Tranzbyte Corp. (OTCMKTS:ERBB) Takes a Pounding

Yesterday’s market session turned out to be bad news for Tranzbyte Corp. (OTCMKTS:ERBB) shareholders. The company’s share price slid by just over 19%, down to a close of $0.032 per share. This brought ERBB to its lowest levels ever since the first week of March, before the huge run up the charts.

There was no immediately obvious trigger for the drop. No unfavorable news came out over the session, on the contrary – the last PR from ERBB concerned a pre-order valued at $1.7 million. Still, the price took an immediate nose dive at the opening bell and proceeded to drop further. It’s difficult to imagine that the drop was caused by sellers who were taking their profits, as that scenario was more likely back in late March.

Voices of reason are starting to crop up among traders on online forums, communicating a more sober outlook on the company. Indeed, the ‘honeymoon phase’ of the early 2014 marijuana daze as one poster calls it is now coming to an end and reality is slowly setting in. The suspension of Growlife, Inc. (OTCMKTS:PHOT) further shook the sector, as in the minds of a good number of people PHOT was a big contender in the pot race. PHOT resumed trading on Friday and is currently over 60% down from its pre-suspension price level.

ERBB was one of the marijuana companies that climbed a little too fast for their own good. The tidal wave of excitement unleashed by the announcements related to the company’s ZaZZZ vending machine and the media exposure received pushed ERBB to dizzying heights that turned out to be unsustainable. With all its fuel spent up for the moment, the company will need to start posting solid revenue figures boosted by its expected state-wide launch of ZaZZZ and improve dramatically upon its last reported financials before another big run up.

ERBB‘s last quarterly report for the period ended December 31 lists the following:

• $2 thousand in cash
• $3.6 million in current liabilities
• $86 thousand in quarterly revenues
• $323 thousand in net loss

Given this is the last reported financial state of ERBB, even the company’s current market cap of $113 million may appear a bit too generous, despite the promise of future success of the ZaZZZ machine. In late March the market valuation of the company was three times that, so this retrace should not come as too big of a surprise.

If ERBB manages to hold a steady course and grows in a horizontal, more sustainable manner as opposed to the hype spikes it charted in March, the future may still smile on long shareholders, but only time will tell.