Quality Stocks Take On a 9-Month Pump Job on International Stem Cell Corp (PINK:ISCO)

Yesterday, we got an email from Quality Stocks touting the stock of International Stem Cell Corp (PINK:ISCO). As a result, ISCO shares lost approx. 3% of their market value by the end of the corresponding session. However, the story is far from over as the campaign is about to last for a whopping 9 months for $5,000 per month.

While past experience suggests that paid promotions only worked out in the immediate term, we come across pump jobs such as the one we are talking about every so often. And indulging in heavy advertising of a penny stock for 270 days is definitely a tiresome undertaking with a million to one chance of success. Judging from ISCO‘s market close on day one, the stock has hardly got off to a flying start. Opening at $0.344, ISCO peaked at $0.36 before closing at $0.335 on a volume of 147 thousand, twice less than the average daily turnover. So, if you got in at the open, you must have made a maximal profit of 4.6%, which does not really sound impressive enough to justify the pump.

However, if you bought a stake in ISCO on Feb. 11 when it was last promoted and decided to wait until the stock skyrockets on the charts, which of course did not happen as ISCO slumped by 21% on Feb. 13, you might have been looking forward to the new pump. Why does ISCO not seem fit for a continual upward trend on the chart?

For a start, while investors can be impressed by a company’s business, they are not likely to take this business seriously if it is running at a loss. This is exactly the case with ISCO. The company has been making in excess of $1 million per quarter, yet this amount is only a small fraction of the millions of dollars allocated for salaries and other administrative expenses. Since the cash at hand is not enough to cover those salaries, ISCO‘s directors have generously been awarding themselves with hundreds of thousands of shares without paying a single dime to acquire them. The latest stock-based compensation occurred in late-January when each of four of the company’s directors got 162500 shares for free.

Keep in mind this fact when you try to identify the reason why ISCO lost 21% shortly after the penultimate pump job on the stock in February. Do not forget about it now, either, because there might be another sell-off round any minute.