AmbiCom Holdings, Inc. (OTC:ABHI) stock was recommended by pennystockprophet.com as their pick of the day, thus some heavy increase in the trading activity should be expected for the day. On their own accord, the company issued a press release revealing a new $1.2 million purchase order.Traders should not lose their cautiousness though – the short term buying pressure is often followed by a sudden drop in the price when the interested parties start taking profits on their significant positions. Even with the positive news in play, the stock promotion raises a red flag for investors.
PennyStockProphet received $25 thousand, provided by a third party as a payment for the recommendation. Their disclaimer also states that the same interested party may have shares. The amount should be significant if they threw in $25 thousand for a stock advertising campaign.
The illiquid stock of ABHI shot up over 15% during the first half an hour of trading. These quick promotion driven rallies rarely last beyond one day. Market makers also had their way with the price, as it opened 8% higher today.[BANNER]
It is questionable how much space is left for traders to bet on. Furthermore, it requires day trading experience to catch such waves and to notice when the buying pressure is wearing off and the bid/ask spread is getting wider.
Fundamentally, ABHI is not the most attractive investment. The company holds a healthy balance sheet, but they still fund operations and pay for their line of credit by issuing stocks. Currently, the company is not profitable.
The latest news said the company received $1.2 million worth of order from a major client for ANHI’s Wi-Fi solutions. The details of the order were not disclosed.
