Borislav Tonev

SourcingLink.net, Inc. (OTCMKTS:SNET) Slashes A Third Of Its Price

by Borislav Tonev August 19, 2013
0SNET.pngWhat do you need to do if you want to pump a penny stock company? There are a few different approaches and there's no established path but we have witnessed some trends. Often, before putting the ticker under the promotional spotlight, the people who stand behind the company do a couple of preparations that include changes in the business plan and the management team, a stock split, an increase in the number of authorized shares and all this is frequently garnished with a couple of optimistic press releases. Then, it's just a matter of waiting for the pumpers to spring into action. This is exactly what happened to SourcingLink.net, Inc. (OTCMKTS:SNET, SNET message board) last week.

Until not that long ago, SNET were in the automotive business and they offered luxury automobile membership services for the rich and famous. If you check out some of their older reports, you'll see that, although they were working at a loss, they were capable of generating revenues. Then, in March 2012, for reasons that are not very well explained, SNET decided to ditch the luxury car market and put the focus instead on mineral exploration and, more specifically, digging for rare earth elements and gem stones. Then, they went quiet for more than a year, issued some reports, did a 1 for 500 split in July and last week, they came up with some news about an acquisition of a property in Quebec, Canada, that is supposedly full of rare earths. Not surprisingly, this the announcements gave the pumpers something to talk about and the emails started flying around immediately.

A host of promoters took part in the campaign and the total compensation calculated by our database amounts to no less than $178 thousand. Normally, these sort of awareness raising activities result in a spike in the share price while the artificial hype is still on, followed by a scary drop during which a lot of people lose a lot of money. Looking at the chart from last week SNET might be turning into a classic case in point.

On Thursday, the ticker (which had been all but dormant for the last couple of months) opened the session at $0.042 and made an astonishing leap all the way to $0.29 on a daily trading volume of around 5.5 million shares. Everyone was really excited and the investors who timed their trades carefully probably made some quick and easy money. Friday, however, wasn't that successful. SNET opened way above its previous close but it immediately started sliding down. When the closing bell rang, the price stood at $0.19 which is a loss of around 34%.

So far, SNET is turning out to be just another promoted company in Pennyland that is doomed to crash hard and leave quite a lot of people out of pocket. But still, is there anything to suggest that they might be able to break the mold and actually display a better performance under the pressure of promotions?

Well, things are not off to a good start when you begin to research the company thoroughly. Their headquarters appears to be located in a good-looking business center in San Diego. When you dig a bit further, however, you'll see that the same exact suite, on the same exact address is offered as a virtual office.

If you decide to check out the people running the company, you might also find some worrying facts. SNET's accountant, for example, is called Murray Goldenberg and you can see from this link that a person by the same name was convicted in a scheme to manipulate the stock of a company called First Colonial Ventures, Ltd. (now known as Encompass Holdings Inc. (OTCMKTS:ECMH)).

When it comes to their financial situation, they are better off compared to a lot of their mineral exploration counterparts. Still, we're not sure if just $18 thousand in the bank and a working capital of around $22 thousand will be enough to make a real impact.

This means that if you want to invest your hard-earned cash in SNET, you'll need to believe the press releases and the pumpers' emails. Time will tell if the optimistic announcements will turn out to be true or not, but in the meantime, we can have a look at our database and see how trustworthy the promoters are.

As we mentioned, Stock Mister got the biggest share ($100 thousand) of the promotional budget and by the looks of things, 7EXHI.pngthey distributed some of the money among the smaller pumpers. They did much the same thing when they were promoting Exlites Holdings Int (OTCMKTS:EXHI). As a result, EXHI broke records during the first day of the campaign, but now, just a week later, they are standing around 91% below the hype-induced high of $0.215.

The days to follow will determine whether SNET is in for the same treatment, but we reckon that keeping the chart on the right in your mind while making your decision is definitely a good call.

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