Nightly Topic: What are "Promos"? Promos are Penny Companies that retain a third party company to promote their company in order to push the pps share up for that particular company. This 3rd party is compensated in two ways. It could be in direct cash from the company but more common is they are given free shares of the companies stock for compensation. This 3rd party then releases their "Pick" which they will promo. You generally will see a huge influx of PR's during this time trying to make the company look more enticing.
Promos can be a great way of making money but they can also be disastrous as many here on the Board know. PWEI (now PWEID) is one that has had astronomical gains as of late. SNPK back in Spring also did extremely well. There are a few things to consider when looking into Promo's....
Firstly, the higher the starting pps, the harder it is for them to move. Another thing to look at is was the Penny "Front loaded"? Front loading is a term which means that the 3rd party company that was compensated with shares by the Penny Stock company buys into the stock before they release the promo. This is evidenced by some larger gains on the promo'ed company before the "Pick" is released. We never see that though until after the fact. Typically it is because the 3rd Party is buying shares ahead of time knowing they will later sell their shares they were compensated with once they release their "Pick" and the rest of us start buying. Ethical or not?????? I won't comment.
Why does a Penny company pay to have their stock promo'ed? They do so for two reasons. One is they are legit and they truly want to bring awareness to their company so the public knows what they have to offer. More often than not though, they do so to get their pps up and then they dilute (sell shares).
During this process, one can make substantial gains but one always has to remember one thing with Promos: I have never seen one sustain the high pps they excell to. Most end up plummeting at some point and many can be left holding the Bag.
The timeframe of a promo can be from as little as a week to a few months. There is never any definitive way of knowing how long they will last.
Also keep in mind that while there are many 3rd party companies out there that will promote Pennies; there are some that are better than others. Some are much more aggressive than others.
Bottom line is there is money to be made with Promos but also a large risk as one never knows when the bottom will fall out and it almost always does.
Hope this makes sense and helps some out.
Tomorrows nightly topic will be how to find a momentum Play to buy into just for the day and where to find them.
