PTA Holdings Inc. (OTCMKTS:PTAH) Retreats Back To Triple-Zero Territory

There was a promotional campaign for PTA Holdings Inc. (OTCMKTS:PTAH) back in January. Some more emails flew around in February and the pumpers mentioned the ticker once again at the beginning of June. This has had its inevitable effect on the ticker and while at the beginning of the year PTAH was traded at around $0.001 per share, by the first sessions of August, it had already dropped to around $0.0002. That’s a pretty disappointing performance and especially so considering the fact that all the while, the company has been functioning rather successfully.

The financial statement for the first quarter of 2013 came out on May 5, and it sported a revenue figure of just over $1 million and a net income (things that are extremely rare among penny stocks). Traders, however, weren’t paying attention. There was some increased interest but it wasn’t enough to reverse the trend and break the slow but steady fall.

The report for the second quarter came out on August 11, it didn’t present us with figures that were fundamentally different compared to the ones found in the preceding statement but this time, investors took note. In a matter of just one week, PTAH moved from $0.0003 per share all the way up to around $0.0027. That’s an improvement of around 800% which proved to be too much for the ticker. Not long after the ascend, the price started going down and on Friday, it dropped back to the triple-zero level once again. The question now is: “Why is PTAH displaying such a disappointing behavior?”.

At first glance, at least, it appears to be totally illogical. The company is generating revenues and unlike other penny stocks, they are also displaying some real progress. What’s more, they announced on Friday that the third quarter is shaping up to be even better than the second one and they seem generally excited about the negotiations regarding some future acquisitions. So, why isn’t the stock moving up?

Well, we mentioned in our previous article that the threat of dilution is getting more and more real and the recent increase in the number of authorized shares could be acting as a sign that the shareholders’ investments might be put under some additional pressure.

In addition to this, potential investors are probably not quite sure about the management team. If you check out some of our first coverages on PTAH, you’ll see that we wrote about some complaints against Leonard Lewensohn, the current CEO and although the litigation dates back to 1995, some people are extremely weary when it comes to penny stocks. We reckon, rightly so.

There haven’t been any legal proceedings against PTAH and the people who run the venture ever since, but when you dig a bit further, you can still find some chinks in their credibility armor. Their corporate headquarters, for example, is located at 3420 East Shea Blvd. in Phoenix, Arizona, which seems to be a rather nice-looking office building. When you do a bit more research, however, you’ll see that the same exact business address, down to the number of suite occupied, also serves as the HQ of another small cap venture – For The Earth Corp (OTCMKTS:FTEG). Not surprisingly, the place is offered as a virtual office which doesn’t really inspire all that much investor confidence.

Then there’s the inherent volatility among OTC tickers. Dial Global, Inc. (OTCMKTS:DIAL) illustrated that perfectly on Friday when it dropped by about 48% despite the news of Cumulus Media, Inc. (NASDAQ:CMLS) acquiring the small cap venture. At the same time, Amarantus Bioscience Holdings, Inc. (OTCMKTS:AMBS) added around 25% being fueled by nothing more than a couple of optimistic PR announcements and these two companies show that you can never be too sure what is going to happen next in Pennyland. The same is absolutely true for PTAH and that’s why, considering all the risks carefully before making any investment decisions is crucial.