Vapor Corp., (OTCMKTS:VPCO) On A Downward Slope

We’ve covered Vapor Corp., (OTCMKTS:VPCO) a fair few times now and we’ve always said that this particular company does have a lot more to show compared to their small cap counterparts. They have a positive working capital, a product that is already on the market and even a profitable quarter registered during the first three months of 2013.

All in all, VPCO is not the typical penny stock. But it is still a penny stock and as such, it’s prone to moving up when there’s some good news and tumbling down when there isn’t – a point hammered home by the ticker’s performance from the last couple of weeks. On September 17 an article was published on a website called The Motley Fool and it concerns the e-cigarette market as a whole. VPCO was, of course, included in the list of ventures operating in the sector and it’s pretty clear that the author hasn’t been preoccupied with attacking the company, but rather, wanted to warn investors not to get terribly excited about this particular industry.

Despite that, VPCO took a heavy beating. As soon as the coverage went online, the ticker dropped below the $1 per share mark and out of the eight trading sessions that followed, only three ended in the green. On Friday, VPCO wiped out around 6% and the first half an hour of this week’s trading suggests that more losses might be in store. The question now is: “Will VPCO manage to recover and, if yes, when will that happen?”.

This largely depends on the financial results for the third quarter of 2013. As we mentioned, the first three months of the year were mightily optimistic. VPCO managed to register a profit but when the financials for the period between March and June came out, things weren’t looking quite so bright. The revenues have shrunk by about 24% year-over-year and around 3% quarter-over-quarter. That said, only the future filings can reveal whether VPCO really are starting to stray away from the right track.

Until then, a potential investment in VPCO carries just about all the risks associated with putting your money in small cap ventures. For one, the last couple of weeks show that you have the volatility to think about. In case some negative news or reviews hit the wire, there could be a heavy depreciation.

VPCO showed us what could happen when some warnings from various authors are flying around and if you check out the chart for Virtual Piggy Inc. (OTCBB:VPIG) on the right, you’ll see how terrible the effects can be in case the attack is aimed directly at the company or its management team.

Another thing that you should always keep in mind when contemplating a potential investment in penny stocks is the threat of a paid promotion. With the price now well under the $1 mark, some third parties might decide that a pump is in order. We deal with such practices on a daily basis around here and we know that, no matter how solid the company appears to be, if the pumpers are involved, a sudden drop seems almost inevitable.

Speaking of which, we mentioned in some of our previous articles that VPCO‘s CEO, Mr. Kevin Frija has been interviewed by two entities that are often involved in stock awareness campaigns – Red Chip Companies, Inc. and NBT Equities Research. We can see that NBT’s questions and answers session (although uploaded more than three months ago) is still available on their home page which could suggest that it’s still enticing people to jump in. Is that a good sign?

Well, the interview was carried out by Mr. Tobin Smith, himself. If you are a frequent visitor of our website, you probably know who he is. In case you aren’t, we should tell you that his optimism about another penny stock venture, North American Oil & Gas Corp (OTCBB:NAMG), is being spread around by paper mailer brochures. As you can see from the chart on the right, NAMG is not doing particularly well at the moment.