Petrosonic Energy Inc (OTCMKTS:PSON) Tries To Recover

After the devastating 46% downfall that Petrosonic Energy Inc (OTCMKTS:PSON) experienced between June 18 and June 20, they did manage to claw some ground back up during Friday’s session when they closed 15% in the green, But is there anything to suggest that they are in for a bounce that could bring some of the profits back?

Let’s first take a look at what caused the massive crash. It was the scandal that took place around former host of Fox News’ TV show “Bulls & Bears”, Mr. Tobin Smith. Mr. Smith is a well-know financial journalist who worked for Fox News for quite some time, but then an unnamed third party paid his company, NBT Group, Inc. $50 thousand for what they call “sponsored research” on PSON. The report that came out was written my Mr. Smith himself, it was printed on glossy paper and was sent out as part of a $3 million hard mailer promotional campaign. Fox News, weren’t particularly impressed and they fired him due to a breach of contract, which was a massive blow to PSON‘s credibility.

The whole thing definitely put a spanner in the pump’s wheel and it created a lot of negative reactions among investors and analysts. The target, of course, was not PSON themselves, but Mr. Smith. He decided that a public response is in order and he published it last Wednesday in a lengthy post on NBT Group’s website. In there he talks about a lot of things and he suggests that the termination of his contract with Fox News has been somewhat unfair. This isn’t really our problem, but what does concern us is the fact that he thinks that he’s done nothing wrong.

He explains that he’s gets paid to do his “sponsored research reports” but he also says that he does them only for companies that deserve it. He further mentions that the aforementioned reports are done for the greater good of the featured company and retail investors and, of course that he is proud of all the time and effort spent on research and due diligence. We decided to put his words to the test.

PSON is not the first company that has been featured in a paid report by Mr. Tobin Smith. Back in May 2012 he explained in detail that the opportunity to buy some shares of IceWEB, Inc. (OTCBB:IWEB) at the ridiculously low price of around $0.16 is one that you can not afford to miss. If you are one of the people who have trusted him back then, you are probably holding IWEB stock that is around 84% cheaper right now.

A more recent example is his report on BOLDFACE Group Inc (OTCBB:BLBK) from January, when he said much the same things. BLBK hovered around $0.35 per share back then and within a matter of five months, the price has dropped to just $0.06. That’s more than 80% for the numerologists among you.

Yet another example of Mr. Smith’s rather disappointing attempts to predict the movement of small cap tickers is Max Sound Corp (OTCBB:MAXD). His coverage on them started in mid-April and due to all the excitement the price reached around $0.32 per share. On Friday, the ticker reached a new 52-week low of $0.165.

The charts above are pretty indicative of how penny stocks are performing when Mr. Tobin Smith issues his “research reports” and looking at them right now, we’re not sure why he claims that he’s proud of his work. We’re also not sure if the term “research” is the right one to use when it comes to his coverages of penny stocks since he fails to mention some important things in his reports like, for example, the fact that PSON have generated no revenues since inception.

There’s no doubt that the hubbub created around Mr. Smith and his report were the cause of the sudden and catastrophic fall that PSON experienced last week, however, having in mind the magnitude and the budget of the promotional campaign, this was bound to happen sooner or later. Just like it happened to Northumberland Resources Inc (OTCMKTS:NHUR) and Norstra Energy, Inc (OTCBB:NORX) who were also the target of large-scale pumps during the last couple of weeks. We’re still not sure if the pumpers are done with PSON, which is why, we would urge you to tread carefully, even though, the ticker showed some signs of waking up on Friday.