The Sunday Newsletter,
There is much emotion and anxiety playing out during the past week's session.
First let's start with the company's announcement going back a couple of weeks on share reduction or buyback. The company announced on X a few weeks back that they would reduce the O/S. For the reduction to reflect the actual via the transfer agent takes a couple of days or a couple of weeks. We got an update last week-Friday with a 100M reduction. This is probably a true figure since it isn't difficult to predict on any given day on how much the buyback amounts to. As I have mention from my last post (see my reply above) on the particulars on the SEC rules.
There is so much hyperbolic predictions on this thread pertaining to the direction on where the company is going. It doesn't benefit anybody on this thread looking to further their due diligence and answers only to read these wild predictions that are so far out there that any reasonable qualified analyst could never even stand behind such claims. I realize that many would like to see this company's potential come to fruition, but currently this is a long shot and a very or extremely risky trade for ROI. Welcome to the penny arcade.
As I mentioned before, the company has to stay within 25% of the volume for buyback and selling shares within the sessions volume. We don't need to keep looking for the numbers from the transfer agent's confirmation for the actual amount. You can see just from the volume going back when the company announced on X how much is being taken back or retired. It shows that the company reduced it about 100M and is on par. Face it folks, the company on most days going back weeks really doesn't have the volume to amount to any major reduction. A real significant amount has to be around 25% of the current O/S. This amounts to 2.5b reduction and anything less is basically a nonstarter.
For the folks that continue to buy. Stop it now and just hold what you have and watch where this goes. I can tell you with almost certainty that if you continue to overburden your continued buying you will have a very rude wakening when things start settling down and that will eventually come into Fall going to end of year. Some have shared with the board on how much they own, and I again can tell you that it doesn't matter. What I will say, if you own over 100M you are playing in a very risky venture and the risk/reward is against you.
Under the current O/S this company will never hit .01. The law of averages is against this issue under the current setting and if the share reduction isn't reduced to a considerable level, most of you will have proven that 70% who participate in the penny arcade will lose their principal amount and eventually will sell just for 'Preservation of Capital' or POC. This is a fact!
I generally never take the advice in the penny arcade on what is said on X. You have to take these statements from any company on X with skepticism and this company referring to reduction as "significant" is thus far, nothing more than BS. However, this may change, but the change must accompany a catalyst from the company since any future driving force to elevate the share price will be null and void and we will all be holding worthless shares and whatever amount you may have spent is a lose.
This is one subject that many can't seem to get a grip on and that is the dreaded R/S. When any company states that they are not going to do a R/S is only stating a vague response and generally is just too quiet down the obvious sentiment. Nobody wants to hear that horrible move, but with this company, it has to be part of the conversation regardless of the statements on X by the company.
I'm going to make a prediction right here and now. This company has to reduce the share structure by at least 25% or greater by the end of the year and they must present shareholders with a very sound catalyst to implement this part of the program. I do however feel that .0003-.0005 is achievable in the short-term, but it needs a catalyst. Without a catalyst we will linger down here in the doldrums for how long, is anybody's guess. The eventual outcome is not going to be very satisfactory to shareholders. If by the end of the year and NO significant share reduction as mentioned the company will never be able to survive NOT doing a R/S and now, I am more inclined to think that a R/S will happen by the end of the year. The company as with most companies will give a high noted reason on why they will need to do a R/S and shareholders never have a chance to counter this discission. If one does happen and no significant change in the share structure expect a R/S around 1: 2,500.
For all who hold and maintain that hold since it doesn't matter at this point, start exiting out once this issue starts moving north and consider the number of shares in retail hands remove your principal with extreme prejudices early.
Take it for what it's worth, I am a very good analyst on the inner workings of companies in the penny arcade and generally when I say there is a high probability on a R/S take it to the bank.
See you in the fall.
Class dismissed.
Have a good day.
varok
AI
