Borislav Tonev

Orbital Tracking Corp (OTCBB:TRKK) With a Pump-Induced Bounce

by Borislav Tonev March 31, 2016

Orbital Tracking Corp (OTCBB:TRKK, TRKK message board) has been tumbling down the charts hard. About a year ago, the ticker was sitting at around $1.60 per share. By contrast, on Monday, it was barely handing on to the $0.18 mark.

The drop over the last few weeks has been particularly painful. In February, for example, TRKK was playing with the $0.60 barrier, but as you can see from the chart on the right, the market cap has shrunk quite a bit since then.

While the share price has been falling down, the revenues have been going up. A point hammered home by the 2015 10-K which came out a few minutes before yesterday's closing bell. It contains the following figures:

  • cash: $963 thousand
  • current assets: $1.6 million
  • current liabilities: $1.4 million
  • yearly revenues: $4 million
  • yearly net loss: $2.1 million

Sure, the statement is hardly perfect. In fact, the net loss is quite ugly, but there has been a 63% increase in revenues on a year-over-year basis and that's something investors definitely want to see.

So, the fundamentals are not dragging the stock down. What's the problem then?

Well, there's been quite a lot of promotional activity around TRKK lately. In fact, over the last three weeks, we've received more than thirty email alerts. The compensations range from a few thousand dollars to a whopping $115 thousand, but it's clear that they failed rather spectacularly at lifting the stock. Yesterday, however, Damn Good Penny Picks joined the party and TRKK's fortunes were turned.

As soon as the $20 thousand emails hit our inbox, people immediately started paying attention and they pushed the stock on a 37% climb which resulted in a close of $0.25 per share. TRKK also racked up a dollar volume of over $330 thousand which means that plenty of people have read through Damn Good Penny Picks' emails. They're probably expecting the climb to continue. But will that happen?

It is true that unlike the rest of the promotional outfits, the newsletters owned by Stellar Media Group LLC were more successful at pushing the stock up. If you go through their track record, however, you'll see that spikes similar to the one TRKK experienced yesterday rarely last for long which means that you should probably consider all your options carefully.

Not least because there might be a few things threatening TRKK's performance. Over the years, the company has issued quite a few preferred shares. In October 2014, for example, TRKK satisfied about $99 thousand worth of unpaid interest with the issuance of 4.25 million Series D Preferred shares. That's a conversion rate of just over $0.02 which is pretty low.

Here's where things get really interesting, though. Each Series D share can be turned into 20 common ones and the holder of the preferred stock has already taken advantage of this. The profit opportunity for him is pretty huge at the moment and he might decide to cash in while the pump-induced liquidity is still there.

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