Do the math, a simple analogy of math, MM's and co
Post# of 56324
Posted On: 06/17/2014 3:20:20 PM
Do the math, a simple analogy of math, MM's and corporate operations
Previously restricted shares issued at par value .0001 that sell into the market at .06 "earn" 60,000% over the par value when issued. When enormous quantities (billions) of shares come into the market in blocks of hundreds of millions the MM's job is to sell these shares which they do at a predetermined target price established between the share provider and the seller (MM). In order to sell, MM must have buyers. That means us, the retail buyers who see value at X and buy the originally .0001 par value shares at various price points and keep or sell them into the market. The shares value to retail buyers is largely determined by perceived demand/supply of a product or service to be provided by the representative company. When the pool of retail buyers drys up the MM's will buy and sell between themselves to keep liquidity in the market. So, that brings us to where we are now. There is very low volume and MM's are not buying and selling other than very minimally so PPS is staying at approximately .06 for an extended period. This is not because MM's are low on par value stock but because of impending news (license).
The result is that the MM's are holding value at around .06 which is a level retail investors are still currently buying at. When the retail buyers dry up the MM's will "sell" more shares into the market at less than current PPS and the PPS will drop to entice more retail buyers (many people think the shares are being shorted which is inaccurate, the blocks of shares still held/sold by MM's into the market have a huge range from .0001 to what they can get for them as determined by share provider and retail volume).
OK, so where is this all going.
The job of the CEO is to strategically position the company, this includes share structure, market entry and timing, key personal and operations oversight, JV, acquisitions,etc.
So to retail buyers then what we look for is the end market and the operational strategy employed by the company CEO. What is sometimes overlooked is the difference between what information is published or made available and what is really happening. In this case share structure and corporate finance is crucial to better analyze PPS.
The quantity of shares issued, when and how released into the market and corporate finance tells the real story. The strategy of issuing shares to insiders at .0001 par then releasing those shares in order to fund corporate activity in the guise of a revenue share agreement requires a creative entry in financials (see financials). If you look at the alternatives in corporate finance it is a clever if not dubious way to maintain control over the company and obtain very cheap financing. The risk is all on the retail shareholders because the end buyers of the stock are us, the retail buyer. So now that the company has "revenue",i.e., sold blocks of shares, it can financially afford to complete construction, buy more property, acquire more companies, etc.
Does this benefit the shareholder, arguably, YES, however just obtaining a license does not guarantee sales or profits. What it will do is bring more retail buyers to the table and PPS will again jump as these new buyers pick up "cheap" stock.
What to watch for going forward. Million of these ,0001 par value shares will enter the market AFTER LICENSE and will cause the PPS to once again drop. The market absorption rate needs to be carefully considered here because many long term holders will also take profits and the insider shares sold by MM's will ultimately control PPS
Having said all the above, I believe PPS could hit .18 after license then drop back to a new baseline of .06 (where MM's are holding PPS now).
We may also see additional shares sold prior to license causing PPS to drop to the low to mid .04 prior to license. If this happens look to a bounce off the SMA50 The reason I expect a drop off a new high is because the large block of insider shares will be sold into the market after license.
Final note, This is all clever use of the OTC market to finance a business. It would only work in the OTC market because of the reporting requirements (or lack thereof). The company is looking to generate revenue to uplist and will most likely buy back shares on the open market as the .0001 par value issued blocks of shares enter the market and drive PPS down. For longs holding lots of shares, stay long, do not sell when PPS drops, use the strategy employed by the company CEO to buy shares on drops because ultimately, the company is very well positioned to become a high dollar stock on a major exchange in the future.
That's my 2 cents,hope it helps and thanks for reading.
As always, this is my opinions only, do not buy or sell any stocks based upon my opinion or analysis, always do your own due diligence and do not invest money you are not prepared to lose.
Previously restricted shares issued at par value .0001 that sell into the market at .06 "earn" 60,000% over the par value when issued. When enormous quantities (billions) of shares come into the market in blocks of hundreds of millions the MM's job is to sell these shares which they do at a predetermined target price established between the share provider and the seller (MM). In order to sell, MM must have buyers. That means us, the retail buyers who see value at X and buy the originally .0001 par value shares at various price points and keep or sell them into the market. The shares value to retail buyers is largely determined by perceived demand/supply of a product or service to be provided by the representative company. When the pool of retail buyers drys up the MM's will buy and sell between themselves to keep liquidity in the market. So, that brings us to where we are now. There is very low volume and MM's are not buying and selling other than very minimally so PPS is staying at approximately .06 for an extended period. This is not because MM's are low on par value stock but because of impending news (license).
The result is that the MM's are holding value at around .06 which is a level retail investors are still currently buying at. When the retail buyers dry up the MM's will "sell" more shares into the market at less than current PPS and the PPS will drop to entice more retail buyers (many people think the shares are being shorted which is inaccurate, the blocks of shares still held/sold by MM's into the market have a huge range from .0001 to what they can get for them as determined by share provider and retail volume).
OK, so where is this all going.
The job of the CEO is to strategically position the company, this includes share structure, market entry and timing, key personal and operations oversight, JV, acquisitions,etc.
So to retail buyers then what we look for is the end market and the operational strategy employed by the company CEO. What is sometimes overlooked is the difference between what information is published or made available and what is really happening. In this case share structure and corporate finance is crucial to better analyze PPS.
The quantity of shares issued, when and how released into the market and corporate finance tells the real story. The strategy of issuing shares to insiders at .0001 par then releasing those shares in order to fund corporate activity in the guise of a revenue share agreement requires a creative entry in financials (see financials). If you look at the alternatives in corporate finance it is a clever if not dubious way to maintain control over the company and obtain very cheap financing. The risk is all on the retail shareholders because the end buyers of the stock are us, the retail buyer. So now that the company has "revenue",i.e., sold blocks of shares, it can financially afford to complete construction, buy more property, acquire more companies, etc.
Does this benefit the shareholder, arguably, YES, however just obtaining a license does not guarantee sales or profits. What it will do is bring more retail buyers to the table and PPS will again jump as these new buyers pick up "cheap" stock.
What to watch for going forward. Million of these ,0001 par value shares will enter the market AFTER LICENSE and will cause the PPS to once again drop. The market absorption rate needs to be carefully considered here because many long term holders will also take profits and the insider shares sold by MM's will ultimately control PPS
Having said all the above, I believe PPS could hit .18 after license then drop back to a new baseline of .06 (where MM's are holding PPS now).
We may also see additional shares sold prior to license causing PPS to drop to the low to mid .04 prior to license. If this happens look to a bounce off the SMA50 The reason I expect a drop off a new high is because the large block of insider shares will be sold into the market after license.
Final note, This is all clever use of the OTC market to finance a business. It would only work in the OTC market because of the reporting requirements (or lack thereof). The company is looking to generate revenue to uplist and will most likely buy back shares on the open market as the .0001 par value issued blocks of shares enter the market and drive PPS down. For longs holding lots of shares, stay long, do not sell when PPS drops, use the strategy employed by the company CEO to buy shares on drops because ultimately, the company is very well positioned to become a high dollar stock on a major exchange in the future.
That's my 2 cents,hope it helps and thanks for reading.
As always, this is my opinions only, do not buy or sell any stocks based upon my opinion or analysis, always do your own due diligence and do not invest money you are not prepared to lose.
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