Vape Holdings, Inc. (OTCMKTS:VAPE) Bounces Back On PR
Since the last time we checked on Vape Holdings, Inc. (OTCMKTS:VAPE) two weeks ago, its sock has managed to fall all the way down to $1.65. Yesterday’s session finally put a decisive end to the company’s red streak, pushing the ticker all the way back up to the $1.92 mark.
In the last couple of months, vaporizer companies have benefited tremendously from the marijuana rush, regardless of their intention to get directly involved with marijuana distribution. Presently, VAPE, Vapor Group Inc. (OTCMKTS:VPOR) and mCig Inc. (OTCBB:MCIG) seem to be held in high regard by investors, in spite of the fact that they all seem to have adopted similar, less than creditable tactics when it comes to the stock market. One of those tactics is shamelessly promoting their own stock through PR that is profusely optimistic, uninformative and vague enough to be easy to misinterpret.
To elaborate – the reason for VAPE‘s 16% jump yesterday seems to be its announcement that its online sales are going well. In its press release, the company stated that over the last month it has made about 300 retail sales and has generated a lot of traffic on its website.
VAPE‘s business taking off is good news, of course, but something in the press release doesn’t seem right – the numbers in the announcement are too abstract to mean anything on their own. How do 300 sales translate into something tangible, like revenue?
The company dodges this simple and most important question – and here’s where some basic math comes into play. Judging from the price ranges of the products on the site, if each individual sale included one item, 300 sales amount to a monthly revenue ranging between $6 thousand and $15 thousand.
During the six months ended March 31, 2014 VAPE reported “net cash used in operating activities” $252 thousand. That’s roughly $42 thousand used per month. So what this tells us is, that if the company hasn’t found a way to drastically decrease its expenses once it started active retail, it may have spent the last 30 days turning $42 thousand worth of net cash into $6-15 thousand worth of revenue.
This type of vague and easy to misinterpret announcement is precisely the reason why pot-stock press releases should be taken with a pinch of salt. Said PR can prove to be misleading even if it is not exaggerated or downright false. The worst part is that investors have no real way of knowing what’s currently going on with the company – not until VAPE files its next 10-Q, which is still about two months away.