Tranzbyte Corp. (OTCMKTS:ERBB, ERBB message board) managed to maintain some of the momentum it had gathered on Wednesday in yesterday’s session, making another 18.65% jump before the closing bell.
As the charts can attest, the press release that hit the web on May 21 has worked miracles for ERBB’s share prices. The company’s market cap is now back above $100 million, and it looks like there’s nothing stopping the ticker from going even further up the charts. Or is there?
Well-timed optimistic PR, combined with the volatile way in which the marijuana rush affects the market can create an effect somewhat similar to a pump campaign targeting the company. More often than not, the results are immediate and obvious – a sudden spike is almost always guaranteed. However the climb is often followed by an abrupt downfall – especially if the information the company gave turns out to be too vague, misleading or false.
Investors should probably examine ERBB’s latest press release more closely with this in mind. Arranging a conference call with a question and answer session is clearly the decent thing to do, as far as investors are concerned. However, this appears to be just about the only part of the press release that can be called “clear”. ERBB mentions that it will ship to four dispensaries in three states, but omits to share even a single name. And what about the state approval that the company needs in order to set machines for operation in dispensaries? There have been no news of ERBB gaining such permission, and it’s not like the company can “do without” one. Can ERBB really be keeping such a thing a secret? Or, alternatively, is this just another publicity stunt, not backed by any real achievements?
Whatever the case turns out to be, ERBB had better be careful with with its PR from now on and deliver on its promises, because if it doesn’t, it risks more than just another run in the red. As of may 16, the SEC has made it clear that false PR is just as bad as promotional campaigns, and none of those things will longer be tolerated.
The suspension of Fortitude Group Inc. (OTCMKTS:FRTD) – another marijuana company that seemed determined to rise on little more than PR – just proves that the whole marijuana market is currently treading on extremely thin ice.
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