Vape Holdings Inc (OTCMKTS:VAPE) Makes an Uninspiring Bounce
Exactly three and a half months ago, Vape Holdings Inc (OTCMKTS:VAPE) hit its 52-week high of $41.25 per share. After a 4% bounce yesterday, it’s sitting at $1.32. That’s nearly 97% of the value lost. The logical question is: “What happened?“.
The reason for the absolutely devastating drop is certainly nowhere to be found in the company’s press releases. As you probably know, VAPE entered the vaporizers business just recently and they acquired the Hyve Ceramics website less than three months ago. As Kyle Tracey, the company CEO is keen to point out, VAPE is still making its first steps out of the development stage and the current situation is not really indicative of the future progress. Then again, he also says that the traffic on the website is growing and he tells us that the revenues will be huge.
And since we mentioned VAPE‘s current situation, we should note that on May 20, the company filed its Q1 report and the figures in it don’t look too terrifying. Here’s a summary of the most important financials:
- cash: $598 thousand
- current assets: $768 thousand
- current liabilities: $556 thousand
- quarterly revenues: $30 thousand
- loss from operations: $215 thousand
Indeed, the balance sheet is not exactly perfect, but it’s not as horrific as the ones presented by other small cap companies. It’s certainly not bad enough to cause such a dramatic drop in the share price.
So, the press releases aren’t to blame and neither are the financial reports. What, then, is the cause for the incineration of 97% of VAPE‘s value? Could it be the paid promoters?
Surprisingly or not, the answer is a resounding “No“. VAPE did indeed go through a couple of pumps, but that was a long time ago when the stock was traded under the PLPE symbol and the business plan was completely different. Having said that, although there wasn’t any outright promotional activity, there was a lot of hype around VAPE when it was hovering above the $40 per share mark.
The reason for this is the business plan. As the name would suggest, VAPE specializes in designing, building, and selling vaporizers and people nowadays often connect vaporizers to marijuana. We probably don’t need to tell you that the legalization of recreational cannabis in Colorado and Washington created a lot of stir in Pennyland and the subsequent excitement sent a huge number of penny stocks flying high.
Unfortunately, few managed to sustain the pressure and many (VAPE included) came crashing down. Others like Growlife Inc (OTCMKTS:PHOT) and Fusion Pharm Inc (OTCMKTS:FSPM), on the other hand, were suspended by the SEC which added to the havoc the sector has been experiencing over the last few months.
The marijuana industry is indeed in a bit of a mess at the moment – pot stocks have their stronger days and they have their weaker days. Predicting the future is nigh on impossible. But is VAPE any different from the rest of the marijuana tickers? And, more importantly, can it regain at least some of the lost ground?
The sales projections certainly sound impressive, but it seems that investors are no longer ready to put too much faith in the press releases and predictions. The dilution which we discussed at some considerable length in our previous articles is also a problem that could rear its ugly head in the future. Apparently, traders seem to fully understand that. At least that’s what early trading today suggests. About fifteen minutes after the opening bell, VAPE is sitting at $1.22 which is 7.58% below yesterday’s close.