NuGene International Inc (OTCBB:NUGN) Accelerates Its Drop
On numerous occasions we have stated in our articles that NuGene International Inc (OTCBB:NUGN) is far from the typical penny stock venture. The company not only offers real products but it has also sponsored independent clinical studies of said products which came back with encouraging results.
The financial state of the company is also on the positive side with NUGN reporting over $610 thousand in cash, close to half a million in revenues and a net loss of $240 thousand for the first quarter of the year. At the same time the company has a positive working capital of nearly $1 million. Not to mention that none other than Ms. Kathy Ireland is the Chief Designer and Brand Ambassador of NUGN.
Despite all of these positive characteristics the current share price of the company’s stock remains extremely inflated. At the start of April NUGN were trading at $2 per share while in June the ticker hit a high of $4.54. The remarkable chart performance however was only possible thanks to a widespread pump campaign carried out through the distribution of hard mailer brochures. Initially the promotion had a production budget of $2.28 million but the more recent mailers disclose that the budget now stands at $4.4 million. With such a massive amount of money, even if the exact number is somewhat exaggerated, it is no wonder that investors are still receiving the glossy brochures.
So far the artificial hype created by the promotion has managed to push the stock upwards even after some rather severe crashes but will it manage to do so now? On Monday NUGN dropped by close to 10% while yesterday the losses were even bigger with the stock wiping 17.68% of its value. Currently the ticker stands at $2.7 which in turn means that the market cap of the company is $106 million. Without the help of the pump NUGN simply cannot justify such valuations with its current fundamentals.
Back in 2014 NuGene sold 148,200 shares for $37,050 in proceeds. As a result of the 15-for-1 split performed in January the people who bought those shares now owned 11.1 million free-trading shares with a split-adjusted price of $0.0033. The profits they could reap by selling these shares on the open market during the pump are astronomical.
With the hard mailer promotion still ongoing NUGN should be approached with caution. Even if you believe in the potential of their products take into account the various risks before putting your hard-earned money on the line.
