Surna Inc (OTCMKTS:SRNA) Bounces All of a Sudden
Surna Inc (OTCMKTS:SRNA) is a company that wants to make money out of the cannabis industry. This alone could be enough to scare some people away. After all, a lot of investors are still licking the wounds they received last year when they thought that, thanks to the legalization of marijuana in Colorado, they’ll be able to make tonnes of money from penny stock companies that work in the pot business. As you probably know, things didn’t really work out that way and after the hype dissipated, it all went up in a cloud of broken promises and SEC suspensions.
Indeed, lots of people fell for the press releases of OTC companies who were saying that they want to sell pot when, in fact, the only thing they wanted to sell was shares. In must be said that SRNA wasn’t among those companies.
The public entity’s entrance into the controlled environment agriculture business was the result of a reverse merger which took place in March 2014. This means that revenues were registered almost immediately, and, apart from a slip up in Q4 of last year, they seem to be growing at a rather rapid rate. The latest 10-Q shows about $871 thousand in quarterly sales.
Unfortunately, as we’ve mentioned numerous times on these pages, decent operational results aren’t always translated into decent chart movements. Like virtually all marijuana-related OTC stocks, SRNA too fell victim to excessive hype and it dropped from a height of over $7 per share in April 2014 all the way down to a bottom of $0.04 logged at the beginning of the month.
Part of the down fall could be explained with the fact that while the revenues are decent enough for a pot stock, the rest of the 10-Q isn’t really that impressive:
- cash: $365 thousand
- current assets: $1.8 million
- current liabilities: $2.8 million
- quarterly net loss: $1.4 million
The people running SRNA are currently pretty excited about the upcoming reflector that the company plans on selling and they’re probably expecting some better profit margins from it. Hopefully, the new product will indeed push the business closer to profitability. Guarantees can not be given, however, which means that the future stock performance is still unpredictable.
Jumps such as the one witnessed yesterday aren’t helping on that front either. After quite a lot of time of doing nothing, the ticker was suddenly brought to life and in a matter of a single session, it managed to gain 42%, reaching a close of more than $0.08 per share for the first time in over a month.
Of course, there’s nothing wrong with the stock leaping in the right direction, but SRNA did it without any catalysts whatsoever which means that sustaining the run could be hard. Of course, a new press release could change things dramatically, but even if it does come out, you mustn’t forget that the company has some convertible notes that can be turned into stock at a 20% discount.
