Anastas Gegov

Spiral Toys, Inc. (OTCBB:STOY) Comes Crashing Down

by Anastas Gegov February 16, 2015

After quite the positive start of last week for the stock of Spiral Toys, Inc. (OTCBB:STOY, STOY message board) things turned red and the ticker's gains were obliterated by the weekend. This is not so surprising, considering the fact that STOY was moving on a paid promotion.

 

Taking a quick look at the company’s financial statements it also doesn’t suggest that STOY can support the $36 million market cap which it reached last Tuesday. Here are the numbers of prime interest contained in the quarterly report covering the period ended September 30, 2014.

 

  • $70 thousand in cash
  • $3.7 million in goodwill
  • $397 thousand in current liabilities
  • $98 thousand in quarterly revenues
  • $219 thousand in quarterly net loss

 

 

Furthermore, there is the issue of the highly discounted shares that have seen the light of day over the past years which we talked about in our previous article. Usually, when you hold a large amount of stock in an OTC company that isn’t exactly performing financially great you would want to cash in when the shares you bought for 15 cents go 82% higher.

 

Maybe these were the exact same people who paid Stock Chat $50 thousand to promote the stock and are currently cashing in on their positions. There have been quite a lot of shares flying around since the start of the paid promotion and the $442 thousand in daily dollar volume that STOY generated in Tuesday’s session is quite a lot for a stock that rarely records values of above $10 thousand.

 

In any case, dealing with promoted stocks is as risky as it can get in the OTC markets so be sure to always do your due diligence and weigh out the risks before making an investment choice.

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