Konared Corp (OTCMKTS:KRED) Sinks After an Underwhelming Q2 Report
Konared Corp (OTCMKTS:KRED)’s shareholders are no stranger to disappointment. The company went public after a reverse merger in September 2014 and just a few short months later, the stock found itself on the receiving end of a massive multi-million dollar paid promotion.
It must be said that the pump for KRED was among the more long-lasting campaigns we’ve seen which means that the people who timed their entry and exit points well were faced with some healthy profit opportunities. A pump is a pump, however, and, as the more experienced among you probably know, these sort of campaigns, no matter how strong, tend to cause quite a lot of damage. KRED could serve as a classic case in point. Sure, the crash wasn’t as violent as the one experienced by other promoted stocks, but the ticker still dropped from over $1 per share to just $0.06 in a matter of less than a year.
Then, however, at the end of February, a light at the end of the tunnel appeared. A few press releases and a promising-looking revenue figure in the 2014 10-K meant that people were once again ready to trust the stock with their money.
The pumpers tried to wreak havoc with the price at the end of last month, but even that wasn’t enough to put investors off completely. People knew that the Q2 report is coming and they were expecting some good-looking figures from it.
The report in question came out after the closing bell on Friday and you don’t really need to open it to see that the figures in it failed to meet investors’ expectations. All you need to do is take a look at the stock performance from yesterday. KRED lost more than 17% of its value in a matter of just six and a half hours and it closed the day at less than $0.10 per share for the first time in over five months.
Here’s what made investors’ upset:
- cash: $169,390
- current assets: $810,751
- current liabilities: $845,753
- quarterly revenues: $173,622
- quarterly net loss: $1,134,964
We’ve seen worse financial statements in Pennyland, but investors were expecting more from KRED. They were expecting a more solid cash position and a more stable working capital surplus. What they weren’t expecting is a 59% revenue drop on a year-over-year basis. Q2 sales were also 27% down from the ones logged during the first three months of the year.
In light of this, people’s anger is somewhat understandable, but can KRED finally make amends?
Well, according to the management team, the drop in sales was caused by a decrease in marketing activities which, in turn, stems from capital restraints. Apparently, KRED believe that these restraints will be gone soon because they say that they expect more marketing expenses during the second half of the year.
In addition to this, they announced earlier today that a certain Kyle Redfield is joining the company as a President and Chief Operating Officer. Apparently, Mr. Redfield has extensive experience in the industry and he has helped many beverage companies get to their feet in the past.
That’s good news, and judging by early trading today, the market is reacting to it. About twenty minutes after the opening bell, KRED is sitting at $0.106 or about 6.5% in the green. But does this mean that you should skip on the due diligence?
Not in the least.
