One of the factors contributing to price drops
I have been wondering about the downward pressure on price after good news for a while. I know very little about penny stock markets and day to day fluctuations but I feel there are unusual dynamics at play with STWA.
I am going to suggest to you that a contributary reason the price is going down is not because people are selling off shares - but paradoxically because they are in fact buying substantially more.
How so? This could well be true of me later in the year. There are many of us with options and warrants empowering us to buy at low prices. So the option facing some will be to sell, say, 20,000 shares at $1.50 to release sufficient funds to cover exercising a 2 year old warrant for 100,000 shares at 30 cents. Net gain (in this example) 80,000 shares.
However, as far as market price impact is concerned such people will appear to be sellers when actually they are big net buyers (albeit of new issue shares). This effect, if it is actually significant, should phase out in the next 6 to 9 months.
And a note to Soxfan – the company has for years been selling new issue shares to any investor who wishes to purchase new issue shares. You have to be willing to declare a networth of $1m and claim to be a sophisticated investor (meaning you realise you could lose your shirt on penny stocks!) The company would certainly have sold to you if you had approached them and met those criteria. The shares are restricted for a period of 12 months before you can register them for sale and you buy them at a slightly advantageous price to market price and get a warrant (option) to buy a similar number later (within 3 years originally, more recently 2 years).
This is the way the company has been raising money to keep going. It has no income so has to get money somehow and is not allowed to sell new issue shares directly on the market. So this is the way that works. Shares were typically being bought at 25 cents when the market price was between 25 and 40 cents. About the time the price went above 40 cents Cecil had enough money to complete the research and stopped the offers. He does not want to dilute his shares either unnecessarily. If you don’t like it I don’t know what else to say except that without a way of raising capital like this, I don’t see how you would have a company able to pay R&D and develop a product, bring it to market and make you or anyone else any money.
