HNHI closed the market reporting an 8% increase in its price and a more than twice the average trading volume of 1.55 million shares. The close at $0.27 for a share is still within the higher price channel that HNHI jumped into on the celebrity promotions, but as the market cap is currently far above the tangible value of the company the stock’s position might be considered very uncertain.
According to H&H Imports latest financial report, it is free of long-term debt, but unfortunately that appears to be the only thing that could be pointed out at first glance in favor of the company’s stock and its current market valuation. HNHI principal business is to test if a full-scale marketing campaign for a product or a service can be justified, and given the commercial viability to organize these campaigns.
That business has never been successful since the very beginning, though the operational profitability is only one of the problems. Dilution is also an issue, as at the end of November last year the company filed a registration statement for 179 million new shares of its common stock, some of which already issued and outstanding, others issuable upon exercise of warrants and stock options. As soon as the statement becomes effective, that shares can be periodically sold on the open market.
As we already reported, HNHI is that highly appreciated by traders this week due to the recommendation by rapper 50 Cent on Twitter. As also reported, as a significant shareholder of the company he has been in a severe conflict of interest in advertising the shares.
