Terra Tech Corp (OTCMKTS: TRTC)
Terra Tech investors are being met with huge selling pressure and a decline of over 21% on Tuesday, adding insult to the loss of over 15% of the share value on Monday.
Although there is no specific news that has been put out by TRTC management that would cause the decline, some investors are speculating that the candidate being nominated for Attorney General by the Trump administration may not be so stogie-friendly.
While there may very well be some truth to that rumor, and assuming that Sessions is ultimately confirmed to serve, the likelihood that investors are running for the exits based on factors that are still months away is not altogether realistic.
What Is Realistic
More probable to the decline is the fact that management has taken a promising company and turned it into a printing press, authorizing share increases and entering convertible debt transactions that have made insiders multi-millionaires.
Between the second and third quarters of 2016 alone, TRTC saw its outstanding shares rise by over 160 million, a dilution that wipes out any potential for near-term profitability for TRTC. With only $7 million dollars in quarterly revenue and a fully diluted share count that will exceed 700 million upon the conversion of notes payable, TRTC management has backed themselves into a time-out corner that will stifle any hope of near-term profitability.
Oh, there is a way they can achieve profitability, and that would be to do a reverse split – an idea that CEO Derek Peterson has told investors may not necessarily need to happen. Really?
Then perhaps the CEO can provide a statement with regard to the unusual market activity in the stock and confirm to a concerned shareholder base that insiders have not sold a single share of stock during the past week of trading.
Or, perhaps the CEO can make a statement regarding the political atmosphere toward the future use of marijuana, especially as it relates to the Federal Government. Surely, Mr. Peterson has remained well apprised of the potential consequences that AG appointees may have upon the industry.
Why stay quiet now, when shareholders need him the most? Historically, he has not been quiet when promoting the future of the business, offering speculation protected by safe harbor and quelling fears that the company would not be able to handle an almost billion share float in the near term.
With the stock trading down to 22¢ this morning and now hovering at 26¢ a share, investors are caught in a quagmire. With almost 45% of their value lost since November 17th, investors need to determine whether or not the company can provide a long-term return based on its current capital structure, or if the company will need to execute a reverse split to repair the bloated share count.
It’s never easy asking investors to take an intense look at an investment that they believed was the winning lottery pick in the market. But, at some point, investors who are still part of a profitable trade must decide if taking a profit is better than losing money.
Shares do not always bounce back, and in the case of other OTC marijuana stocks like PHOT and MJNA, the proof is in the stash. Insiders at TRTC will do quite well, becoming multi-millionaires regardless of the share price. If the price fell to 5¢, they could simply adjust the warrants to a penny and still make a 500% gain on their trades. No, don’t worry about them.
Instead, call the CEO and demand a response to market conditions and a comment on their position on both a political and economic front.
Disclosure: I have no position in any stock mentioned and no plans to initiate any positions within the next 72 hours.
I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.
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