Nevertheless, there were only few signs which could suggest that the stock was trading under an artificial boost. There was neither a significant surge in the volume nor a stunning price increase.[BANNER]
The intraday chart pattern was the only thing that was indicative of the promotion. It showed that PNGM started with a big gap at the open, then spiked up shortly before it fell below the opening price. The bulk of the volume was generated within the first hour of the session. An intraday chart configuration of this type is prevalent in cases of promotion.
Since the stock promotion apparently had little effect on the stock, it looks like there is another reason for the climb of PNGM which started on April 13. The same day, the company published an 8-K to announce that it had bought an exclusive right to negotiate with Development Resources LLC for the acquisition of several mineral claims in Nevada. However, the surge is not very convincing at this stage because it is not backed up by enough trading volume.
The company’s valuation is currently $17 million, which seemingly stems from the hope for a huge mineral discovery by PNGM. Otherwise, the company doesn’t provide any fundamental justification of its market cap:
- Only $353 in cash
- PNGM plans to obtain financing solely by sales of equity securities
- Working capital deficit had increased by 44% in 2010
In this case, it seems that investors will have to be prepared for coming dilution and to estimate whether their beliefs in PNGM’s future are worth $17 million. Now that paid promotions have started to take part in the fate of PNGM stock, there is the possibility that the trades will get even more speculative nuances than before.
