One of the major players in the marijuana sector which had been nothing but horrible throughout the course of 2015, Hemp Inc. (OTC PINK: HEMP), redeemed itself on Monday in a big way by gaining 36% on the session and ending it as the top traded penny stock on the OTC. After flirting with the idea of becoming a subpenny stock, a level which HEMP stock graduated from last back in December, 2013, the ignition switch was lit after the company reported that CBD/Hemp Oil is now legal in North Carolina thanks to the passing of House Bill 766 into law Friday.
While much excitement may be celebrated at the company’s decortication plant (a natural fiber manufacturing and processing facility) n North Carolina, traders are somewhat skeptical that the massive rebound can sustain the exuberance of being the top traded OTC ticker exactly 3 months after the significant 420.
In a statement to the public (in an effort to finally get one PR to effectively pump HEMP shares), CEO, Bruce Perlowin stated “This is quite a victory for Hemp, Inc. and its shareholders because Hemp, Inc. owns 9 acres of land with a 70,000 square-foot facility that can process large, or commercial quantities of hemp fiber.” Sounds great and all, but if you take the shares you own and divide it by 3,000,000,000, the calculation will likely show roughly the square footage ownership equivalent to be able to stand on one’s tippy toes and hop up and down.
Perlowin went on to state that “Now that the State has approved the legalization of CBD/hemp oil, Hemp, Inc. can build this space out in order to accommodate the State’s medical needs, should that decision be made.” The simple and easy translation to that comment means that either a) authorized shares of HEMP are due to be increased so as to be able to leverage some debt financing or b) pull off a reverse stock split since there was $2,784,975 of convertible debt on the books as of March 31, 2015 and $6,223 in revenues (which cost $28,007 to generate) is not sufficient cash flow to pay for anything.
The last time HEMP stock was trending in the range where it had been for the past month was way back in December 2013 when shares were actually below .01. That was the time when HEMP surpassed all expectations, thanks to the legalization of recreational marijuana in Colorado and Washington State as of January 1, 2014, by running from 0.085 to 0.34 in two months: a 3900% gain!
While volume on HEMP had been picking up a bit over the course of last week, yesterday’s significant spike, 77.7 million shares traded, was just a drop in the bucket in terms of what’s out there. Since only the toxic debt financiers that are privileged enough to be able to obtain HEMP shares for lower than .01, the theory that HEMP could return to the level where it began the year, around 0.05, might be a bit too optimistic. That said, a day 2, maybe even day 3, momentum play could attempt to surpass and close above yesterday’s HOD of 0.023.
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