Hemp Inc. (OTCMKTS:HEMP) Loses Altitude
The sector-wide surge that pushed the marijuana branch sky high on Wednesday took Hemp Inc. (OTCMKTS:HEMP) 60% up, but it was all too clear that this growth was unsustainable. As expected, the very next session saw the ticker tumbling down to the bottom of the charts on a massive dollar volume.
Hopeful online commenters have tried to explain this plummet as a “pull-back [which] is a normal reaction after yesterdays 60% climb. It [the ticker]‘s pretty steady now.” The former part is certainly true – tickers tend to crash after an unreasonable and unsustainable run. The latter part of the statement sounds less plausible, however.
In elaboration – a ticker is stable when there is a real reason for it to more or less retain its chart position. HEMP‘s latest jump was purely hype-driven – there are no news, filings or positive developments related directly to the company that would suggest that it is making any progress whatsoever. Thus logic dictates that, apart from hype, there is no reason for its share prices to stay as inflated as they currently are.
In fact, not only does HEMP lack any actual achievements that would support its elevated position, it actually has serious shortcomings that could pull the ticker further down at any moment.
The fact that HEMP has to resort to creative accounting to make it seem like it has any commercial achievements whatsoever speaks volumes in and of itself. Although the numbers in its latest financial report state that HEMP is technically profitable, said report also mentions that the aforementioned profit was received in the form of overvalued equity that is very difficult to turn into actual cash.
Add the fact that HEMP‘s share structure is terribly diluted and you will have a very good idea why the ticker may be in for quite the tumble instead of another impressive spike, in spite of the apparent rekindling of the Marijuana Rush.
Another OTC Markets Marijuana penny stock that spiked on Wednesday only to crash horribly the day after because it has nothing that could keep it afloat is American Green Inc. (OTCMKTS:ERBB).
