The stock of NuGene International Inc (OTCBB:NUGN) witnessed deep sessions this week after trading in a narrow range last week. In yesterday’s trading session alone, the stock declined more than 12% to close the day at $2.23. Yesterday, the company released the financial numbers for the second quarter of this fiscal.
As per 2Q2015 report, NuGene had $486,000 in cash. The total current assets came at $1.16 million against the total liabilities of $268,000. The revenue in the quarter came at $536,000 and net loss was $772,000. Compared to the other penny stock firms, the company’s balance sheet is encouraging. The issue is that the financial numbers do not support the overly-inflated market capitalization of the company.
Despite the recent decline, the market cap is still above 88.27 million. It should be noted that although the revenues for 2Q2015 surpassed the revenue over the previous quarter, the net loss jumped at a much faster pace. At the end of 1Q, the company posted $240,000 in net loss and now the loss stands almost three times higher.
The problems for NuGene go far beyond the financial numbers. For months NuGene stock has been touted by a promotional campaign that covered the distribution of hard mailers. For a paid campaign to be active for a long period there is a need of a big production budget and it seems millions have been paid in order to artificially push company’s stock up on the chart.
The disclaimers in the glossy hard mailers revealed a budget of $2.28 million, which in the recent mailers was bumped up to as much as $4.4 million. The individuals that can gain most from the promotional campaign are the holders of the 11.1 million free-trading shares that they received at a split-adjusted rate of $0.0033 per share.
NuGene International Inc (OTCBB:NUGN) ended the last trading session with a major loss of 12.38% with the volume of 369,000, considerably higher compared to the daily average of 211,000 only. The fall had a whiff of capitulation in it from the larger perspective. The downtrend has been on for the last two weeks or so as the last leg of a Triangular contraction, as seen clearly on the chart attached. The lower boundary of the Triangle couldn’t hold off the onslaught even for a single session, implying the bearish strength. A corrective bounce to $2.50 can’t be ruled out but the downtrend remains intact.