Top 10 Penny Stocks: Atrinsic (ATRN) Adjusting to Pinks

When you look at the best penny stocks to buy, you would think that when a formerly NASDAQ listed now pink sheets stock has dropped from a $6.15 high 8 months ago to being a sub penny stock at the end of January, the CEO should resign and kiss his own arse. Well that’s exactly what happened to Atrinsic, Inc (OTCBB: ATRN.PK) (PINKSHEETS: ATRN).

When you look at the most recently filed 8K by ATRN, what you will find is that when right around the time when the penny stock hit 0.008, then CEO, Stuart Goldfarb, resigned and CFO Nathaniel Fong began serving as CEO. Since then, ATRN has been one of the top 10 penny stocks on the OTC Bulletin Board.

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Since Nathaniel Fong has taken the driver’s seat of ATRN, who built their foundation with their purchase of back around the 4th of July, 2008, the subscription-based content provider of Kazaa and others has skyrocketed. Shares in this hot penny stock had gained, from end-January to mid-February, 4,387.50% top-to-bottom. Talk about an amazing run, but wait; it is still there.

Yes, ATRN is still holding its position trying to find a resistance level since delistng from the NASDAQ to trade on the pink sheets in November, 2011. ATRN closed Wednesday at 0.162 gaining 39.66% on 19,797,340 shares traded. That’s $2.41million traded in a stock that 2.5 months ago you could almost get 2 for a penny ATRN gave some of it back yesterday closing at .1275, dropping 21.30%.

ATRN Stock Snap Shot:

Market Cap: 831.81K
Enterprise Value: 2.87M
Price/Sales (ttm): 0.02
52-Week High (Jul 25, 2011): 6.15
52-Week Low (Jan 6, 2012): 0.01
50-Day Moving Average: 0.18
200-Day Moving Average: 0.82
Avg Vol (3 month): 20,905,600
Avg Vol (10 day): 5,997,320
Most Recent Quarter (mrq): Sep 30, 2011
Revenue (ttm): 33.49M
Qtrly Revenue Growth (yoy): 34.30%
Gross Profit (ttm): 17.51M

ATRN is structured pretty simply as a single segment with two main offerings:

  • Transaction Services: ATRN offers full service online marketing services by using targeted and
    measurable online campaigns and programs for ATRN marketing partners, corporate advertisers,
    or their agencies. The simple solutions ATRN provides generate qualified customer leads, online
    responses and activities, as well as increased brand recognition for ATRN clients.
  • Subscription Services: ATRN provides a portfolio of subscription-based content applications direct
    to users. ATRN does this by working with wireless carriers and other distributors. Entertainment
    content offered by ATRN can be broken down into the 5 categories:
    • music,
    • casual gaming,
    • personal finance,
    • commerce & lifestyle,
    • sweepstakes, and
    • surveys

The ATRN business model operates very similar to a cable T.V. network. They monetize their consumer audiences through premium subscriptions as well as third party advertisers. Because of their innovation, ATRN is one of the first and fastest growing companies in the integrated mobile entertainment and Internet markets.

ATRN subscription services for the 9 months ended Sep 30, 2011 were considerably lower than the same period 2010 while operating expenses have seen a slight decline. Perhaps this could be attributed to the recently resigned CEO. Regardless, ATRNeffected a 1:4 reverse stock split of its common stock on December 2, 2010 which is what makes this SEC filing pink sheet stock so attractive. Even though Atrinsic registered 5,963,857 Shares Common Stock for sale on September 29, 2011, they have a low float, revenue, quarterly growth year-on-year, and they have hurdled back from under a penny less than three months ago to a stable range in the mid-teens.

According to their 10Q, ATRN expects to continue to incur losses and negative cash flows while the company continues to incur expenditures to develop the Kazaa digital music service, acquire subscribers for the Kazaa service, and is not able to reduce other operating expenses and overhead sufficiently to a level in line with its level of revenues. ATRN reported a loss of $14.2 million for the 9 months ended Sep. 30, 2011 but Kazaa will most likely be the bread winner for ATRN in the long-term.

ATRN’s Kazaa is a subscription-based digital music service that gives subscribers unlimited access to millions of CD-quality tracks. Subscribers can stream and download unlimited music files for a monthly fee and play those files on multiple computers and mobile devices.

Unlike iTunes and other music services that charge each time a song is downloaded, ATRN’s Kazaa allows subscribers to listen to and explore as much music as they want for one monthly fee. Subscribers pay a monthly recurring fee through a credit card, or mobile device. ATRN in turn pays the royalties to the rights’ holders for licenses to the music utilized by this digital service.

Bottom Line: ATRN is a hot penny stock, no doubt. Can they turn things around and break out into the black in the near-term, probably not, especially with an accumulated stockholders’ deficit of $186 million. Add ATRN to your stock watch list since it has proven that momentum changes everything.

If you were one of the lucky penny stock traders who bought the stock at 0.008 and laughed your way out at .3599, kudos to you and great stock pick. But, if you’re like the masses  who caught hold of ATRN recently or are holding it in the $ range from last year, take notice that volume was exceptionally high in late January and the stock has yet to find its resistance level.

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