Alkaline Water Company Inc (OTCMKTS:WTER) Attracts Attention But Fails To Move

Yesterday interest in the stock of Alkaline Water Company Inc (OTCMKTS:WTER) reached unprecedented for the last 9 months levels. The daily volume for the session surpassed 3 million shares while just a day earlier the stock registered a volume of less than 40 thousand traded shares. The 30-day average for WTER stands at 226 thousand shares. So what was the reason that suddenly lured investors towards the company?

How about the new report published by the analyst firm One Equity Research? With a title starting with “If Coke Bought WTER Today” the report was bound to capture the attention of the market. Unfortunately hyping up a stock and turning that attention into a positive momentum are two very different things. It is true that thanks to the initial buying pressure WTER surged up to a high of day of $0.119 but all of the gains were quickly obliterated. By the time of the closing bell WTER had slid back down to exactly where it began the session – $0.093, for a gain of a little more than 3%.

There are numerous factors that could explain the rapid retrace. Let’s start with the fact that One Equity Research were actually compensated in order to publish yesterday’s PR. According to the disclaimer at the bottom of the page they have received 1.5 million restricted shares from the company. In addition they were paid $10 thousand by a third party for coverage of The Alkaline Water Company.

It seems that WTER are far from reluctant to issue more and more shares despite their growing O/S count. In our previous articles we already warned you that last year 14.8 million warrants were exercised at $0.10 each while some options with an exercise price of $0.01 were also turned into common shares. For the nine months between March 31, 2014, and December 31, 2014, the outstanding shares of the company increased from 81 million to over 119 million. A Schedule 13D filing revealed that as of April 14, this year, WTER had 124.5 million outstanding shares.

The company does have some positive sides though. Their business seems to be growing with the quarter ending March 31, 2015, being the best in the company’shistory. The annual report that should be filed by the end of June will reveal exactly how much revenues did they manage to generate.

Although WTER’s Alkaline88 sales are accelerating the company is still far from becoming a profitable entity. For the nine months ending December 31, 2014, they reported $2.45 million in revenues against $5.48 million in net loss.

The stock might continue to enjoy increased interest in the days leading up to the annual report but its volatility shouldn’t be underestimated. Do your own due diligence and adjust your trades accordingly. And you might want to take a look at our articles covering WTER when they were targeted by a $3 million paid pump back in 2013. 

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