Root9b Technologies Inc (OTCMKTS:RTNB) Has Some Problems on its Hands
Some people love Root9b Technologies Inc (OTCMKTS:RTNB), and some people aren’t so fond of it. The ones who love it pushed it from around $1.50 per share at the beginning of the year all the way to $2.51 on May 19. The others have been trying to short it and have been writing negative articles on a popular financial website.
But who’s going to laugh the longest?
That is for time to tell. It must be said, however, that the aforementioned articles have resulted in quite a lot of issues for the company. The one written by a person who uses the nickname “The Pump Stopper” in particular caused quite a lot of stir. Last week, Mr. Stopper published a rather long piece in which he talked at some considerable length about RTNB, its business, and its management team. Apparently, he reckons that the people behind the company have a horrific track record of running other businesses, and he doesn’t think much of RTNB‘s fundamentals and press releases as well.
You should be able to find the article pretty quickly and you might want to take a look at it, as it does reveal some interesting facts. You mustn’t forget, however, that when he was writing it, The Pump Stopper had an open short position in RTNB, so he did have the motivation to be as negative as possible.
He insists, for example, that RTNB is nothing more than a “public shell” and a quick look at the latest 10-Q reveals that this might be a bit of an exaggeration. Here’s what the company recorded at the end of March:
- cash: $5 million
- current assets: $23.4 million
- current liabilities: $17.5 million
- quarterly revenues: $9.5 million
- quarterly operating loss: $2.7 million
So, while RTNB is still unable to reign in on the operating expenses, it doesn’t seem to fit the definition of “shell” at all. Despite this, because of The Pump Stopper’s article, a lot of people decided to take a closer look at the company. And we’re not talking about retail investors.
Mere hours after the piece went online, a law firm called Levi & Korsinsky LLP said that they are starting an investigation on RTNB, and on the same day, another entity by the name of The Rosen Law Firm followed suit. The management team reacted quickly and issued a response to The Pump Stopper, saying that his claims are “baseless”, but despite this, yesterday, a third law firm called Lifshitz & Miller said that they too will be probing into RTNB.
Sadly, while law firms are starting their investigations, and the people behind the company are trying to answer all the negative publicity, the stock is left to bear the brunt of the impact. On June 15, The Pump Stopper’s article pushed the stock 9% in the red and although it managed to remain relatively calm over the next few days, yesterday, it wiped out a quarter of its market cap in a matter of a single session. Things are not looking much better today. About forty minutes after the opening bell, RTNB is sitting at just $1.05 per share – another 16% in the red.
All in all, it’s fair to say that even if you believe that The Pump Stopper is nothing more than a short seller who wants to gain from the stock’s crash, jumping in right now is quite risky. Especially when you consider the law firms’ investigations, the results of which are still unknown. Make sure you tread carefully.
