Vapor Hub International Inc. (OTCMKTS:VHUB) Crashes Once More
By now the chart pattern displayed by Vapor Hub International Inc. (OTCMKTS:VHUB) should be quite obvious. The stock goes on a prolonged run just to crash and wipe most of the gains it made. On the day of the crash a massive number of shares is usually dumped on the market.
On Friday VHUB did just that and it slashed 11% of its value dropping down to $0.56 per share. The traded volume for the day was 1.4 million shares, nearly doubling the largest volume posted during the latest run of 750 thousand shares.
Although VHUB is currently operating within the e-cigarettes and vaporizers sector which guarantees them a lot of interest from the market the stock has nonetheless been artificially hyped up by paid pumpers. Both The Analyst Review and Investor-Edge disclose a $65 000 compensation received on April 15.
As you can see from the chart just a week later VHUB began an 8-session climbing streak that brought the stock close to 70 cents followed by a massive crash on the record number of 3.6 million shares. Now both pumpers list that they expect to get a significantly higher compensation of $210 thousand later this month so the promotion is likely to continue for quite a while.
Even after Friday’s correction VHUB still commands a market cap of $38 million, a number that seems to be completely disconnected from the reality of the company. Although they have real operations and are generating revenues the financial results are far from enough to support such valuations. According to the latest quarterly report at the end of March the company had:
- $200 thousand cash
- $343 thousand total current assets
- $206 thousand total current liabilities
- $188 thousand revenue
- $3413 net income
Another huge concern should be the fact that back in 2010 VHUB sold 3,34 million shares to 33 seed shareholders priced at just $0.01 each. Then, in a typical pump set-up, a 9-for-1 forward stock split was performed this January turning those shares into more than 30 million. The people holding these extremely cheap shares stand to gain millions at the current market price of the stock and the increased attention generated by the paid pump.
On Friday a SeekingAlpha article discussing the same major red flags around the company was published and it certainly 
influenced the outcome of the session. That is why doing your own due diligence should always precede any trades involving pennystocks.
influenced the outcome of the session. That is why doing your own due diligence should always precede any trades involving pennystocks. 