Stock Runway Puts MedCareers Group Inc (OTCMKTS:MCGI) Through its Paces

4MCGI.pngIt’s pretty clear from the chart on the right that MedCareers Group Inc (OTCMKTS:MCGI) probably isn’t your best bet when it comes to penny stock investing. The ticker simply seems too illiquid which, in the world of small cap enterprises, is usually a rather big red flag. The three-year chart might be an even bigger cause for concern. Promoters and other factors have turned the stock into a white knuckle ride with an absolutely amazing price amplitude.

Unfortunately, even in terms of operations, MCGI have little to show us. If you check out the address of their headquarters, you’ll see that they work from a suburban house in the City of Coppell, Texas and, according to the latest 10-K, there are only two full-time employees. The company was also delinquent in its SEC filings until recently. They managed to catch up by publishing no less than eleven financial reports in September, but there’s no telling if they will succeed in staying current from now on.

There’s another problem, too. Giving the investing public the much-needed financial information was a good thing, but unfortunately, the figures are nothing to brag about. MCGI‘s founder and current CEO, Mr. Tim Armes, started work on the online social platform for nurses more than ten years ago, it’s now up and running, but it doesn’t seem to be bringing in the desired revenues. According to the latest 10-Q, the quarter ended July 31, 2013 resulted in just $2,485 in sales, which, believe it or not, is a 36% decrease year-over-year. The rest of the figures aren’t really confidence-inspiring either. Here’s a quick summary:

  • cash: $77 thousand
  • current assets: $78 thousand
  • current liabilities: $1.1 million
  • quarterly net loss: $263 thousand
  • accumulated deficit: $5.2 million

With all these factors in mind, explaining the rather uneventful trading from the last months isn’t really that hard. Yet, yesterday, MCGI managed to shift more than 291 thousand shares bringing the dollar volume up to a mind-bending $537 thousand.

The only reasonable explanation for the explosive trading could be the emails from Stock Runway. The initial alert hit our inbox early in the morning and the first minutes after the opening bell suggested that their predictions of the ticker “taking off” were really going to turn into reality.

A lot of buying pressure pushed the price as high as $0.23 per share, but, as is often the case, the peak was simply too short. MCGI dropped quite a bit faster than it accelerated and just half an hour after the opening bell, it hit its intraday low of just $0.125. It managed to regains some of the lost ground later on but it still finished the session around 13% below its previous value.

Stock Runway, apparently, were quite happy with the performance and they sent us a second email around 12PM talking about the great run from the beginning of the session and blaming the devastating drop that followed on short sellers. This is typical behavior from the pumpers and especially characteristic for free campaigns.

Stock Runway’s smugness, however, doesn’t change the fact that quite a lot of people lost money during yesterday’s session 4DDXS.pngand it shows that whatever the pumpers are saying, you should always rely solely on your own research and due diligence.

Other companies that drew in quite a lot of attention include diaDexus, Inc. (OTCMKTS:DDXS) whose stock managed to bounce back a little after Tuesday’s devastating drop and Nevada Gold Corp (OTCBB:NVGC) – a ticker that got squashed by an $800 thousand promotion.

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