Is a private placement bad news? If you see what happened to You On Demand Holdings, Inc.(OTC:CBBD) on June 8, you will most probably give a positive answer to this question.
As soon as CBBD announced it had raised $10.9 million in a private placement last Wednesday, its stock incurred some substantial losses as it went down 30%. However, the free-fall did not last long. On the contrary, it was followed by two consecutive surges. The latter, which took place last Friday, lifted CBBD stock up 23% to $0.102 per share. Thus, the latter regained a large portion of its strength.
While the price surge was impressive, the volume movement was far from spectacular. 950 thousand shares were fairly enough to give CBBD the boost it eventually got, which is quite small an amount given that the daily average trading volume amounts to some 1.1 million.
Dealing with cable and pay television services, the China-based company specializes in providing pay-per-view and video-on-demand premium content on a subscription basis. Formerly known as China Broadband Inc., You On Demand Holdings, Inc. is currently managed by the former professional wrestler Shane McMahon.
As an OTCQB member, CBBD has kept a diligent financial policy. The company filed its latest 10-Q report three weeks ago. The document in question covers the quarter ended Mar. 31, 2011 and reveals:
- $4.6 million in cash;
- working capital surplus of $1.5 million;
- $1.7 million in revenue;
- a pre-tax net loss in excess of $2.7 million.
While CBBD’s assets surpass its liabilities by $18 million, the company must find a way to bring its losses to an end in order to prosper and expand. Whether Mcmahon will reach the commercial success of his father Vince Mcmahon (who needs no introduction), might not seem crystal clear now. Yet, anything is possible, be it in Pennystockland or elsewhere.
