New World Gold Corp. (OTCMKTS:NWGC) Crashes by a Fifth
On May 22 the stock of New World Gold Corp. (OTCMKTS:NWGC) burst onto the scene surging upwards by more than 168% and closing at $0.0043. Although the traded volumes during the next session couldn’t quite reach the massive 144 million shares from that day the positive momentum was enough to carry NWGC above the 1 cent mark this Wednesday.
Such price levels proved to be too much for the company to maintain though and yesterday the stock suffered a severe correction wiping 22% of the recent gains and sliding down to $0.0085. Still NWGC remains more than 5 times higher than its share price of $0.0016 just before the start of the run.
As the name of the company shows NWGC is in the business of mining gold, one of the most attractive industries for pennystocks before the surge of the marijuana hype at the start of the year. Still NWGC is far from the typical gold pennystocks. The company has real operations and announced record revenues for its latest quarter. According to the financial report at the end of March they had:
• $79 thousand in cash
• 1.7 million total current assets
• $59 thousand in current liabilities
• $2.4 million revenue
• $750 thousand net income
• 1.7 million total current assets
• $59 thousand in current liabilities
• $2.4 million revenue
• $750 thousand net income
The company has been maintaining a positive bottom line since 2011 but for the most part they have been unnoticed by the market. A possible explanation could be the fact that their operations are located in Ecuador and Peru. Another reason might be the alarming rate of dilution that has been taking place. At the end of March,2013 NWGC had 262 million outstanding shares while a year later that number has more than doubled currently sitting at 527 million shares. Just for the three months covered by the report 77 million new shares were issued as debt conversion.
It is worth keeping in mind that the current attention towards the stock was facilitated through a couple of promotional alerts posted on Facebook. Both Silk Dynasty Stocks, LLC and BIG Investments Group, LLC touted NWGC without disclosing any compensation which means that the artificial hype may start to dissipate rather quickly. And as we said traded volumes have indeed been shrinking.
Now investors are hoping for a new PR announcement by the company in order to keep the momentum going. We don’t know how likely that is when the company has made only 5 press releases since the start of the year.
NWGC offers far more promising fundamentals than the majority of pennystocks but they still require a lot of due diligence 
before jumping in. Prior to the promotional posts the company was sitting at the lower end of the double zero territories and on quite a few sessions saw almost no trading.
before jumping in. Prior to the promotional posts the company was sitting at the lower end of the double zero territories and on quite a few sessions saw almost no trading. Yesterday one of the most heavily traded marijuana pennystocks – Creative Edge Nutrition Inc. (OTCMKTS:FITX) also put an end to their run up the chart. FITX dropped by close to 10% and closed the day at $0.0068. Although the stock of Vape Holdings Inc. (OTCMKTS:VAPE) is trading at much higher prices it showed similar performance after it wiped 9.75% of its value and returned to $2.13 per share.
