My comments on yesterday's 20% drop
In light of the pounding AMJL stock took yesterday (down 20% to $0.42 on moderate volume of 105,000 shares), if things continue at the current pace, this stock should soon test the $0.16 level (its 52-week low). That is, if management doesn't come out with some concrete financial results, or at least some earnings guidelines. Short sellers have clearly been targeting Amigula, but it is now clear that ordinary investors are panicking and starting to dump their stock.
The short sellers seem to believe the company was bluffing when it threatened a forward split on or around April 1 (which would have forced the shorts to close their positions and return a multiple amount of the stock they borrowed). This threat had its intended effect, for a while, but the sharks are circling once again.
So management had better do something, and fast, if this stock is to avoid being worth just a few pennies rather soon. They might consider buying back their own stock on the open market, but that would merely be a measure to buy time until the next major catalysts occur.
Considering the stock's relentless fall over the past couple of months, it is increasingly hard to avoid the impression that Amigula has put the cart before the horse in terms of their listing. Usually with a venture start-up, you build the business, prove the model and only then seek a listing. In this case, however, the company has apparently listed first and only then sought to build their operations.
I may very well be wrong in this regard, and the recent mention in Barron's magazine that Amigula had already contracted with 50 growers and were seeking $7 miln in private financing (in addition to the $5 mln company president Warren Eugene put up from his own pocket) is encouraging. But waiting for court rulings and/or legislative progress is a very risky strategy in terms of your share price. Most investors simply canot wait that long, especially when they are losing hundreds and even thousands of dollars session after session.
Another possibility is that Amigula's underlying business may indeed be getting stronger, but for whatever reason management has been unable to make this information public. They will eventually have to release some financial numbers due to their fiduciary responsibilities, and even just throwing the market a bone could be enough to shore up the share price at this point, even temporarily.
Whatever the case, it is clear that the bleeding has to stop, and soon.
