After months of almost no trading, yesterday Innolog Holdings Corporation (OTC:INHC) exploded on news of a contract.
As one can see from the chart, INHC was a very unpopular, illiquid sub-penny stock. The press release shot INHC up 1,713.64% and the price at the close was $0.0399 per share; almost 2 million shares changed hands.[BANNER]
The huge surge was obviously due to the announcement of a sub contract received by INHC’s operating subsidiary Innovative Logistics Techniques, Inc. Supposedly, the contract could provide annual revenues between $1.5 million and $3 million.
Even if projections prove accurate, such an enormous price change seems over the top. INHC reported $3.7 million revenues for the nine months ended Sept. 30, 2011.
In the most optimistic option the new contract will get INHC $3 million; assuming INHC doesn’t incur any expenses related to its services, the $3 million would just barely allow the company to break even; and no expenses is hardly going to be the case.
This doesn’t mean the contract isn’t a big deal for the company, it’s just questionable whether it warrants such a gigantic market response, and that, of course, is up to the individual trader or investor.
