Trading on the Nasdaq well above the penny stock range just 2 months ago, shares of RMG Networks Holding Corporation (RMGN) totally collapsed at the open yesterday after the visual communications solutions company missed their forecasted Q1 results by a mile. Failing to see the future after taking into consideration the necessary accounting adjustments that comes with the business combinations from April of last year, shares of RMGN stock were bearishly dumped on a better than 3-to-1 ratio compared to the optimistic bulls that were buying it yesterday at all-time lows. With panic selling the dominant force heading into the end of the trading session, a bountiful opportunity for patient traders who can smell a good deal, knowing that the storm has passed and blue skies are on the horizon, has all the makings of a long-term tripledecker.
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RMGN Stock Quote
Market Cap: 11.58M
Last: 0.97 ▼ -2.33 (-70.61%)
Volume: 3,257,174
Sell Volume: 2,318,008
Open: 2.88
High: 2.99
Low: 0.89
Trades: 5,057
14-Day RSI: 7.56%
1st Resistance Point: 2.3033
1st Support Level: 0.2033
52Wk High: 13.03
52Wk Low: 0.89
Yesterday’s announcement of RMG Networks’ Q1 results were far from terrible and showed no reason why shares of RMGN stock deserved to be annihilated other than to give short sellers a quick profit and provide an opportunity to risk loving longs to sit on some cheap shares in hope of seeing a price tag of above $4 again this year. The chart above shows RMGN shares were already in decline, anticipating the bad news that was published more than an hour before yesterday’s opening bell.
Highlights from the first quarter included:
- First quarter consolidated revenue of $12.6 million, on an adjusted basis, comprised of $10.1 million in adjusted Enterprise revenue and $2.5 million in Media revenue;
- Launched enhanced Visual Supply Chain solution expanding suite of visual communications solutions;
- Completed installation of the RMG Office Network and generated initial network revenues;
- Generated initial EMEA advertising bookings and added two EMEA airline partnerships with Etihad Airways and OnAir;
- South East Asia and China regions generated initial Enterprise revenues; Middle East continued strong growth; and
- Cross-selling initiatives continued to gain traction with two global customers signing contracts spanning multiple geographies.
The dumpage was certainly caused by the net loss of $1.04 a share, $0.80 cents worse than what analysts were looking for (loss was expected to be $0.24 a share), but RMG Networks made it abundantly clear that the early, positive achievements from their 2013 growth investments that began to bloom in late 2013 continued into Q1 and are still showing definite results heading into Q2. Within the fiscal 2013 results made public back on March 31, the Company made it known that “during the second half of 2013, we acted to extend our market leadership through an aggressive approximately $8 to 9 million investment program which reduced near-term profitability but enabled us to construct a platform of personnel, products and systems on which to drive what we believe will be significant current and future year growth.”
On June 14, 2014, RMG Networks is holding their annual meeting of stockholders at their corporate headquarters in Addison, Texas. There is hardly any anticipation that shareholders who feel they have been bagged will be banging down the doors to get in since, not only was the move yesterday on RMGN highly over exaggerated, but also because of the 12.37 million shares issued and outstanding, 3.31 million of them are held by corporate insiders. A float like that on the OTC with the prospective future that RMG Networks holds would become a chaotic 5-bagger within an hour – especially when you consider how much more aggressive OTC traders are in comparison to those on the Nasdaq.
Back on April 1, 2014, Roth Capital lowered their price target on RMGN stock to $8 from $10 after Garry K. McGuire, Jr., Chief Executive Officer of RMG Netowrks indicated that year-over-year sales were expected to significantly decline in Q1. As can be seen on the chart above, RMGN stock failed to see that, although Roth Capital kept a “buy” rating on the shares, the slide down the razor’s edge and into the pool of alcohol that they landed into yesterday could not be stopped.
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About RMGN Stock
RMG Networks Holding Corporation helps brands and organizations communicate more effectively using location-based video networks by connecting brands with target audiences using video advertising networks comprised of over 200,000 display screens, reaching over 100 million consumers each month.
Click here to view the SEC filings for RMGN.
Click here to view the website for RMG Networks.
Authorized: 250,000,000
Issued and Outstanding: 12,367,756
Directors and Executive Officers as a group: 3,313,226
Last 5 Trading Sessions:
| Date | Open | High | Low | Last | Change | % Change | Volume |
| 05/08/14 | 2.88 | 2.99 | 0.89 | 0.97 | -2.33 | -70.61% | 3,257,100 |
| 05/07/14 | 3.50 | 3.50 | 3.27 | 3.30 | -0.15 | -4.35% | 26,400 |
| 05/06/14 | 3.60 | 3.60 | 3.27 | 3.45 | -0.15 | -4.17% | 12,600 |
| 05/05/14 | 3.64 | 3.70 | 3.56 | 3.60 | -0.05 | -1.37% | 13,000 |
| 05/02/14 | 3.75 | 3.75 | 3.62 | 3.65 | -0.16 | -4.20% | 10,100 |
Bottom Line:
There is so much to love about RMGN stock at this price range that you can’t help but have this as your top penny stock to watch at the open today. There is no reports, rumors, or even a hint of insolvency anywhere when it comes to RMG Networks which truly makes RMGN a steal of a deal for those who can sit tight and ride the flight back up to above and beyond $2. Remember folks, it was less than 2 years ago that we were screaming at readers to buy Fannie Mae (FNMA), Freddie Mac (FMCC) and American Airlines (AAMRQ), now American Airlines Group Inc. (AAL), when all of them were depressed and trading at under 0.35. What a difference long-term patience makes when dealing with the big boys.
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