Or maybe not if people post stuff like this over the weekend...
Yesterday New Western Energy Corp (OTCMKTS:NWTR, NWTR message board) registered its first truly active trading session in a very, very long time. More than 1.1 million shares changed hands in a matter of six and a half hours which brought the dollar volume up to nearly $180 thousand. The ticker hit an intraday high of more than $0.17 and finished the day above $0.14 for the first time since July 2014. This is almost 32% above Friday's previous close.
Not bad, but there is a rather big problem. The whole excitement wasn't caused by a press release or a decent set of financial results. The volume and the 32% jump came because of some rumors. Apparently, quite a lot of people believe that NWTR will become the target of a promotion in the very near future.
But what if they're wrong?
Well, the people who jumped in yesterday will have one or two things to be worried about. As we mentioned already, NWTR hasn't been the most heavily traded stock over the last few months and without a pump, liquidity might become an issue pretty quickly.
And although the company announced at the end of last month that it's expanding its business, NWTR's financial statements suggest that not everything has been going according to plan over the last few years. Here's what the 10-Q for the third quarter of last year tells us:
cash: $29 thousandcurrent assets: $325 thousandcurrent liabilities: $908 thousandquarterly revenues: $131 thousandquarterly net loss: $270 thousand
It should be noted that the revenues are moving in the right direction, but the historical performance shows that this is not really enough for investors.
But what if the people of the internet are right and NWTR does indeed become a promoted stock?
We read in the 10-Q that some note holders converted their debt at a rate of $0.04 per share during Q3, so we're pretty sure that they won't be too upset if they see some volume and some appreciation of the share price. Retail investors, however, might want to tread carefully.
Some of you will probably find this hard to believe, but NWTR was once a $1 stock. It reached these levels back in January 2013 when it was pumped. Just a month later, the ticker was barely hanging on to the $0.60 mark, and, thanks to a few more promotional campaigns, it has managed to incinerate even more of its value over the last two years. In case you haven't calculated already, the unfortunate investors who bought NWTR shares in January 2013 and are still holding on to them are now looking at losses of about 85%.
This, we reckon, is yet another example of how dangerous promoted penny stocks can be. Put in the rumors, speculation, and uncertainty that surround NWTR at the moment, and you've got an even more volatile mix.
