New Generation Consumer Group Inc. (OTCMKTS:NGCG) Gets Demolished

New Generation Consumer Group Inc. (OTCMKTS:NGCG) ended up crashing 30% in yesterday’s session, in spite of publishing good news that same day.

To an investor that is unfamiliar with NGCG‘s particular situation, the ticker’s movement may seem erratic. The company just published an optimistic press release so how can it have crashed so thoroughly? What gives?

Well, some due diligence reveals the probable cause of the crash. One look at NGCG‘s share structure reveals a truly grizzly sight:

• On Oct. 2014 NGCG performed a 1 for 1,000 reverse split, which left it with just 1.6 million shares outstanding
• On Dec. 31, 2014 NGCG‘s outstanding share count was 56 MILLION
• On Feb. 4, 2015 NGCG‘s outstanding share count was 484 MILLION
• On Mar. 31, 2015 NGCG‘s outstanding share count was 584 MILLION
• On June 30, 2015 NGCG‘s outstanding share count was 660 MILLION

Over the last year or so, NGCG has issued staggering amounts of common stock, and the dumping of these shares on the market has continually driven the ticker down to the bottom of the charts. Could it be that note holders were just waiting for the right moment to flood the market with toxic convertibles, and thought it would be a good idea to do so immediately after the company published yet another optimistic announcement? That may very well be the case.

Of course, it may be that a “weak hand” that held too much decided to wash his hands from NGCG once and for all, or a disgruntled investor that is just fed up with the company’s unimpressive results decided to dump his shares. Since we’re talking about a dubious OTC Markets pinksheets penny stock, there is no way to know for sure. 

But even if there is no real way of knowing if the above mentioned theories of crushing dilution are in fact close to the truth, investors should probably not discount them out of hand, especially in light of the NGCG‘s erratic behavior.