which, in turn, makes a potential short term trade riskier than ever. Even if you are considering an investment in the long run, you should bear in mind that the recent press releases, as optimistic as they are, don’t eliminate the dangers. The revolutionary MariMist, for example, won’t be ready until at least six months from now and that period, as you probably know amounts to light year in the world of penny stocks. Even if that wasn’t the case, we still reckon that $11.5 million (the market cap at yesterday’s close) is a bit of a stretch for a company that doesn’t appear to have a functioning website. Doing a lot of due diligence and carefully considering all the risks is absolutely essential before putting any money on the line.
FRTD wasn’t the only ticker to experience some intense trading during yesterday’s session. Terra Tech Corp (OTCMKTS:TRTC) managed to shift more than $22 million worth of shares while jumping up by around 18%. mCig Inc (OTCBB:MCIG) also added 18% while recording a more modest $4.3 million in dollar volume.
