Stevia First Corp (OTCMKTS:STVF) Bounces Thanks to Old News
About half an hour before yesterday’s opening bell, Stevia First Corp (OTCMKTS:STVF) issued a press release. The management team proudly announced that they have completed a private placement during which they have sold about 5 million shares at a rate of $0.30 a pop. Some warrants were issued as well which could potentially bring in even more proceeds.
Apparently, investors are pretty happy about the news. In a matter of six and a half hours, they traded more than 640 thousand shares which resulted in a dollar volume of about $126 thousand. They also pushed the ticker up by a healthy 41% which means that STVF closed the session with a price of $0.24 per share.
Quite an achievement, you have to agree, and it’s not difficult to see why people got so excited. While the names of the investors taking part in the private placement are not disclosed, they are labeled “institutional investors”. And if institutional investors are ready to fork out $0.30 for STVF‘s stock, why wouldn’t regular retail investors do it? But is there anything else to suggest that STVF is a good place for your money?
The chart at the beginning of the article might be a bit of a turn off for some people. Prior to yesterday’s jump, STVF logged five consecutive red sessions during which it dropped from $0.28 all the way to $0.17. And if early trading today is anything to go by, the bounce isn’t going to last. About seven minutes after the opening bell, the ticker is sitting at $0.20 (16% in the red).
And while some people might still be a bit excited about yesterday’s press release, they should probably bear in mind that the news isn’t actually new. The private placement was first announced on May 6 and it was accompanied by an 8-K form detailing the deal. Curiously enough, nobody reacted to it back then.
As for the latest 10-Q, it has its good points, but it also has its not-so-good points. Here are the figures recorded at the end of last year:
- cash: $1 million
- current assets: $1.1 million
- current liabilities: $1.6 million
- quarterly revenues: $59 thousand
- quarterly net loss: $1.1 million
You can see that even without the private placement from three weeks ago, the balance sheet isn’t really that horrific. There is some cash in the bank, and although there is a working capital deficit, most of the current liabilities consist of derivatives. There’s no toxic debt, either.
Unfortunately, the income statement is a bit of a different story. The sales are not massive and that’s understandable. After all, STVF only started generating revenues a couple of quarters ago. In light of this, the net loss isn’t that much of a shock, either. The problem lies with the fact that in the Results of Operations, the management team said that they expect sales to continue “at approximately this rate”.
If they want to guarantee a more consistent performance for their stock, they’ll need to put something a bit more encouraging in their future financial statements. They also might want to come up with a newer and more substantial piece of news. Until they do it, putting your money on the line will be accompanied by quite a lot of risks.