NuGene International Inc (OTCBB:NUGN) Accelerates Its Fall
Back in June NuGene International Inc (OTCBB:NUGN) reached a price of over $4.25. The rapid ascent up the chart, however, was not a result of the stable operations of the company – it was fueled by a multy-million paid pump. Thanks to the hype generated by the hard mailers that were being distributed to investors’ mailboxes NUGN were able to sustain the over-inflated prices for a couple of months but that is no longer the case.
Yesterday the company crashed by nearly 12% and closed the session at $1.62, approximately 61% below its pump-induced highs. Despite the significant depreciation NUGN still command a market cap of over $64 million. Such valuations seem completely disconnected from the underlying fundamentals. The latest quarterly report covers the period ended June 30 and according to it back then NUGN had:
• $486 thousand cash
• $1.16 million total current assets
• $268 thousand total liabilities
• $536 thousand sales
• $772 thousand net loss
It is true that the reported revenues for the quarter grew by 153% compared to the same period last year but investors might want to also take into account that a $15,500 net income has now turned into a nearly $800 thousand net loss.
On September 9 NUGN issued their latest press release but it only managed to push the stock 3.59% in the green. Not to mention that on the very next day the ticker wiped even those minimal gains. Still, NuGene announced that they had signed a memorandum of understanding with Bassett Salon Solutions, a distributor of high-end beauty products to over 7,000 salon accounts in the United States. If everything goes according to plan by Q1 2016 NUGN‘s products will be distributed to all of Bassett’s accounts. For now though the product line of the company will be tested in only two accounts.
NUGN‘s financials may be better than what most of the other pennystocks can offer but that doesn’t mean the company is any less risky. The numerous red flags we have discussed in our previous articles are still there and any trades involving the stock should be attempted only after doing extensive due diligence.
