CannaBusiness Group, Inc. (OTCMKTS:CBGI) Sinks as Promotions, Publicity, Go Quiet
CannaBusiness Group, Inc. (OTCMKTS:CBGI) has shown a steady increase in selling volumes in the past days, and already poses the question of whether the stock price may not start a short or longer recovery at the lowered levels. In the past month CBGI went through a protracted slide, and on Thursday expanded the losses by another 14% to $0.0495, on selling volumes above $694,000.
The previously promising MMJ ticker has slid from a peak of $0.40, thus in effect wiping out 90% of its value since the strongest days in March. April saw only four days of buying on very slim volumes, as most investors tried to move out. CBGI was the biggest daily loser on the Marijuana index, where most companies were in the red for yet another day. Still, the index managed a slim daily gain of 0.1% and has been detaching itself from the rock bottom for a few days.
The index was readjusted in the last few days, and the name changes led to a shift in value, as the peak was around $9, and the current levels based on the included tickers are $3.97. The index had to change its composition to reflect companies that showed genuine interest in the MMJ sector, and a potential to develop a real business. So at least it is a good sign that CBGI is still on board, while other companies fell through the cracks.
One of the big setbacks for CBGI was the over-zealous promotion, which caused the disproportionate stock price fluctuations. And while CBGI looks rather devoted to the Canadian marijuana market, its financial backing is worrying:
- $4,972 cash
- $5,387 total assets
- $16 thousand total current liabilities
- $30 thousand revenues
- $4,456 net income
But the deep correction is posing the question about the right price range for this stock. Investors’ forums show expectations for at least a brief recovery, a “dead cat bounce”, which may recover some of the losses and even contain a good day or two, but ultimately CBGI proved it cannot command too high prices.
The latest PR from the company arrived on April 14th, when the director outlined the future of the cannabis business. The company looks confident that with the opening of new retail spaces, it would increase its revenues in 2014. The only problem is, so far there has been little chance to see the marijuana sales reflected in the financial reports. So investors will have to wait for a long while to see which businesses were indeed serious, and which ones just mentioned a tentative link to the sector, to boost the stock price.
CBGI claims it already bought one piece of real estate, and plans to service the MMJ sector with other property deals. With this, CBGI lines up with other companies using a classical business model- properties- to claim a place in the sector.
Advanced Cannabis Solutions, Inc. (OTCMKTS:CANN) is one of the bigger players, which despite the suspended trading has recovered a bit, standing at around $20. And a recent arrival, USA Real Estate Holding, Co. (OTCMKTS:USTC), sank despite the promotion, to the edge of the triple-zero levels.
So if you still like CBGI for its comparatively attractive MMJ profile, keep in mind the depressed state of the market and be prepared for further unraveling.