Any kinda update from the company will spike just like in the past thats why the 3s right now are set in stone 3s will be gone in a heartbeat.. Its truly undervalued compared to 90% of the penny stocks out there...
On Friday, PTA Holdings In (OTCMKTS:PTAH, PTAH message board) suddenly sprang back to life after Leonard Lewensohn, the company CEO, provided the shareholders with an update. He announced that... the company will be late with the filing of the second quarter report. Admittedly, he also said a few other things.
Apparently, the delay has been caused by a few “very positive business events”. Mr. Lewensohn decided not to disclose any particular details, but he did hint that there will be some restructuring of PTAH's assets deployment, he said that an acquisition of a trucking company will be completed “within the next week or so”, and he also announced that “a major funding package” has been completed.
This, apparently, was more than enough to get investors interested. In a matter of two days, they managed to take PTAH from as low as $0.0003 all the way to $0.0008 and although it finished yesterday's session with no gains at all, it did climb (albeit briefly) above the $0.001 mark for the first time since September 2013.
Volatile swings such as the ones witnessed yesterday are not that uncommon among triple-zero stocks. What is extraordinary, however, is the volume. More than 446 million shares changed hands in just six and a half hours bringing the trade value up to $420 thousand. It would appear that investors are genuinely excited about Mr. Lewensohn's update, but as always, we have to ask ourselves: “Aren't they missing something?”.
Since the Q2 report won't be out for another week or so, the best thing we can do is take a look at the statement for the first quarter and see how the company was doing four and a half months ago. Here's what PTAH recorded on March 31:
cash: $6,761
current assets: $293 thousand
current liabilities: $92 thousand
revenue: $930 thousand
net loss: $30 thousand
There are some obvious problems like the pitiful cash reserves, but there's no getting away from the fact that PTAH does appear to be an operating entity. And here comes the next question: “If it truly is a relatively solid company, then why is the stock deep in triple-zero territory?”.
Once you do some digging around, you'll see that this is not the first time Mr. Lewensohn makes some bold projections about the future. Back in May 2013, for example, he said that the acquisition of Eggspress Inc. should increase the company's annual revenues by around $5 million. If you take the figures for the first quarter of 2014 and compare them to the ones registered during the corresponding period of 2013, you'll see that the revenues have actually dropped by around 10% while a $24 thousand net income has been turned into a $30 thousand net loss. But is this really enough to put such a tremendous pressure on the ticker? No, it isn't. There's another, bigger problem.
We would like to draw your attention to the Quarterly Information and Disclosure Statements for both Q1 2014 and Q1 2013. If you open the two documents and have a good look at them, you'll see that at the end of March 2013, the public float consisted of around 230 million shares. Twelve months later, it was sitting at more than 1.4 billion. That, in case you haven't calculated already, means that in a matter of just one year, PTAH managed to print more than 1.2 billion freely tradable shares of common stock.
Dilution is a problem for a lot of OTC companies, but we should note that few are actually issuing shares at such a rapid rate. The stock printing has already had its devastating effect on the shareholders' investments and if it continues, PTAH's management team might have their work cut out for them supporting the ticker at its current levels. This, we reckon, is something you should definitely bear in mind while making your final decision.
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