New World Gold Corp (OTCMKTS:NWGC) Goes Further Up
After months of sitting idle and generating no significant volumes, New World Gold Corp (OTCMKTS:NWGC) suddenly woke up and registered a couple of exciting sessions at the end of last week.
On Thursday, investors traded more than 144 million shares and the ticker gained a whopping 168%. Trading during the last day before the long weekend was not quite as intense, but it was still significant – another 25% were added while the dollar volume at the end of the session stood at around $432 thousand. In a nutshell: two exciting sessions, cumulative trade value of more than $1 million, and a jump for NWGC from $0.0016 to $0.0054 per share.
It seems that the whole thing was caused by an outfit called BIG Investments LLC who are touting the stock as their new pick. They are primarily talking about NWGC on Twitter, Facebook, and on the message boards and although they don’t disclose any compensation, it would appear that so far, things are going well. Will the run last, though?
BIG Investments’ involvement in the whole thing is not necessarily a good sign. As you can see from this link, in February, the same people were trying to convince investors that Strategic Global Investments, Inc. (OTCMKTS:STBV) has “A lot of room to run“. Back then, STBV was hovering around the $0.01, but right now, less than four months later, it’s stuck between $0.0001 and $0.0002 per share. A pretty disappointing performance, you would agree, but then again, there is one major difference between STBV and NWGC.
Namely, the latter seems to be a much more solid enterprise. The latest report, for example, covers the first quarter of 2014 and it contains the following figures:
- current assets: $79 thousand
- current liabilities: $59 thousand
- quarterly revenues: $2.4 million
- quarterly net income: $750 thousand
There are some problems like the obvious lack of cash, but there’s no getting away from the fact that $2.4 million in revenues is not something we see every day. What’s more there’s been a 48% year over year revenue jump and the net income, when compared to the one registered at the end of Q1 of 2013, has almost doubled. In addition to this, the report tells us that NWGC has been profitable since 2011 and there’s nothing to suggest that this is about to change.
All in all, NWGC seems like one of the truly solid companies on the OTC Markets and that brings us on to a very interesting question: “Why is the stock still sitting deep in the sub-penny levels?“.
It’s really hard to say what the problem is, but, as we mentioned in our previous article, dilution might have something to do with it. More than 77 million shares of common stock saw the light of day during the last reported quarter and the financial statement suggests that they were issued as a conversion of debt. If you take a look through the older reports, you’ll see that the stock issuance has been going on for quite a while. In March 2013, for example, the O/S count stood at 264 million whereas right now, it’s nearing the 530 million mark.
The statements don’t give us any information on how the newly issued shares were valued, but even if there are no ridiculous discounts, the pressure coming from the printing press could prove to be too much for NWGC. That’s why, doing your due diligence and considering all the risks before putting any money on the line is absolutely essential.
