Writ Media Group Inc (OTCMKTS:WRIT) Gets Crushed
tags: WRIT
On June 20 Writ Media Group Inc (OTCMKTS:WRIT) announced the acquisition of the private equity firm Pandora Venture Capital Corp. for 14 million of its shares. Seven days later the company launched Pelecoin, a cryptocurrency platform. While undoubtedly rather significant can these events be the sole reason for the impressive uptrend of WRIT‘s stock that saw the company’s share price rise from 25 cents to more than a dollar in just eight sessions?
Of course not, such ridiculous prices were achieved mainly thanks to the widespread pump campaign that has been targeting WRIT for over a week now. The stock has been touted by emails sent by the various affiliates of Finest Penny Stocks. At the same time Quality Stocks have been posting messages on the various investors boards as part of their agreement with WRIT for 180 days of advertising, branding, marketing, investor relations and social media services. For this Quality Stocks expect to receive $16 thousand in cash and 40 thousand common shares.
During yesterday’s trading the artificial hype was able to propel WRIT to a truly ludicrous intraday high of $1.50 per share. What followed, though, was nothing short of a nightmare – in just a matter of minutes the ticker crashed so hard that it dropped below 70 cents per share. By the time of the closing bell the company was sitting at $0.66 for a loss of over 38%. Even at this price, however, WRIT still commands a market cap of just below $17 million. Can the underlying fundamentals of the company support such a valuation?
Well, WRIT were supposed to submit their annual report by the end of June but thanks to a notification of late filing the company received a grace period of two more weeks. This means that for now we have to rely on the quarterly for the period ended December 31, 2015. Back then WRIT had:
• $264 cash
• $879 total current assets
• $888 thousand total current liabilities
• ZERO revenues
• $120 thousand net loss
Out of the reported liabilities around $230 thousand consisted of convertible debt that could be turned into common shares at sizable discounts. Investors should keep in mind that last year WRIT performed a 1-for-200 reverse split with the outstanding shares of the company as of December 14, 2015, sitting at 2.3 million. According to the quarterly report as of February 10, 2016, that number had increased to 10 million shares but if you go to the OTCMarkets profile page of the company you will see that just 12 days later, as of February 24, the O/S of the company was already at more than 25 million shares.
The plethora of red flags and the fact that WRIT may rapidly drop down to its pre-pump price ranges turn the stock into an incredibly dangerous choice. Thorough due diligence must be performed before committing to any trades.
