Next Graphite Inc (OTCMKTS:GPNE) Fails to Move Despite a Paid Pump
Next Graphite Inc (OTCMKTS:GPNE) had a wild session at the end of last week. It opened Friday’s trading with a small gap up and it immediately started climbing. A few minutes later, it hit an intraday high of $0.075, but sadly, it failed to stay there for long and it eventually slid back down to a close of $0.04. Not exactly the performance everyone was hoping for, but it must be said that some of the shareholders will probably see a silver lining.
In a matter of six and a half hours, investors traded nearly 3.8 million shares which pushed the dollar volume up to around $166 thousand. If you take a look at the historical figures, you’ll notice that liquidity has been something of a problem for GPNE. Now, though, people are paying attention and the shareholders must be pretty happy about that.
The only problem is, Friday’s exuberant trading was caused by nothing more than a paid pump. United Pennies of America, Epic Stock Picks and the rest of their affiliated newsletters received $23 thousand and sent out some alerts. Apparently, this was a good enough reason for some people to jump in, but the ones who did should probably bear in mind that they have bought into a company that has a host of issues.
Take the press releases, for example. Experienced penny stock investors know that even the more solid OTC tickers out there refuse to move when there’s no PR action. GPNE made its latest announcement four and a half months ago, and in Pennyland, this is an awful lot of time.
Nevertheless, we’ve mentioned numerous times on these pages that PR alone can never be enough to support a stock in the long run. The financials are also important. Sadly, GPNE doesn’t excel on that front, either. The 2014 10-K looks like this:
- total assets: $17,878 in cash
- total liabilities: $181,413
- NO revenue since inception
- yearly net loss: $1,646,269
So, the people who are invested in the company at the moment can do little but hope that the management team will be able to fix some of the problems like the infrequent updates and the truly appalling financial situation. While they’re at it, however, they might want to consider one more thing.
GPNE was previously known as Zewar Jewellery Inc. and it was in the business of selling imitation jewellery through the internet. In May 2013, Zewar was trying to go public and in order to do that, it sold 3.2 million shares of common stock at a price of $0.01 per share.
As you might have guessed already, the imitation jewellery business never really took off and at the end of 2013, the company went through a merger. Lots of new shares were issued, some were transferred from the old management team to the new one, and some were canceled. The 3.2 million shares sold in May 2013, however, remained outstanding.
About a month after the merger, GPNE‘s new management team decided to effectuate a 7.8 for 1 forward split which turned the 3.2 million shares into almost 25 million shares. And they were all sold for just $32 thousand.
The tiny volumes registered over the last year or so suggest that the people who initially bought the discounted stock might still be holding on to a significant portion of it. And they might be eager to cash in on the profits before GPNE becomes illiquid again.
