NuGene International Inc (OTCBB:NUGN) Falls Victim to a Paper Mailer Pump
Want to guess when NuGene International Inc (OTCBB:NUGN) logged its last red session? A week ago? Two weeks ago? No, you’re all wrong. The last dip was witnessed on March 31. That’s right, almost two months ago.
It must be said that NUGN isn’t really the most explosive stock out there, but it did managed to run from less than $2 per share all the way to $3.09 in a matter of about seven weeks. What’s more, the dollar volumes during the last few sessions have been sitting precariously close to the $1 million mark which means that there are more and more people putting their money on the line.
At first glance, this may seem somewhat understandable. The company was previously trying to make a name for itself by selling jewelry, but that didn’t really work out. That’s why, a reverse merger took place at the end of last year and, after acquiring a new ticker symbol, NUGN started selling cosmeceutical and beauty products. The new business seems to be going relatively well. Here’s what the company recorded at the end of the first quarter:
- cash: $618 thousand
- current assets: $1.3 million
- current liabilities: $304 thousand
- quarterly revenues: $481 thousand
- quarterly net loss: $240 thousand
The new business plan has certainly transformed NUGN. The sales are decent enough and a company that is not buried under mountains of toxic debt is something of a rare sight in Pennyland. But is this enough to justify NUGN‘s outstanding performance from the last two months?
Sadly, there’s a bit more at play. Apparently, some hard mailer brochures have been flying around over the last few days. There aren’t a whole lot of pictures of the promotional materials around the internet and we can’t see the disclaimer, but the budget is probably quite substantial. After all, nobody advertises a penny stock through the snail mail for the fun of it.
Those of you who are familiar with the OTC know just how dangerous a paid promotion can be. The hype and excitement often work and they briefly push the promoted stocks in the right direction. Sooner or later, however, the pumpers go away and the tickers tend to crumble to dust. And if you reckon that the relatively solid operations are enough to stop NUGN from falling, you should probably think again.
Cardinal Resources Inc (OTCBB:CDNL) was one of the last penny stock companies to get promoted by a hard mailer brochure, and like NUGN, it too has a relatively decent balance sheet. Despite this, right now, less than six months after the promotion, it’s barely hanging on to the $0.04 per share mark – a whopping 92% below its pump-induced peak.
And there are at least 11,144,640 things to suggest that NUGN might be in for the same treatment.
It all started in March 2014 when some investors bought a total of 148,200 shares at $0.25 apiece. Back then, the company was still called Bling Marketing, but as we mentioned already, it later went through quite a lot of changes. The ones we’re interested in are the two forward splits because thanks to them, the people who bought the aforementioned 148,200 shares could now be holding on to exactly 11,144,640 shares of NUGN common stock. And they paid a grand total of $37,050 for them. This, by the way, is something we talked about almost two months ago.
About thirty-five minutes after the opening bell, NUGN is sitting at $3.10 (about 0.3% in the green).
