Plandai Biotechnology Inc (OTCMKTS:PLPL) Recovers From a Violent Drop

73PLPL.pngOn April 23, 2013, MBSA sent us a promotional email on Plandai Biotechnology Inc (OTCMKTS:PLPL) which marked the start of a really big pump for the ticker. Since then, there have been around 300 alerts and countless articles touting PLPL as the next big thing in the pharmaceutical and nutraceutical industries.

It’s indeed one of the most long-lasting campaigns that we have seen and it’s also fair to say that it’s one of the more effective. The initial awareness dug the ticker out of the $0.05 to $0.06 range that it occupied back in March 2013 and the constant touting even managed to send the ticker on two trips to the $0.80 mark in August and October. The peaks were, predictably, followed by some serious corrections, but even so, PLPL managed to remain relatively calm under the pressure.

That changed in December. The ticker suddenly slipped and fell hard losing about 55% of its value in just five trading sessions. But what could be the reason for the drop?

As we mentioned in the first paragraph, PLPL has been touted as an emerging leader in the nutraceutical industry and, for the better part of 2013, the pumpers talked about the revolutionary Phytofare botanical extracts. Unfortunately, while they’re probably quite clever indeed, they’re still not on the market.

If you check out the 10-Q covering the period ended September 30, 2012, you’ll see that historically, the company has generated revenue through the sale of timber and agricultural products. In November 2012 (when the report was published), the management team thought that the Phytofare extracts will be on sale in 2013.

A couple of months later, when they filed the 10-Q covering the forth calendar quarter of 2012, they were a bit more specific and noted that their products should be in a chemist near you in the Fall of 2013. Unfortunately, things didn’t quite work out and the latest report (which covers the third quarter of 2013) states that the extracts won’t be out until 2014.

It’s clear that things are not going quite according to plan and there can be no guarantees that the deadline set in the latest 10-Q can be met. It’s safe to say that, if PLPL are to succeed, they need to get the extracts on the market as quickly as possible since they are losing quite a lot of money. The Q3 results, for example, showed a significant year-over-year increase in revenues, but the $753 thousand net loss suggests that the timber and macadamia seeds business is far from profitable.

All in all, the only thing that could salvage PLPL‘s operations is the extracts and the potential profit that can be made from them which is why, at this point, some investors consider the ticker to be more of a waiting game.

And yet, the price is surging. PLPL has registered only three red sessions since the beginning of 2014 and the cumulative gains exceed 100%.

This can be attributed to some extent to the effort from the pumpers who, as you can see from our database, are still touting the ticker, but it’s mostly due to the fact that PLPL is now a medical marijuana company.

8PLPL_logo.pngThey announced back in November that their Phytofare extraction method can also be applied to cannabis for the creation of non-psychoactive drugs for a variety of ailments. The initial response wasn’t that significant, but, as you probably know, the new year brought along quite a lot of hype around the cannabis industry which, in turn, sent tickers like Growlife Inc (OTCBB:PHOT), Cannabis Science Inc (OTCMKTS:CBIS), and Terra Tech Corp (OTCBB:TRTC) on a run.

So far, PLPL has been surging alongside them, but sooner or later, the enthusiasm will subside. Once that happens, the company will need to support its market cap only through their operations and if the management team miss another deadline, the price might be in for another violent drop. That’s why, careful evaluation of all the risks is absolutely essential.

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