Bitcoin Shop, Inc. (OTCMKTS:BTCS) Recovers a Bit on Bargain Buying
The Bitcoin currency has gone from hot to not, and hot again, and so in the past days has done the stock of Bitcoin Shop, Inc. (OTCMKTS:BTCS). The ticker was sinking seriously when it busked the trend by adding more than 59% as the new week opened, reaching $0.68. Dollar volumes of $1.28 million showed a concerted effort at bargain buying- a serious bargain, as a few sessions ago BTCS had easily conquered $5.
The new press release with the financial results on March 7th did not immediately change the fate of BTCS, not until it had crashed further. For a company that is dealing in raw money, though virtual ones, BTCS looks a bit cash-poor, with:
- $6,000 cash
- $588,000 total assets
- $547,000 total current liabilities
- $674,000 total revenues for Q3 in 2013
- $94,000 net income
It seems like the online shop is chugging along, though the results are certainly not stellar yet, and hardly justify a stock price of $5. The only factor that could have helped BTCS upward so easily was the relatively small market cap, now a bit above $514,000, and the mere 762,805 shares outstanding, a small amount for an OTC company, that has created a serious squeeze. Certainly, the 300-for-one split in February worked well to squeeze the stock price upward, but the gains did not last long.
But the reverse-split did more. It allowed the holders of more than 100 million shares at par value of $0.001 to sell off in the days after the split, as trading volumes indeed exceeded the announced number of issued shares. The change in ownership places a locking agreement on selling off the shares completely, but still there is enough insider interest to make BTCS look worrying. There are still serious doubts on investors’ forums that BTCS will move in any good direction.
Then, there is the inherent risk and mystery around bitcoins, which replaced the previous business model of BTCS– touch screen devices. Bitcoins are in the last weeks surrounded by scandal and security breaks, and hardly look like a reliable liquid asset- and yet keep a part of their appeal as a virtual currency.
While BTCS is not promoted in emails, its previous name and identity saw this kind of attention in 2013. This clearly helped the shares go up in price during the summer months, but the real spike in activity and price came in the new year.
BTCS is in a class of its own, along with companies that show great potential, but little history to prove the points. One such company was Baltia Airlines, Inc. (OTCMKTS:BLTA), also shooting up on promises at the beginning of the new year, but for now dropping back to its usual levels.
If you like those exceptions to the current climate of the OTC markets that is overwhelmed by marijuana stocks, be aware that no business model guarantees stability, and while in the short term an upward potential may be attractive, the gaps and drawbacks could become visible soon.