Borislav Tonev

Investors are not Impressed with Rainbow International Corp (OTCMKTS:RNBI)

by Borislav Tonev May 23, 2014

All in all, the prerequisites for an exciting promotion were definitely there and, during the first couple of days, it seemed like this was exactly what we were going to get. The first email hit our inbox about a minute before May 14's opening bell and it immediately propelled the ticker on a 36% run during which RNBI racked up a dollar volume of around $1.3 million. Trading was a bit calmer during the next day, but the stock managed to add another 26% to its value. All in all, RNBI had jumped from $0.135 to $0.23 per share in a matter of just two sessions and, with the paid promotion in full swing, some people were expecting to see more gains. Unfortunately for them, something unexpected happened.

A few minutes before the opening bell on May 16, the SEC decided to suspend Fusion Pharm Inc (OTCMKTS:FSPM) and suggested that there are some questions around the company's announcements and financial statements. FSPM was considered by many to be one of the legitimate pot businesses in Pennyland, but apparently, the SEC had reasons to believe otherwise.

The shock from the suspension was going to reverberate throughout the whole sector, but the Commission decided to rub salt into the wound by issuing a warning. They urged investors to be careful around penny stock enterprises that are trying to lure them in with exciting plans related to the marijuana industry.

Not surprisingly, this affected all pot stocks and RNBI was no exception. In a matter of two days, it managed to lose nearly a quarter of its market cap and settled at around $0.18. Apparently, weren't too bothered about the drop and on Tuesday, they said that "RNBI is the hottest company this summer". The figures suggest otherwise.

Trading is still active, but the volumes are a far cry from the ones logged at the beginning of the pump. are also keeping quiet at the moment and it would appear that they simply don't have the magic touch that APS had before they decided to retire. But is that such a bad thing?

5RNBI_logo.pngWe know that there are plenty of people out there who know how to play the promotional game and are making some healthy profits from pumped stocks. Unfortunately, the number of inexperienced investors who get badly burned is also quite significant.

Now that the SEC is cracking down on both pumped and marijuana related tickers, the game is riskier than ever. The people who held Fortitude Group Inc (OTCMKTS:FRTD) shares and woke up today to find the stock suspended know that all too well.

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