Spiral Toys Inc (OTCBB:STOY) is Back in the Game
Spiral Toys Inc (OTCBB:STOY) got pumped for the first time back in February. The promotion was pretty conventional – there was a landing page, there were some emails, and the whole thing cost $100 thousand. There was nothing conventional about the way the stock behaved, though.
Most of the pricier pumps tend to result in a slow and steady rise in both the price and the volumes. STOY, on the other hand, turned out to be a pop-and-a-drop affair. On February 10, it exploded and gained a massive 50%, reaching its 52-week of over $0.87. On the very next day, however, it slipped and just a week later, if found itself at less than $0.40.
Now, STOY is targeted by the pumpers again and it must be said that this time, its ascent is a bit more gradual. The landing page is still active and over the last few weeks we have received more than twenty email alerts from a myriad of promotional outfits. The emails are not cheap. A total of $66,500 has been spent on the pump since the beginning of the month and the hype is definitely working its magic.
STOY was a bit shaky at first, but yesterday, it picked up quite a lot of speed. It managed to gain 11% and it finished the day at $0.57 on a dollar volume of around $345 thousand.
So, at least for the time being, the performance during STOY‘s second pump is proving to be better than the one during the first campaign. But is there anything else that could entice you into jumping in?
There has been some news recently. The company launched its much talked-about CloudPets at the beginning of the month and a couple of weeks ago, it said that a national media campaign is being rolled out. Yesterday, the management team informed us that they have received a purchase order for 500,000 CloudPets from their partners at Jay@Play which means that the toys could soon pop up on the shelves at some major retail chains like Walmart.
Things appear to be coming along nicely and the people running the company are quite excited about the future. In a letter to the shareholders, for example, Mark Meyers, STOY‘s CEO, said that he is confident about his plans to up-list the stock to NASDAQ in early 2016.
Unfortunately, it’s not all good news. On April 15, the company published its 2014 10-K and it presented us with the following figures:
- total assets: $245 thousand in cash
- current liabilities: $294 thousand
- yearly revenues: $269 thousand
- yearly net loss: $3.4 million
If the company is going to reach all the milestones outlined in Mr. Meyers’ letter, it will need to raise quite a lot of money, and that’s where a problem emerges.
So far, STOY has been funding its operations by selling stock. In Q4 of 2014, for example, it conducted a private placement and issued nearly 3.4 million shares at a price of $0.15 apiece (73% below the current market price). Between December 31 and April 15, the company sold an additional 416,333 shares at a more reasonable $0.30 (still a hefty 47% below the market valuation).
In addition to this, at the end of last year, there were some notes payable which can be converted into common stock at $0.25 per share (a 56% discount to yesterday’s close).
This means that while retail investors are hoping to see some positive results from STOY, other people might be in a hurry to unleash their holdings on the open market and walk away with the profits. With the pump currently running, liquidity shouldn’t be a problem for them.
About half an hour after today’s opening bell, STOY is sitting at $0.58 (1.75% in the green).
