In general, movie reruns tend to be enjoyable for the general public, especially if they relate to high-quality content. However, when it comes to the re-airing of failed historical stock pumping attempts, the excitement is by no means as high.
What the stock of Onteco Corp. (PINK:ONTC) managed to achieve yesterday on the stock market was a direct consequence of a large-scale paid advertising campaign. The latter encompassed as many as 21 promotional emails worth a total of $77,500. While a 19% increase might definitely whet investors’ appetite, there is one circumstance that deserves attention – this is NOT the first time OTC Tip Reporter, one of the promoters behind the current campaign, has been involved with pumping ONTC shares. In other words, what you see is pretty much the same movie being rerun twice.
What happened the last time ONTC got promoted by OTC Tip Reporter? Having been targeted at the session held on Mar. 27, the previous advertising effort made for a 14% appreciation in terms of price within the first day alone. This is where the good news comes to an end. ONTC then dropped by 15% and 21% on Mar. 28 and mar. 29, respectively. What is more, although this happened less than three months ago, ONTC’s market value has since been on a steady decrease, as shown on the accompanying chart.
Is there anything that could prevent the same scenario from happening again? Let us take a look at ONTC’s financials. First, Q1 of 2012 appears to be the company’s worst in a while in terms of revenues as it has generated none. Even though the company did manage to record revenues in the past, it has been incurring substantial net losses nonetheless.[BANNER]
Oddly enough, these developments have not prevented the company’s former CEO from signing an Executive Employment Agreement against a monthly remuneration package of $15,000. Second, cash reserves of $3,811 seem rather insufficient for meeting the corporation’s everyday needs. If this were not enough, the company appears to have signed dozens of convertible promissory notes for the last couple of years, which in turn has both increased the financial burden on stockholders and caused large-scale dilution among them.
Last but not least, let us not forget that ONTC carried out a 1-for-1000 reverse stock split effective Jan. 11, 2012, in an attempt to artificially boost its market value. Six months later, the outcome is as clear as a bell – ONTC stock occupies the sub-penny zone remaining dangerously close to the triple zeros.
When ONTC got pumped in March, it failed to take off in the end because it had no solid fundamental background to lean on. Has the situation changed much today? We will let the facts do the talking.
