Two sessions ago, the stock of Loon Energy Corporation (CVE:LNE), (PINK:LOONF) fell sharply on the TSX Venture Exchange (CVE). This happened just when the company revealed some testing results from the Buganviles Block property located in Colombia. The same day, LNE slumped to a two-month low at $0.085 per share.
On Wednesday, Loon Energy Corporation announced the preliminary results from the testing of the Lower Guadalupe zone in the Visure-1X well and the deepening of the Tuqueque-1X well. Loon has a 10% interest in both wells. It is obvious that investors did not digest the news positively, or probably they were not pleased with the disclosed results. Otherwise, it is hard to explain how on the day of the announcement the stock plunged by 38% on a heavy turnover of 2.7M shares.
At least, there are signs that this downfall is only temporary and will probably not last for more than one session. Yesterday, on a large volume beating four times the average, LNE kept its price unchanged from the previous close at $0.090 per share. This implies that the decline has perhaps already come to an end.
As for the future performance of the stock, it is not easy to be predicted. Some more pessimism comes maybe from the filed financial reports of Loon Energy for the third quarter of 2010. They show several negative developments in comparison with the same period of 2009:
- there is a $1.2M negative net income for the Q3 of 2010 compared to a net loss of $0.10M for the relevant period of 2009;
- at the end of September 2010, Loon Energy had $1.3M in cash compared to $2.79M one year before that;
- as at Sep. 30, 2010, the company had a working capital of $1.06M, while in 2009 it was $2.23M.
These results probably imply that it is unlikely to expect a significant appreciation of the shares in the near future. Who knows? The stock markets are often unpredictable. Besides, a Doji has been formed on the chart, symbol of investor indecisiveness and uncertainty.
