How Long Can Growlife, Inc. (OTCBB:PHOT) Keep Pushing Up?
After heading the pack of the most heavily traded OTC stocks on Friday, yesterday’s session saw Growlife, Inc. (OTCBB:PHOT) shift double its average volume and close nearly 15% up. The ticker traded 53.9 million shares and stopped at $0.23 per share.
PHOT was one of the very few marijuana stocks that did not go through a major hiccup on Friday and despite dome heavy intra-day volatility managed to close green. Over the last days of 2013 the ticker was no doubt buoyed by the general sector hype that pushed up every stock that was related to marijuana in any way imaginable. That trend continued into the market days of the new year.
The volume and price action was caused by the first completely legal recreational-use sale of marijuana in the state of Colorado that was recorded as a historical moment on Jan 1. PHOT is doing its best to keep everyone excited as well, posting regular press releases. The recent top-level shuffle at PHOT may have helped the stock as well, with the appointment of Mr. Alan R. Hammer to the company’s BoD.
The company’s latest big run started in late November, as PHOT announced a joint venture with CANX USA LLC should bring $40 million in funding, with $1.3 million arriving with the closing of the deal. While this means that PHOT will have sufficient resources to roll out its GIFT program supporting new marijuana businesses that are refused funding by banks, the money comes with some extra provisions that investors may want to keep in mind.
The company issued CANX warrants for the purchase of 140 million PHOT common shares, with an exercise price of $0.033 per share. Additionally, PHOT issued CANX a convertible note for another $1 million and this note can be turned into common shares at a conversion price of $0.025 per share. Possible significant dilution aside, if those warrants and convertibles are turned into shares while PHOT is still soaring over $0.20 per share, i.e. at a near-90% discount, traders might find the price being pushed down by some heavy selling.
Both the warrants and the convertible note are mentioned in the press release by PHOT but the exercise and conversion prices are found only in the accompanying 8-K filing. Traders are advised to always keep an eye out for those before they get hopped up about new developments.
Other marijuana stocks recovered in yesterday’s session, in part making up for Friday’s slump that hit almost the entire sector. Medical Marijuana, Inc. (OTCMKTS:MJNA) climbed 10% to a close of $0.17 per share. Cannabis Science, Inc. (OTCMKTS:CBIS) closed 14% up, nearly landing at $0.07 per share.
