Borislav Tonev

Revolutions Medical Corp. (OTCMKTS:RMCP) Gets Squashed

by Borislav Tonev October 15, 2014

The volatility of penny stocks is notorious. Jumps of more than 100% and drops of over 50% are an everyday occurrence on the OTC Markets and we reckon that this sort of unpredictability is what makes small cap companies so fascinating. The aforementioned volatility also means that, provided you time your trades right, you can make quite a lot of quick and easy money. If you get a bit carried away with the hype, however, you might be forced to say goodbye to a huge amount of hard earned cash. Investors who traded Revolutions Medical Corp. (OTCMKTS:RMCP, RMCP message board) during the last two sessions should be aware of what we're talking about.

On Monday, the ticker popped up onto the scene and, fueled by the hype around the potential Ebola outbreak in the US, it jumped from just $0.003 all the way to $0.035 per share. That's a whopping 1,066% gained in a matter of just six and a half hours.

We covered the run yesterday and we mentioned that the company isn't really able to present us with solid enough evidence that it can sustain this sort of levels. Sure enough, during Tuesday's session, RMCP sank like the proverbial stone. Nearly 69% of the market cap was incinerated and the stock plummeted to just over $0.01 per share. Plenty of people saw the massive drop and decided to cut their losses and exit their positions while they still can. For various reasons, however, some remained with RMCP and they're probably wondering at the moment if a bounce is possible.

Apparently, discussion boards are full of people who reckon that it is. Some are saying that yesterday's crash is nothing more than a consolidation which sounds a bit absurd considering the fact that more than two-thirds of the market cap was wiped out in a matter of six and a half hours. Others reckon that profit takers pushed the ticker down and a third group of people are pointing at the charts of other Ebola stocks and are trying to convince everyone that the whole sector suffered a correction yesterday.

Whatever the reason for the colossal drop, a bounce is not out of the question. As we mentioned in the first paragraph, the performance of penny stocks is extremely hard to predict and if you've been around them for long enough, you'd know that logic isn't necessarily the governing factor.

One thing is for sure, though – RMCP's run remains speculative and that should carefully be borne in mind before reaching your final decision. The company hasn't announced anything that could tie it to the current outbreak of Ebola but even if they do somehow get involved in fighting the dreadful disease, they'll still need to think about a host of other problems that can send them off-course. The same issues, by the way, should be considered by investors who contemplate jumping in.

As we mentioned yesterday, RMCP didn't have a whole lot of money in the bank at the end of the second quarter. Revenues were non-existent and the huge debt of nearly $9 million was putting a lot of pressure on the balance sheet. There's also the dilution coming from converted notes which could wreak havoc with the share structure and the conversion rates which pose a serious threat to the price.

All in all, there are quite a lot of things that could scare investors away and yet, about thirty minutes after today's opening bell, RMCP is sitting in the green. Apparently, the speculation around the connection between the company's syringes and the Ebola virus is still working. How long will it last, though? Only time will tell.

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