India Globalization Capital, Inc. (NYSEAMERICAN: IGC) is having a relatively strong start to the trading session in the pre-market hours this morning, but don’t be fooled. Chances are that this stock is going to fall hard. In fact, we found three big reasons that those thinking about getting involved in the stock should think again. Today, we’ll talk about:
- Why IGC is likely to fall ahead.
- what we’re seeing from the stock; and
- what we’ll be watching for moving forward.
Three Reasons IGC Will Fall Hard
Recently, India Globalization Capital has seen some impressive gains. After announcing that it plans on creating a CBD-infused beverage, the company’s stock skyrocketed. There was a short break in the gains on Friday as a correction hit, taking the stock down more than 30%. Nonetheless, it’s back up today. Interestingly however, the reason for the recent gains is one of the first big red flags.
IGC climbed after announcing that it would be making CBD-infused drinks. The company said that it plans on working with a manufacturer in Malaysia. That’s going to be pretty difficult. After all, Malaysia currently has a manditory death sentence for the posession of cannabis and has no medical cannabis program. So, should the company’s Malaysian partner help with the production of CBD-infused drinks, they would be facing serious repercussions.
Going further, the company’s CEO has a history, and it’s not a good one. In the past, Ram Makunda served as founder and CEO at Startec Global Communications. Unfortunately, this proved to be one of his big failers with the company going bankrupt in 2001 after defaulting on a $9.6 million interest payment.
Moreover, IGC is working on an Alzheimer’s drug that is rooted in cannabis. The company is working with a Peurto Recan partner that goes by the name Dama Pharma. While Dama Pharma is supposed to be an established medical cannabis company, there are some holes in the story. First and foremost, the comapny is a very new one that has only been in existance for a few months. It even has a website that looks to be incomplete. At the same time, the company only has one employee. There’s something fishy there my friends!
Here’s the bottom line, Ram Makuda, has a history, but it’s not a good one. At the same time, the CBD-infused drink goals that sent the stock soaring recently are iffy. After all, why would IGC partner with a company that does business in an area where anything cannabis related can lead to a death sentence? That’s especially the case when the partnership largely surrounds cannabis. This, combined with the fact that the Alzheimer’s partner in Peurto Rico seems to be a very new shell of a company with no substance leads me to believe that IGC is going to see serious declines ahead.
What We’re Seeing From The Stock
Often times, news will lead to excitement in the market to the extent that traders and investors will hop on the bandwagon without digging into the details. That’s what’s happening with India Globalization Capital in my opinion. Nonetheless, the stock is headed up in the market this morning. At the moment (8:06), IGC is trading at $4.64 per share after a loss of $0.59 per share or 14.57% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on IGC. In particular, we’re interested in finding out if there is any validity at all to the company’s CBD-infused drink announcement and what the real plan is behind the potential alzheimer’s drug. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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