Is Arch Therapeutics Inc (OTCBB:ARTH) About To Have Another Go?

If you are a frequent visitor of our website, you will probably know that we’re not big fans of stock promotions. In just about all cases, paid pumps are performed with the sole purpose of someone making a profit. The pumpers are forever praising a company that usually has some quite serious financial problems, they put on ridiculous price targets in boldface and promise you that if you were to invest your hard-earned cash in the featured ventures, you will become very very rich. As is often the case, however, reality turns out to be harsher and before you know it, you are stuck with some worthless shares and the losses you’ve incurred are so huge, that you don’t even dare calculate them. While that is what happens to most of the people, there are still those who like to play the pumps and it is true that if you jump in at the right moment and time your exit carefully, you could turn a profit. It’s still way too risky, though and what better example to illustrate all this than the promotion for Arch Therapeutics Inc (OTCBB:ARTH).

It all started back in June. Just like another pumped penny stock from the recent months, Goff Corp
(OTCMKTS:GOFF), ARTH was an Ireland based small cap venture with a business that was never going to be profitable. The similarities between ARTH and GOFF don’t end there, however. Both companies changed their business plan, the location of their principal offices and their management teams shortly before the promotions for them started. Both ventures also performed a stock split and increased their authorized share capital. If you have been around penny stock promotions for as long as we have, you would have probably guessed where this is going and if you take a look at our first article on them, you will see that our eyebrows were raised way back on June 20.

A day later, interest in the ticker was still pretty high which urged us to cover ARTH once again and by the time we were done for the day, there was virtually no doubt in our mind that a paid pump was brewing. Apart from all the factors mentioned in the previous paragraph, we also saw that the internet domain for the landing page that was about to send ARTH flying was registered. There was a message saying “Coming Soon” and the only question was “How soon?”. It would appear that we weren’t the only ones who uncovered the pumpers’ plans and it’s fair to say that the word was spread around pretty quickly. Probably that’s why, the people standing behind the promotion decided to take a more steady approach.

The landing page was launched for a few hours during the June 22 – June 23 weekend but it was quickly taken down which annoyed quite a lot of day traders who were itching to start playing the pump. They were going to have to wait for a little longer, but it would appear that some of them were starting to shows some impatience which resulted in a few corrections. The wait was over on Monday, July 8 when the touting website for ARTH was finally launched and that in turn resulted in 36% gains in a single session. Not long after that most of the optimism from the virtual edition was printed on colorful brochures and sent out to post boxes all over the US.

It turns out, however, that you should be weary not only of what you read on the Internet, but also of pretty pictures found around the snail mail. Following the initial jump there was one more green session but despite the promotional budget of around $3 million, everything was over pretty much there and then. Between July 10 and July 18 there were no profits in sight and the total losses for that period alone amount to around 65% which, you’d agree is pretty far off from the performance suggested by the pumpers.

Last Friday, however, marked the first green session for ARTH in a while and the first two ones from this week also ended on a positive note. So, does this mean that, after all, the pump is still not over? We won’t be surprised if that’s the case. We read on the message boards that some traders are still receiving hard mailer brochures and we know that the newsletters could jump in at any time. In addition to this, ARTH published a press release just a few minutes ago about their co-founder delivering a lecture at a conference and while that might have nothing to do with the way ARTH is going along, it does seem to be giving the price a nudge. About an hour after the opening bell, the ticker stands around 5% above yesterday’s close. How long will it last, though? Only time will tell but considering the catastrophic performance from last week, we’re not ready to bet on any sort of steady behavior.

If ARTH‘s chart isn’t scary enough to convince you that an investment in a promoted penny stock really is a risky bet, then you might also want to take a look at the ones for Eco-Tek Group Inc (OTCMKTS:ETEK) and Primco Management Inc (OTCBB:PMCM) who were also the target of paid pumps.