MGCN - Analysis of today's news and price movements.
biz.yahoo.com
Today Megachain released news on the deal they signed with Greenchip
investments PLC. As I reported on this thread two weeks ago, this is
the English company looking to buy the European franchise of Megachain.
MegaChain has sold Greenchip the option of 'first dibs' on the Euro
franchise. This deal is a winner for MegaChain, because:
1. The deal provides MGCN with a cash infusion, without the dilution
that secondary financing might have entailed.
2. The deal demonstrates international interest in the Megachain
program. Similar franchises can be sold around the world. In
particular, Greenchip investments PLC is a subsidiary of the Australian
venture capital group Greenchip Funds Management Pty Ltd, (see
greenchip.com.au for more info about Greenchip). Megachain
can easily negotiate a similar deal with the parent Greenchip company
for the Australian franchise.
3. The deal does not limit the price that Megachain may charge for this
franchise. The deal also does not prevent MGCN from directly signing up
European vendors, clients, ISP's, and agents. Megachain is free to
solicit higher bids for the franchise, or they are free to not sell the
Euro franchise at all if they want, and simply continue to seek out
European vendors and ISP's for themselves. All Greenchip has paid for
is the option to match any other offer for the franchise. The fact that
Greenchip was willing to pay for the option even under these harsh (for
Greenchip) limitations illustrates the enormous perceived value of
Megachain's product.
Regarding today's action in MGCN's stock price: Today's close of 1 1/32
is still an increase of 65% over last Friday's lowest ask price of 5/8,
and is only a 13% drop from yesterday's close. As is usual after a
fast, high volume runup, many day traders shorted the stock, and market
makers themselves were forced to sell short to keep up with the volume.
This then drove the price down as soon as the volume slowed.
The current price represents a tremendous buying opportunity for new
MGCN investors. Small additional price drops are possible, as the
remaining 'hot' money moves elsewhere and market makers attempt to walk
it down further so they can cheaply cover their short positions.
However, a huge amount of money is waiting to jump back into MGCN. At
the first hint of a bottom, or after more good news releases, the stock
should run up, never to return to these bargain prices again.
Even now, the vast majority of the good news about vendors, ISP's,
clients, etc., has still not been released. I've uncovered and reported
on this thread as much I can. Only a small part of what I've found and
reported here has been released as news so far, including today's
Greenchip news, and becoming a financially fully reporting company.
When the additional information I've reported here is released, we can
expect further sharp rises in price. In addition, there is clearly even
more activity than I know about. For example, the Proflowers.com deal
was a good news surprise for me.
Long term investors can ignore these gyrations. Buy anytime yesterday,
or today, or tomorrow. Within weeks or at most months, these nickel and
dime movements will be completely irrelevant. Think dollars.
The Megachain web page depicts a soaring rocket. That rocket is now on
the launch pad, and the countdown has already commenced. Climb aboard,
or get left behind.
signed,
Blue Voodoo |
