Adaptive Medias Inc (OTCMKTS:ADTM), an advertising-technology company, seems to be the last OTC stock being followed closely in the new year 2018. The incredible trading volume shown in the exchange in January 2018 seems to be showing that many are having a close look at the stock.
Have a look at the following stock chart, and note that more than 400 million shares changed hands in only one day in 2018, which is the highest volume in the last two years:
But, why? There are several reasons. First of all, the fact that the Chairman and CEO, John Strong, commenced releasing a lot of information using Twitter should have waked up many market participants. In addition, the amount of short volume reported recently seems to be showing that short sellers are closing their positions. It could explain an increase in demand for the stock.
We will provide more details in this new piece. Be sure to read until the end.
Business – Is the company looking for new ventures?
Adaptive Medias, Inc. was founded in 2012 and is headquartered in Northvale, New Jersey. We could read in the company materials that it is focused on providing digital video and mobile solutions for publishers, and video content owners.
We believe that the current business objective of the company could be quite innovative, but the current volume was not caused by new developments in this industry. We researched the Twitter account of the Chairman and CEO, John Strong, and found out that the company may be entering a different sector.
Please check the following photo taken from Twitter, wherein Mr. Strong noted that the Cannabis and cryptocurrency industries are also interesting:
In our opinion, if the ADTM is able to sign an agreement with a third party operating in these two sectors, the growth of the company may pop up. Why? These two industries have exhibited the largest growth in the year 2017 and their growth is expected to continue in 2018.
First of all, the legalization of the recreational and medical marijuana in some states in the U.S. and Canada was a game changer for this sector. It has created an unexpected demand for marijuana products, and many licensed shops admit that they cannot cope with the demand. That’s not all. It is known that the Government has not given enough licenses to sellers, cultivators, and researchers, so licensed companies are expected to make tons of money. Obviously, this has made the share price of marijuana stocks increase. Check out some of our articles to understand what may happen to ADTM if it enters this exciting sector.
Regarding the cryptocurrency sector, many have declared that the new coins are here to stay. For instance, JPMorgan Chase CEO, Jamie Dimon, said in 2016 that the Bitcoin was a clear fraud and recently regretted it. The returns delivered by cryptocurrencies have been magnificent, but it is not only that. The Blockchain technology, which is included in these new coins, offers many good features that physical money can’t. That’s what is improving the growth in this sector and the reason why this smart CEO is interested in this technology. We also assessed many companies operating in this sector. Be sure to check some of our articles on the subject.
Please check the following chart and note that almost half of the recent volume is actually short volume:
In our opinion, it shows that short sellers are fearing increases in the share price and preferred to close their position. This is a great news for the longs since shorts will need to buy to liquidate their positions, which may make the share increase. We believe that if many short sellers commence closing their positions very quickly, we may see a short squeeze. Thus, be sure to follow the trading activity of these unethical market participants in the following weeks.
The company is converting debt
For the readers interested in the financial risk of ADTM, read the following carefully. The company commenced decreasing its debt in December 2017. According to a filing, to which we had access, on December 5, 2017, the company reduced $696,606.85 of debt and issued common stock to debt holders. For those concerned about the risks from stock dilution, if the company can grow at a pace that outstrips the value lost through dilution, then there’s real potential for long-term return.
The Low Float and Conclusion
Currently trading with a market cap of $1.8 million, ADTM is an interesting story among small caps. In our opinion, if the company commences again in a new industry and files its most recent financial statements to become OTC Markets compliant, many will be interested in this name.
Finally, the readers who appreciate volatility games should include this ticker on their list. It is a low float runner with 1,844,901,787 outstanding shares and a float of only 9,527,384 shares.
However, keep in mind that the momentum is being driven by the CEOs Twitter account. For those interested, then follow him on Twitter.
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Disclosure: We have no position in ADTM and have not been compensated for this article.
Image courtesy of Maryland GovPicks via Flickr