Borislav Tonev

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

by Borislav Tonev May 23, 2014
5RNBI.pngPumping Rainbow International Corp (OTCMKTS:RNBI, RNBI message board) seemed like a relatively easy task at the beginning. The company had just entered the hemp business and, as you probably know, hemp is closely related to marijuana and marijuana seems to be what penny stock investors dream about at the moment. With all this in mind, we expected to see a rather strong performance from the promotion.

The outfit standing behind the whole thing is called PennyStocks.com and they are considered to be one of the few remaining newsletters from the once mighty Awesome Penny Stocks clan. The budget is not that bad as well. The fine print under the emails says that an unnamed third party has paid ?250,000 (about $420,000) for one month of touting.

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, PennyStocks.com 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. PennyStocks.com 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.

Comments 5

1. Guest
October 23, 2014, 05:08PM

Quotes Yeah, I got spammed about this stock also, and yes I know all about the scam. It is quite lame that the author of this page uses the term "pump" but omits the second half of the scam's name.

Author, it's called "Pump and Dump".

The scammer buys all the stock they can get, then sends a ton of spam saying that the stock is going to go through the roof, so buy now before it's too late. As soon as the unsuspecting victims buy the stock, the spammers dump everything they got and start over.

When I first heard about this stock, it was 11 cents. Later the same day it was 17 cents... but since I knew the emails were scams, I knew that the only ones that would make anything off the stock were the ones telling me to buy it. --- haha, no way am I gonna give them my money..

I see that today's price is 3 cents, but after finding out what the company is about, I wouldn't have the stock even if they paid me..

2. Guest
August 26, 2014, 05:45AM

Quotes Guest if you buy stock because a spam email told you to, did you expect to make a healthy profit? The scam relies on idiots like you.

3. Guest
August 11, 2014, 04:35PM

Quotes Hey, watch the movie, "The Wolf of Wall Street" except they aren't getting the crazy commission. They must be putting their own money in low, pump it up and get out?

4. Guest
July 23, 2014, 09:23AM

Quotes And so being one of those "inexperienced investors who get badly burned" is there no coming back from this? It really does seem unfair that newbies at this can be tricked by the paid publicity and hype. Lesson learned for me, but is there no reprisal for these companies?

5. Guest
June 25, 2014, 11:28AM

Quotes Somebody (wink, wink) has been trying to boost this stock with spam from zombie computers for about four days now. I know because about 400 a day claim to be from a non-existent email account on my domain.

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