Gray Fox Petroleum Corp (OTCBB:GFOX)’s Promotional Budget Grows, Market Cap Follows Suit

2014 is shaping up to be quite a year for Gray Fox Petroleum Corp (OTCBB:GFOX). Out of the seventeen sessions since the beginning of January, only five ended in the red. The price has jumped up from around $0.90 all the way to $2.24 and the huge trading volumes suggest that a lot of people are having high hopes of GFOX‘s success.

Unfortunately, however, at this point, there’s nothing to suggest that the company really is going to make it big time. The buzz around the ticker is created by nothing more than a paid pump which has been going strong for more than two months now. At first, the market failed to react to the awareness campaign but recently, the effects of the promotion have been profound.

This could be, to some extent, attributable to the fact that someone is spending more and more money on artificially inflating the ticker’s value. If you’ve been following our articles closely, you know that at first, the promotional budget stood at around $270 thousand. A few weeks later, the fine prints informed us that the total amount paid for the pump is hovering around $390 thousand while the latest alerts that we received from Investor Planet carry a disclaimer telling us that the budget stands at exactly $531,752.16.

That’s a substantial lump of money, but it’s nothing compared to the dollar volumes that the ticker generates every day. Yesterday, for example, in just six and a half hours of trading, GFOX managed to rack up a trade value of $1.93 million.

The promotional budget also seems like a drop in the ocean when compared to the market cap which, at yesterday’s close, stands at nearly $80 million. But does GFOX actually deserve such a valuation?

The optimism coming from the emails and landing pages might have diverted investors’ attention from the fact that, according to the 10-Q covering the third calendar quarter of 2013, GFOX was in a rather big financial mess. Some traders might have even missed the latest quarterly report which came out on Friday. It covers the period ended December 31 and it boasts the following figures:

• cash: $29 thousand
• current assets: $41 thousand
• current liabilities: $23 thousand
• no revenue
• net loss: $526 thousand

It’s clear that, although the filing looks better than it’s predecessor, GFOX is still in a world of financial trouble. They did announce an $80 thousand cash injection recently, but even with it, pumping 1 billion barrels of oil out of the ground will be very hard.

Until GFOX manage to show us that they’re capable of securing a more substantial amount of money, their stock will remain nothing more than just one of the many pumped OTC tickers. Tobin Smith will probably continue speaking about things like “the end of OPEC’s reign” because he is paid to do so, but sooner or later, the big promotional budget will run out and once that happens, GFOX will need to run under its own steam. For now, we are having a hard time seeing it supporting itself which is why considering the risks carefully is absolutely crucial.

GFOX isn’t the only promoted stock to be running well over the last few days. Konared Corp (OTCBB:KRED) logged its ninth consecutive green session yesterday and it now hovers comfortably above the $1.20 per share mark. Even the free pumps are working – Medical International Technology Inc (OTCMKTS:MDLH) jumped up by as much as 113% in just six and a half hours and registered a dollar volume of $442 thousand.