Life Stem Genetics Inc (OTCBB:LIFS) Tanks on Record-Breaking Volume

“All good things must come to an end”, wise people have said. They’re absolutely right. Take Life Stem Genetics Inc (OTCBB:LIFS)’s run from the last couple of weeks, for example. The company was awarded the new ticker symbol less than a month ago and yet, this was enough time for the stock to run from around $1 per share all the way to a high of $1.86. A correction was bound to happen.

What we saw yesterday, however, can’t really be classified as a mere “correction”. “Crash”, “disaster”, and “plummet” are probably much more appropriate words for the devastating performance. LIFS tried to continued its surge during the first minutes of the session and it even managed to break yet another 52-week high when it briefly touched $1.90 per share. Then, some intense selling ensued and less than four hours later, the ticker was standing at $1.43 per share – 22% below Wednesday’s value. Although some people will try to convince you otherwise, this is not just a healthy pullback which is a part of an even more consistent run in the right direction. Not least because of the massive volumes – around $4.1 million worth of shares changed hands which is an absolute record.

The actual reason for the drop can only be attributed to the paid promotion that has been running for LIFS for quite some time now. We first covered the ticker a couple of weeks ago and ever since, we have been trying to warn our readers that a violent turn towards the bottom of the charts seemed inevitable. What’s more, the total promotional budget amounts to more than $2 million ($300 thousand of which was paid by the company itself) and it made the chart movement even more unpredictable. Well, now it seems that the pump has run its course. Or has it?

Well, the problem is, with similarly expensive promotions, you can never really be sure when the campaign is over. We haven’t received any alerts over the email since Wednesday morning when Investor Planet made sure that more and more people have access to Wall Street Realtor’s report, but despite this, the landing pages set up by the pumpers are still pretty much up and running.

As we mentioned in our previous article, there are also rumors about a paper mailer campaign running through the snail mail and the whole hype, especially if it’s aided by a press announcement or two, could lead to another peak. Even if that happens, however, LIFS will probably never reach the heights it experienced a couple of days ago.

There are many reasons for this. For one, even at the current levels, the market cap amounts to more than $60 million and the financials in the latest 10-Q (even when taking into account the recent private placement) are far from enough to justify it. Not to mention the fact that Life Stem Genetics, the private company that got acquired by LIFS, was incorporated less than a year ago which could suggest that they’ll need some time to get the whole business going.

And even if you disregard this fact, you should bear in mind that virtually all expensive promotions follow more or less the same pattern. The examples are countless, but among the more recent ones are Pan Global Corp (OTCMKTS:PGLO) and Endeavor IP Inc (OTCBB:ENIP) and we reckon that their chart movement illustrate the point perfectly.

Alkaline Water Company Inc (OTCBB:WTER), on the other hand, is an older pump and we’ve included its performance to show you the aftermath of such campaigns. Make sure you weigh the risks carefully and stay away unless you can afford the losses.