Huge Volumes Bring Hipcricket Inc (OTCBB:HIPP) Down

Hipcricket Inc (OTCBB:HIPP)’s shareholders will probably want to forget the performance from the last couple of days as quickly as possible. It all started last Friday when HIPP opened the session at $0.66 but started sliding almost immediately, eventually closing the day around 6% below its previous value. This week’s trading wasn’t off to the best of starts either – on Monday, the price fell by another 2.4% but that was nothing compared to yesterday’s losses.

Six and a half hours of trading were enough for the ticker to shift more than 880 thousand shares bringing the dollar volume to $483 thousand and losing more than 17% of its value along the way.

As we mentioned in our previous articles, commotion around HIPP has been plentiful over the last couple of weeks which means that at the moment, quite a lot of people are asking themselves: “What caused the sudden drop?“.

Unfortunately, a definitive answer remains elusive. There certainly aren’t any announcements that could potentially depress the price. On the contrary, the company came up with two more press releases in less than a week and they both talk about new projects that should bring HIPP some additional positive exposure.

First, on November 5 they announced that they have entered into a partnership with a nonprofit organization called Internet Sexuality Information Services, Inc (ISIS). Apparently, ISIS are going to use HIPP‘s platform to promote HIV prevention.

About an hour and a half before yesterday’s opening bell came the second press release which informed us of yet another project. Apparently, the Virginia Lottery are going to use HIPP‘s image recognition and database management platforms for their latest interactive game called Z-VA. With the help of HIPP‘s systems, gamers will be able to hunt zombies, which, if nothing else, sounds quite exciting.

Neither of the press releases explains how much the contracts will actually help in terms of proceeds, but we’re quite sure that they are unlikely to do any harm. Yet, the price took a plunge yesterday.

One possible explanation is to be found in the company’s latest SEC filings. As you can see, an S-1 form was filed last week which covers the resale of 23 million shares (as well as 7.1 million more in case all the warrants get exercised). The SEC gave the prospectus an effect yesterday which means that these shares can now be traded freely. The colossal volumes from yesterday leads quite a lot of people to believe that some of the aforementioned stock hit the open market and depressed the price.

There are, of course, other opinions. Some of the investors around message boards suggest that yesterdays drop is nothing more than a normal consolidation which is a part of a more prolonged run in the right direction. In today’s early trading the ticker is around 4% above its previous value which suggests that they might have a point. The slide could also be simply the result of HIPP‘s volatility which we discussed in some of our previous articles.

In any case, the reasons for the drop remain a mystery, but sessions like yesterday mean that predicting what is going to happen next becomes even harder. That’s why, despite the signs of progress that we discussed in our previous coverages, thinking through your strategy and carefully considering every move is absolutely crucial.

diaDexus, Inc. (OTCMKTS:DDXS) also had a rather terrible session yesterday when the stock plummeted by as much as 58% after some bad news hit the wire. Endeavor IP Inc (OTCBB:ENIP) too dropped by around 13% but in their case, it was the promotional pressure that got the better of the ticker.