Punchline Resources Ltd (OTC:PUNL)’s Spectacular Failure
75% down in just a couple of trading sessions. That’s what happened to Punchline Resources Ltd (OTC:PUNL) and there are some very good reasons for the crash. More on them later on, but right now, we would like to note that the behavior of the promoters during PUNL pumps is even more interesting than the performance of the stock.
Take the campaign that ran back in October 2012. There were quite a lot of emails flying around and they were backed up by some optimistic press releases, but the results were pretty much the same as the ones from yesterday and the day before. The crash was so massive that Stock Mister decided to write an apology email to their subscribers for misleading them into thinking that PUNL is a solid investment. Stock Mister were not part of this month’s campaign but despite that, some of the pumpers also wrote emails saying “sorry”. Now, we all know that “sorry” will do little to cheer up the investors who lost their hard-earned cash, but some of the newsletters are not even finished with PUNL.
Penny Stock Crowd (PSC), for example, sent out an email after the end of yesterday’s session saying that despite the catastrophic losses, PUNL could bounce big time really soon. We, however, know PSC all too well and we’re not ready to trust them blindly. Take Great American Energy Inc (OTC:SRBL) for example. PSC claimed that it could see some massive movement on March 18. Instead, SRBL lost 4% on the day and the ticker has been on a downward trend ever since.
It’s pretty clear, then, that Penny Stock Crowd should not be trusted easily, but should you bank on PUNL themselves? After all, if you are considering a long-term investment, you should be more focused on the company in question rather than the people trying to pump it.
PUNL have been around since 2006 and, until recently, they called themselves Punchline Entertainment Inc. Back in September 2012, however, they changed their name to Punchline Resources and they entered the mineral exploration business. They apparently acquired rights to mining claims for some gold and silver properties in Nevada and since then, they come up to the spotlight every now and then telling us how rich they are going to be. Coincidentally (or not), the press releases are published in the heat of a promotional campaign and we have all seen what these did to the stock. But can they recover?
Well that depends on the amount of gold or silver that they can extract from the Earth’s crust. In order to do anything however, they will need to have some money lying around which they can invest in operations. Unfortunately, according to the latest financial statement for the quarter that ended on January 31, that’s not the case. Here’s a recap of the figures:
- cash: $26 thousand
- current assets: $29 thousand
- current liabilities: $340 thousand
- no revenue since inception
- quarterly net loss: $49 thousand
At the same time, the agreements that they have signed for the mining rights state that they will need to invest around $4 million in the properties over the next couple of years, and while they are still managing to postpone the first payment, unless they succeed in raising some capital really quickly, the agreements will be terminated.
They say that they plan to raise the funding through issuance of shares and debt however, considering the catastrophic crashes that follow every single pump, they will have a hard time convincing investors and banks that PUNL is a safe place for their money.
