Shortly before the open today China Global Media, Inc. (OTC:CGLO) announced one of its subsidiaries had signed an one-year agreement for approximately $2.5 million, however, what happened after wasn’t good.
About six minutes in, CGLO started dropping and so far it’s down about 7% at $0.66, but there have been some trades as low as $0.551.[BANNER]
CGLO is engaged in advertisement and brand name development in China. The company has been reporting significant revenues and income, but the market performance of its stock suggests traders and shareholders aren’t too happy with it.
And since the seemingly positive press release gets a very resounding negative answer, one can only assume traders don’t believe the information put out by the company.
There are two factors about CGLO which may undermine its image. One – it’s a Chinese company reporting huge revenues and growth; and two – it’s on the OTC.
Anyone who has been interested in Chinese stocks on the U.S. stock market knows what the problem is with these stocks. This combined with the fact that CGLO is not traded on one of the senior exchanges casts a shadow on any positive report or press release.
Despite some attempts to bounce back, in the last few months CGLO has been losing value. Unless the company finds a way to address the credibility issue, its stock may continue to perform poorly on the U.S. exchanges.
