New World Gold Corp. (OTCMKTS:NWGC) Goes Through the Roof

0NWGC_chart.pngYesterday’s chart movement of New World Gold Corp. (OTCMKTS:NWGC) likely blindsided a few traders. The company’s share price shot up in the early afternoon, then cooled down significantly, stopping at $0.004 per share by the closing bell.

The freak spike happened with no obvious trigger. The company has made no new announcements in almost a month and its last report was a quarterly that was published on May 15, 2014. Here is a brief summary of the numbers reported:

  • $79 thousand in cash
  • $59 thousand in current liabilities
  • $2.4 million in sales for Q1 of 2014
  • $750 thousand in net income for Q1 of 2014

Those are fine numbers, especially considering this is a pink sheet company, even if it operates in the mineral mining sector. However, there is a serious discrepancy between the company’s market cap and revenues reported. NWGC‘s market cap prior to yesterday’s session sat at around $850 thousand. This means the entire market capitalization of NWGC was just a third of the revenues the company reported for Q1 alone. This is quite strange and could indicate low overall investor confidence. The market also displayed zero excitement after the Q1 report was made public, with NWGC closing flat on the day of the filing, then even slipping in the red.

3NWGC_logo.pngNWGC also upped its authorized shares from 500 million to 750 million sometime during Q1 and then issued a new 77 million shares over the quarter, diluting its common stock by over 15% in just three months. According to the latest 10-Q the shares were issued to Mr. D. Rayburn and Mr. R. Meadows, who received 30 and 47 million, respectively.

There is talk on investor boards that a lot of buzz about NWGC was generated on Twitter around the time the price spiked but we could not find any hard evidence that supports the theory of a coordinated promotional effort. At any rate, traders should bear in mind that the price retraced significantly from its intra-day high of $0.007. Doing your own research is always a good idea. On the other hand chasing any stock up the charts hardly ever is.

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