Every stock has a valuation and that valuation fluctuates based on many factors from dilution to acquisitions and so on. Who determines the price of a stock? The market does. Traders base their entry on a stock by many factors where the biggest factor is the "risk versus reward upside". If you think a stock is overpriced, do you scramble to make that trade or do you put it on a watch list and watch for a major dip before starting to build your position? The same can be said when a stock is undervalued, except the action is different. When you see what you believe to be a real bargain and the market agrees by increasing the valuation, you start building your position right away. People were snapping up shares for over $7.50 one year ago. Was this stock overpriced at $7 at that time.....HELL YEAH.....did I buy a pile then? HELL NO! Why you ask? Because I felt the stock was overpriced and had much more risk then the tiny amount of upside potential. So that being said, if the market felt this company's valuation was once worth over $7 and since then, nothing other than the usual growing pains has changed with the company, but the market now says it's valued at under .30 cents, you have to look at the price driving metrics at work with the company and determine the "risk versus reward" from this level. Nothing in the market is ever guaranteed and to invest, you first have to determine when to lay down your bets. With the obvious shorting by MMs along with some light dilution and year end tax selling, the downside pressure was huge and dropped the price in a big way. Now that they've managed to drop the price from over $7 to under .30 cents, traders need to evaluate the company through their own DD to determine the risk versus reward from the .28 cent mark. How low can it go? How high can it go? Is there a better chance that 6 months from now, those shares bought at .28 or wherever, become worth more or less than today's price. That is what matters. I believe the upside here from .28 cents far outweighs the risk from this level. Not only me, but the market is starting to see what many others as well are starting to see. Is there a better chance that a company that, within the last 12 months, that traded at over $7.50 and now trades at .28 of going lower after starting to rebound from the low of .20 cents or is there a better chance to regain some of the lost valuation? I believe that answer is very clear and I'll ride along with the market as that happens. If one doesn't believe in a ticker.....any ticker.....there are many thousand other tickers to choose from. Good luck fellow HMBLers and Happy New Year one and all.
