Poynt Corp (CVE:PYN) (PINK:PNYTF) stock price took some higher grounds on Friday, but the situation doesn’t provide for further appreciation and thus favors the bears right now.
Poynt stock had established tight consolidation ranges since November 2011. It has now broken out of one of them when the price went up 11.5% on Friday and took out resistance at 14 cents per share. The accompanying trading volume of 8.5 million was nearly eight times higher than the 90-day average turnover of 1.1 million, which confirmed that the price breakout wasn’t only an accident caused by general volatility.
The stock still has resistance at 15 cents per share, which could be once again challenged during Monday’s session.
On the other hand, Poynt had no news recently and the reasons why the price broke higher are all technical. It’s possible there was short squeezes in action as well since most of the trading activity concentrated heavily on the first half an hour of Friday’s trading session and the action was pretty stale during the rest of the day.
With this price advance Poynt’s market cap jumped up to $69.5 million. That is 7.7 times their book value of just over $9 million. That is important valuation since the company has negligible income from operations and is constantly losing money. The current valuation is very high for a business that has to issue more capital stock every quarter just to stay operational. The stock dilution rate over the nine months alone was an astounding 38.6%.
