There is little doubt that the private placement of 1.4 million shares at $10 a stub would usually quiet a stock. This one may be no exception. But I tend to think the effect (if any) will be slight. They timed the closing of the private with a stellar earnings report. (A good strategic move by management.) And keep in mind that a private placement (as opposed to a secondary) typically keeps the shares locked up, or "restricted" for at least 12 months. Thus, those who bought the shares won't be part of the float for a year (though they certainly dilute earnings). Keep in mind that at this point this stock has virtually no one following it. Thus, once the analyst community begins to climb on board, they will view the private placement as a part of the landscape, a past event with no future impact. (In fact, they might like it, since this stock has such a miniscule float that it is hard for an institution to enter the stock in any meaningful way.) With no analysts following, the major claim to fame this stock has is that it made IBD's daily graphs and the New America section. That's a great start, but in the larger world of stock analysis, it is still very early on the curve. IMHO, if the company puts things together properly, they stand a good chance of taking part of the current internet related mania. But unlike others (KTEL for example) they have a legitimate shot at finding and preserving a niche which could grow into something large and (surprise) clearly profitable. (It'll be like, the eighth wonder of the world, and internet related company that makes money. Hold me back!) Now is not the time to be shy though. They have to hit it hard and fast. It is time for the company to shake it's money maker. "Rock and Roll.. aaahhh-hhaaaaaahh!!"
Art |
