Konared Corp (OTCMKTS:KRED) Gets Another Paid Pump
At the start of the year Konared Corp (OTCMKTS:KRED) became the target of a massive $2.3 million promotion that quickly pushed them up the chart to a high of $1.36. The pump employed the creation a landing page, numerous email alerts and even the distribution of a hard mailer. No matter how big the campaign is though the artificial hype cannot last forever and since then the stock has been going in only one direction – down.
At the end of last month it dropped to its new 52-week low of just $0.22, a loss of over 80% compared to the pump high. On November 4 KRED filed its quarterly report for the period ending September 30 and even the record revenues contained in it failed to influence the chart performance. Well, to be fair the report actually leaves a lot to be desired:
• $600 thousand cash
• $1.36 million total current assets
• $95 thousand total current liabilities
• $341 thousand net sales
• $752 thousand net loss
It is indeed true that compared to the same quarter last year net sales increased by 95%. Compared to the previous quarter the cash position has increased while the current liabilities have decreased significantly. There is one major problem though – the ballooning net loss. The rate at which their losses have been increasing far surpasses the growth of their sales. For the nine months since the start of 2014 KRED have incurred a net loss of $2.9 million while for the same period in 2013 it was $576 thousand.
With the company actually getting further away from becoming a profitable entity what could explain yesterday’s overwhelmingly positive market reaction? KRED opened with a gap up at $0.25 and closed the session at $0.306, a gain of more than 26%. The volume generated throughout the trading day is equally as impressive – 953 thousand traded shares, the biggest amount for the last three months.
Konared did issue a new press article early in the morning in which they announced a partnership agreement with Dixon Marketing, Inc. The news is certainly positively but it is highly unlikely that it alone was responsible for the sudden change in investors sentiment. A far bigger influence must have exerted the new pump campaign that began on Sunday.
Two email alerts were sent by the affiliates of Stock Chat – 007 Stock Chat and Penny St0ck Spy. This time around the disclosed compensation was rather small – just $5000. Before the start of yesterday’s session another pump outfit joined the promotion for a much bigger sum – FPP Newsletter who bagged $17 000. KRED even got an Analyst Report by Small Cap IR in which their stock is assigned a short-term target of 60 cents and a longer-term target of $1.20. Such valuations may seem quite high but you should take into consideration the fact that Small Cap IR received $15 thousand for their efforts.
With the company hitting record lows just days ago and the effects of the pump it could make a significant bounce. But for how long it will manage to keep its gains is anybody’s guess. The risks around KRED should not be underestimated and any trades should be attempted only after doing extensive due diligence.