Windstream Technolog (OTCMKTS:WSTI) Crashes After Yet Another Pump
A bad year turned worse for Windstream Technolog (OTCMKTS:WSTI) about an hour before yesterday’s opening bell when a host of promotional outfits started sending out some emails about the stock. Wonder why the pump is such a bad thing? Here’s why.
WSTI first appeared on the OTC Markets back in May 2013 when it completed a reverse merger with a publicly traded company called Windaus Global Energy. At first, nobody was paying attention, but when WSTI decided to change the name to Windstream Technologies, we saw some movement. Unfortunately, in June, the pumpers came along with their paper mailers and proceeded to wreak havoc with the stock performance.
When the glossy brochures started flying around, the company was traded comfortably above the $1 per share mark. The enthusiasm coming from the promotional materials pushed it above the $2 per share mark on June 26, but it quickly became apparent that these sort of levels will not be sustained for long. Even so, the crash that followed was quite severe. Just two sessions after breaking through the $2 barrier, WSTI slipped in the sub-dollar levels and although it tried to recover shortly after that, its attempts were far from successful.
It continued shedding significant portions of its market cap throughout the following months and the second batch of hard mailers accelerated the fall which culminated in a 52-week low of just over $0.16.
The company’s credibility was shattered by the pumping fiasco and, somewhat understandably, people are now avoiding the stock like the plague – a point hammered home by WSTI‘s performance from yesterday.
Although various third parties spent more than $200 thousand on yesterday’s pump and although some prominent newsletters like the ones owned by Freedom Ventures and Stock Mister took part, WSTI failed to impress investors. In fact, in a matter of six and a half hours, the stock wiped out 21% of its market cap and finished the session at $0.195 per share.
The fact that WSTI was turned into one of the most heavily promoted penny stocks of 2014 is really unfortunate because the company has a few things going for it. The technology does sound clever enough and the latest 10-Q shows quite clearly that they are making some revenues from it. Here’s what WSTI recorded at the end of the third quarter:
- cash: $273 thousand
- current assets: $2.6 million
- current liabilities: $5.5 million
- quarterly revenues: $373 thousand
- quarterly net loss: $1.4 million
Indeed, things are not exactly stellar. The working capital deficit and the continuous losses are certainly worrying, but it’s also quite clear that the pumpers, and not the financials are the cause for WSTI‘s appalling depreciation.
We will soon find out if the stock has what it takes to shake off the promoters and put up a more decent performance. It should be noted, however, that the toxic debt the company has been picking up over the last few months presents yet another threat to WSTI‘s behavior. As you can see from this 8-K form, some notes were recently issued which can be turned into common stock at a 35% discount.
If the debt gets converted, the ticker might be in for more losses which is why treading carefully and thinking through every single move is absolutely essential.
About forty minutes after today’s opening bell, WSTI is sitting at $0.188 (3.6% in the red).
