Investors are not Impressed with Rainbow International Corp (OTCMKTS:RNBI)
Pumping Rainbow International Corp (OTCMKTS:RNBI) seemed like a relatively easy task at the beginning. The company had just entered the hemp business and, as you probably know, hemp is closely related to marijuana and marijuana seems to be what penny stock investors dream about at the moment. With all this in mind, we expected to see a rather strong performance from the promotion.
The outfit standing behind the whole thing is called PennyStocks.com and they are considered to be one of the few remaining newsletters from the once mighty Awesome Penny Stocks clan. The budget is not that bad as well. The fine print under the emails says that an unnamed third party has paid ?250,000 (about $420,000) for one month of touting.
All in all, the prerequisites for an exciting promotion were definitely there and, during the first couple of days, it seemed like this was exactly what we were going to get. The first email hit our inbox about a minute before May 14’s opening bell and it immediately propelled the ticker on a 36% run during which RNBI racked up a dollar volume of around $1.3 million. Trading was a bit calmer during the next day, but the stock managed to add another 26% to its value. All in all, RNBI had jumped from $0.135 to $0.23 per share in a matter of just two sessions and, with the paid promotion in full swing, some people were expecting to see more gains. Unfortunately for them, something unexpected happened.
A few minutes before the opening bell on May 16, the SEC decided to suspend Fusion Pharm Inc (OTCMKTS:FSPM) and suggested that there are some questions around the company’s announcements and financial statements. FSPM was considered by many to be one of the legitimate pot businesses in Pennyland, but apparently, the SEC had reasons to believe otherwise.
The shock from the suspension was going to reverberate throughout the whole sector, but the Commission decided to rub salt into the wound by issuing a warning. They urged investors to be careful around penny stock enterprises that are trying to lure them in with exciting plans related to the marijuana industry.
Not surprisingly, this affected all pot stocks and RNBI was no exception. In a matter of two days, it managed to lose nearly a quarter of its market cap and settled at around $0.18. Apparently, PennyStocks.com weren’t too bothered about the drop and on Tuesday, they said that “RNBI is the hottest company this summer“. The figures suggest otherwise.
Trading is still active, but the volumes are a far cry from the ones logged at the beginning of the pump. PennyStocks.com are also keeping quiet at the moment and it would appear that they simply don’t have the magic touch that APS had before they decided to retire. But is that such a bad thing?
We know that there are plenty of people out there who know how to play the promotional game and are making some healthy profits from pumped stocks. Unfortunately, the number of inexperienced investors who get badly burned is also quite significant.
Now that the SEC is cracking down on both pumped and marijuana related tickers, the game is riskier than ever. The people who held Fortitude Group Inc (OTCMKTS:FRTD) shares and woke up today to find the stock suspended know that all too well.