Why Did Steampunk Wizards Inc (OTCMKTS:SPWZ) Crash?

Steampunk Wizards Inc (OTCMKTS:SPWZ) lost nearly a quarter of its market value in the last hour or so of Friday’s trading, for no obvious reason. At this point, many investors are rightly asking – what happened?

As usually the case on the OTC Markets, there is now way to be certain that any single answer will to that question will be absolutely correct. However, it does seem more than a bit likely that the ticker crashed as hard a sit did because it didn’t have a reason to be perched as high as it was in the first place.

To elaborate – even after the grizzly crash, SPWZ‘s market cap is as high as $40.6 MILLION. Unless a paid pump is involved, such a high market value is usually reserved for solid, accomplished companies with serious achievements. One look at SPWZ‘s filings determines that it does in no way look like it qualifies to fit in either of the three categories that we have named:

  • Assets – $23 thousand
  • Liabilities – $53 thousand
  • a $392 thousand net loss for the first five months of operations

Long story short – the ticker was severely overbought. This was perhaps in part due to the fact that MicroCapDaily has been heaping SPWZ with optimism on multiple occasions in the last two weeks, and perhaps in part due to the social media coverage the company has gotten lately. The reason for the stock’s inflated price is of little consequence at this point – the important part was that SPWZ‘s chart position was based on hype rather than on actual merit, and thus it was unstable.

There is no way to know what triggered a wave of selling, but let’s just say that three years ago, just as it was going public, SPWZ sold the equivalent of 10,080,000 of its current shares outstanding for just $37,800. It should be pretty obvious why the owners of said shares might want to cash them in right about now, and how said dumping, if it really had occurred, may have well been the cause for SPWZ‘s crash.

Note well that this does in no way mean that SPWZ is all bad, or that there is no money to be made trading the ticker. The company seems to be gathering popularity, and its labors may well bare fruit in due time – but at this point it’s just too early to tell if it can make it in the cutthroat world of mobile gaming.

In the mean time, investors would do well to be very careful and diligent when dealing with SPWZ. The company’s potential just does not seem to warrant its current market cap, which hints at the possibility of it suffering further corrections in the immediate future.

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