Todor Pichurov

Nested Pumps for WebXU, Inc. (OTC:WBXU)

by Todor Pichurov April 1, 2013
WBXU_chart.pngOver the weekend promoters bunched together to tout WebXU, Inc. (OTC:WBXU, WBXU message board). A major part of the tout is the announcement that a "Wall Street firm" has set a price target of $2.50 for WBXU stock. Sadly, this is not exactly the case.

With a dozen emails sent on Saturday sent by almost as many different pumpers, at first glance WBXU may look like a very exciting investment in a hot sector. While promoters disclose humble compensations of $2.5 thousand, the real pump is part of the emails' touts - a so-called 'research report' published by NBT Equities Research. The report in question covers WBXU and sets a price target of $2.50 per share for the company.

Sadly, the 'report' is in reality another paid promotion, whose disclaimer reads that NBT Equities Research has been paid $50 thousand to advertise WBXU. Furthermore, the sum is paid by a third party who holds shares in WBXU. The fact that the third party allegedly does not intend to sell shares over the unknown duration of the advertising campaign is little consolation for investors. Obviously, the 'report' can set any price target for the stock as it's a paid advertisement and not an objective examination of the business. The very disclaimer states that "you should not rely on the information presented".

WBXU's financial state is little short of terrible. The most current financial report of the company is a 10-Q for the period ended September 2012 and it contains the following numbers:

  • ZERO in cash
  • $4.4 million in current liabilities
  • $4.8 million in revenue for Jan-Sep 2012
  • $17 million in net loss for Jan-Sep 2012

7SITS_fail.pngThose numbers speak quite well for themselves. In addition to all this, WBXU managed to log gross loss in Q3, before even factoring expenses, on quarterly revenue that was 99% down year-over-year. The company changed its management in late 2012, appointing Keith Schaefer as CEO. WBXU has dug itself into a deep hole and clawing back out will probably be a long and difficult process, even with a CEO who used to work for household names like Atari.

The track record of promoters Penny Stock Buyers is not exactly stellar as well. In early February they participated in the pumping of Southern ITS International, Inc. (PINK:SITS). Sadly, after spiking on the pumps, SITS huffed, puffed and blew its top off, currently sitting 80% below the spike of the pump.

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