Will The Hard Mailers Push NuGene International Inc (OTCBB:NUGN) Above $4?

For the stock of NuGene International Inc (OTCBB:NUGN) yesterday’s session was nothing but a slow and steady climb up the chart. Starting from an opening price of $3.805 the ticker found itself at $3.99 by the time of the closing bell for a gain of 6.12%. It should be noted that the stock closed at its highest price for the day.

Prior to the start of the session NUGN published another encouraging PR announcing the results from a second study designed to evaluate the efficacy of their Universal Serum and Eye Serum compared to untreated skin. Apparently according to the study after eight weeks of treatment the fine lines and wrinkles had a 40.65% reduction while the moisture level improved by 20.39%.

So far the stock has not registered a single red session since the start of April. Such performance is truly amazing but you must ask yourselves just how realistic it is for pennystock to log exactly 45 trading days without dropping down a single time. Well, as we said, NUGN is a pennystock and when a stock starts to form such a chart patterns in most cases it has been facilitated through a hard mailer pump. NuGene is not an exception.

Investors have been talking for weeks about the rather lengthy hard mailer brochure that has been put into circulation. Promotions involving the creation of a hard mailer usually have massive production budgets and indeed the disclaimer on page 27 of the mailer discloses that the sum of $2,280,000 has been provided by Result Corporation. It should be noted that Result Corporation is stated to be a third party shareholder of NUGN and that “Result Corporation fully intends to sell their shares without notice into this Advertisement/market awareness campaign”.

It is highly likely that the shares they intend to sell are the 11,144,640 free trading shares we talked about more than two months ago. Initially a group of investors bought 148 thousand shares for $37,050 back in March 2014. Two forward splits later though and those shares grew into the aforementioned 11,144,640 shares who have a split-adjusted price of $0.0033. With NUGN sitting just below $4 per share if the entirety of those undervalued shares is dumped on the market the people who own them could walk away with more than $44 million.

At the same time NUGN’s financials offer little assurance that the company will be able to support its current market cap of nearly $158 million without the artificial hype generated by the pump. The latest quarterly report showed that for the first quarter of 2015 NUGN had $619 thousand cash, $481 thousand in sales and a net loss of $240 thousand.

Since the start of April NUGN has nearly doubled its share price and chasing after the stock may not be the best decision. Keep in mind that the current market price is completely disconnected from the underlying fundamentals of the company which means that NUGN could suffer a disastrous crash if the effects of the pump start to fade.