Hemp, Inc. (OTCMKTS:HEMP)’s Red Tumble Continues

In spite of not being directly related to the marijuana sector, Hemp, Inc. (OTCMKTS:HEMP) made an impressive jump when the news of the most recent marijuana developments hit the web. However, it was crystal clear from the get-go that the sector-wide surge was unsustainable and an abrupt and painful downfall was just a matter of time.

This is why it wasn’t surprising when HEMP‘s 10.64% crash on Monday was followed by another 7.38% fall yesterday. So why was HEMP‘s ascent doomed from the start?

Well, to begin with, HEMP stock prices were pushed up by hype, and hype is a capricious engine. It dissipates almost as quickly as it occurs and once it does, the tickers that rose are almost certainly headed down – unless the company in question has actual achievements that would help it retain the growth.

A perfect example of a company that has benefited from hype but has managed to more or less retain its gains is Invivo Therapeutics Holdings Corp. (OTCMKTS:NVIV). Although NVIV certainly has its shortcomings, its achievements to date give investors high hopes for its future, as it is easy for investors to believe in a company and help it retain its gains when it has good financial sheets and solid management.

HEMP seems to lack all of those positive traits – its latest financial report was unimpressive to say the least if one reads into it. Oh, and by the way, that number filed under “profit”… that’s equity compensation for services rendered. In other words, HEMP was paid with shares that it may or may not be able to turn into actual cash. That’s creative accounting for you.

Take into account the fact that the company’s share structure is terribly diluted and it doesn’t really show any signs of getting better, and it immediately becomes clear that HEMP has nothing but hype going for it.

That being the case explains why the ticker is crashing as hard as it is, and why it will probably continue to do so until the next hype hits.