Windstream Technolog (OTCBB:WSTI) Bounces Before the Long Weekend
On June 26, Windstream Technolog (OTCBB:WSTI) said that they’ve opened a new office in India which should help them expand their business in one of the most populous countries in the world. On July 1, they announced that a $2 million financing deal has been signed which will help them complete all the purchase orders.
Prior to these two press releases, there were others about multi-million dollar contracts signed with various entities. All in all, there were a lot of things to suggest that WSTI is about to make a rather impressive run up the charts. It didn’t.
In fact, in a matter of four sessions, the ticker dropped from $2.07 to just $0.55. In other words, it incinerated a mind-boggling 73% of its market cap. It did manage to bounce during Thursday’s short session and it spent the long weekend at $0.725, but we can’t imagine that this did much to cheer the people who jumped in while WSTI was still in the $2+ levels.
The question is: “Why is WSTI‘s performance so devastatingly horrific?“.
The $900 thousand hard mailer pump is to blame. Many charts can show you that such campaigns never end well and WSTI‘s drop could put the ticker among the worst promotional disasters of 2014.
The pumpers played their role in Windstream’s crash, but it should be noted at this point that some other people made sure that it’s as quick and as violent as possible. A couple of negative Seeking Alpha articles (written by contributors who disclose a short position) appeared while the promotion was in full swing. Some other media outlets covered the pump and their research revealed that Tesla Motors Inc (NASDAQ:TSLA)’s Elon Musk has never agreed to having his face featured in the glossy brochure.
WSTI themselves issued an 8-K form on June 27 and said that they are aware of the campaign, but, for some reason, they refused to comment on the overly optimistic projections featured in Wall Street Revelator’s report. All these factors raised some rather huge question marks around the company’s short-term stock performance and a significant depreciation in WSTI‘s share price was all but inevitable.
Here comes the next question: “Can WSTI recover some of the lost ground?“.
Apparently, some people believe that it can. They reckon that the promotional campaign won’t last forever and they think that once it’s over, WSTI will be able to show us that it is indeed a solid company. As we mentioned already, the press releases certainly sound positive enough, but unfortunately, things aren’t quite so simple.
Konared Corp (OTCBB:KRED) is another operating entity listed on the OTC Markets. Like WSTI, they too received a hard mailer promotion at the beginning of 2014 and like WSTI, they too issued a few optimistic press releases during the pump. The campaign ended a while ago, but as you can see from the chart on the right, KRED is still unable to regain the value it lost during the post-pump sell-off.
Then you have the threat coming from the SEC. If you read through the message boards and the aforementioned Seeking Alpha articles, you’ll see that a lot of people have been doing some digging around and they’ve found some controversial facts. If the some of the posts are to be believed, the SEC has been alerted and is investigating WSTI at the moment. We probably don’t need to tell you that if something’s amiss according to the Commission, the results could be absolutely devastating.
That’s why, careful evaluation of all the risks and the amount you’re willing to invest is absolutely crucial.
