In the last two days, Javalution Coffee Co (PINK:JCOF) has been showing signs of serious weakness. The decline happened on an increased trading volume which can additionally overshadow the vision of long traders.
JCOF lost half of its share value in the course of just two days. Somewhere around the beginning of the month, the stock found support at $0.8 for a short while. The last two sessions of JCOF, however, rendered the stock twice cheaper than before.
Yesterday, 7.5 million shares of JCOF common stock changed hands, which is two times higher than the daily average of 3.8 million. The intensive trading finished with a share price of $0.46, which is 9% lower than the previous close. On the intraday chart, though, JCOF dipped even lower to $0.36 roughly an hour after the opening bell.
Things were even worse on Tuesday, when the stock plunged down 33.65% down on a volume of 6.5 million shares. Thus, after the two bearish sessions, JCOF has found itself again at the support that was established in mid-May.
The most probable reason for the decline appears to be the announced completed merger with Youngevity Life Sciences on Tuesday. The press release even revealed that 100% of Youngevity’s common stock was turned into and became 560 million shares of JCOF common stock. Thus, the former shareholders of Youngevity now possess 70% of JCOF common stock on a fully diluted basis. [BANNER]
If, at present, 560 million JCOF shares represent 70% of its common stock, this means that the total number of outstanding shares of JCOF has reached 800 million. Prior to this event, JCOF had 200 million shares outstanding.
Apparently, 800 million outstanding shares are too much even for JCOF because the company announced that it planned to execute a 2:1 reverse stock split. In addition, JCOF also admitted that it intends to reincorporate in Delaware and change its name to AL Global Corporation.
All of that being said, it seems that investors will have to take a chill pill after they fully realize that the price of JCOF shares will inevitably go though a correction in order to reflect the new number of outstanding shares and the market valuation of the company.
