HEMP, INC. (OTCMKTS:HEMP) Plummets After Stock Leap

After an exciting session which registered nearly 7300 trades on Jan. 8 HEMP, INC. (OTCMKTS:HEMP) skyrocketed up to $0.0777. The company had been picking up speed since before the holidays, their skyward ascent interrupted only by the momentary market contraction of Jan. 3. Promoters, such as StockMister, jumped at the chance to add a tout to the hype, but that didn’t do much good. In an expected turn of events, HEMP just couldn’t keep up the pace.

The company’s stock crashed 24.07% yesterday after yet another intense session of about 6400 trades. HEMP started out strong, but by the end of the day lost the investor’s favor and closed at $0.059, much like it did on Jan. 3.

HEMP‘s crash, however, was anything but unexpected. Stock market analysts have, on more than one occasion, dissected the phenomenon we’re witnessing now, and amply named it a “Cannabis Bubble”. It begins with a publicity-driven demand for stock to be easily accessible on the market. After that heavy buying forces market values sky-high.

This price increase is artificial, however – since it is based solely on the marijuana hype that’s driving the market insane the last couple of sessions. Sudden inexplicable falls are to be expected, as the so called “bubble” may “burst” at any time.

Now, more than ever, marijuana stock enthusiasts find themselves in a position to reap great profit, as well as tremendous loss, from the fickle and unpredictable market. It may appear random in the short term, but remember – instability does not negate the need for due diligence when investing is concerned.

And even a surface investigation of HEMP‘s financial status can lead to alarming revelations.

The company’s last financial report stated nearly a million dollars in net loss over the first nine months of 2013. Additionally, HEMP has filed a mere $2.2 thousand under “cash on hand”. The company appears to be generating revenues – $1.4 million is nothing to scoff at. However that alone doesn’t guarantee that its financial troubles are anywhere near over just yet. As it stands, it may be some time before HEMP starts making a profit.

All things considered, even if the company manages to recover from yesterday’s crash, its fate in the long term is still largely uncertain.

Another company in the marijuana sector that crashed recently is Creative Edge Nutrition Inc. (OTCMKTS:FITX), whose stock dropped more than 34% in yesterday’s session.