Vape Holdings (OTCMKTS:VAPE) Can’t Find Bottom
You’ve probably heard already about the so-called green rush that took over the OTC Markets during the first half of 2014. The legalization of marijuana in the states of Colorado and Washington resulted in quite a lot of interest from investors. Many OTC companies modified their business plans so that they can jump on the pot bandwagon and numerous stocks ran to some incredible heights. Vape Holdings (OTCMKTS:VAPE) was no exception.
Unfortunately, at one point, the proverbial bubble burst. The excitement dissipated, plenty of stocks got suspended and those who managed to survive crumbled and lost huge portions of their market caps. Once again, VAPE was no exception.
We should note, however, that over the last few days we’ve seen something of a rebound. Pointing at a specific reason for the bounce is extremely hard, but it’s fair to say that some rumors might be at play. According to them, President Obama is about to nominate Vanita Gupta for the position of United States Assistant Attorney General for the civil rights division of the Department of Justice. As The Washington Post points out, Ms. Gupta is an advocate for marijuana legalization and plenty of people reckon that her potential appointment to the position will be beneficial for the industry. We’re about to find out whether that’s going to happen or not, but the fact is, pot stocks are running in the right direction at the moment. Except for VAPE, that is.
In fact, VAPE has been on a pretty steep slide since the beginning of the month. On October 1, the ticker opened the day at over $2 per share, but yesterday’s session was closed at just $0.83. And while most of its pot-related counterparts have been gaining some lost ground over the last two days, VAPE has been digging a deeper hole in the ground. Which is somewhat strange.
After all, we’ve mentioned numerous times on these pages that unlike many marijuana companies that promise a lot and then fail to deliver, VAPE is actually running a business that doesn’t appear to be doing too badly. During the second quarter of 2014, for example, they registered around $361 thousand in revenues which might not sound like much, but it is relatively presentable when you have in mind that the company is still new. Yet, the ticker is refusing to break its fall. Why is that?
It would appear that some people are having their doubts about VAPE. More worryingly, if The New York Post is to be believed, those people are from the SEC.
According to an article published on Sunday, the Commission is taking a probe at some pot-related companies because they reckon that a small group of investors have made huge piles of cash by pumping the share prices. The companies in question are: Growlife Inc (OTCMKTS:PHOT), Digipath Inc (OTCMKTS:DIGP), Growblox Sciences Inc (OTCMKTS:GBLX), and, yes, you guessed it, VAPE.
The article points out that no charges have been raised yet, but it’s pretty clear from the 12% drop yesterday, that the news is having its effect on VAPE. We won’t be too surprised if the ticker slips some more and we probably don’t need to tell you that if the outcome of the investigation is unfavorable, things will get very ugly very quickly.
Of course, that doesn’t mean that you shouldn’t invest in VAPE if you believe in its future. It does, however, warrant a lot of extra caution when deciding what your next move will be.
