A wider than expected Q3 net loss compounded by allegations of theft and deceptive finances are some of the reasons why Terra Tech Corp (OTCMKTS:TRTC) is tanking. Claims that the company, as well as various defendants connected to the company engaged in theft, stock manipulation and filling of false reports, appears to have accelerated the sell-off wave.
A confirmation that Golden Leaf will not pursue a potential merger with Terra Tech is another development that continues to rattle investors.
Terra Tech Price Analysis
The string of negative news comes at a time when the stock has already lost more than 70% in market value, from this year’s higher highs. The stock has continued to underperform even on the sector turning bullish in recent weeks.
The stock’s sentiments in the market have turned from bad to worse on plunging below the $1 a share psychological level. Given the strength of the downward pressure, the stock looks set to plunge to the $0.40 level, which happens to be the next support level.
A plunge below the $0.40 mark would leave the stock susceptible to further declines in continuation of the strengthening bear trend. After the recent dive, the stock needs to rise and stabilize above the $1.20 mark resistance level, to have any chance of averting further sell-offs.
What Does Terra Tech Corp
Terra Tech is a cannabis-focused company that operates under two segments of herbs & produce and Cannabis dispensaries, cultivation and production. The company also boasts of a number of subsidiaries made up of Blum IVXX, Edible Garden and MediFarm LLC that provides it with exposure to the vast cannabis industry.
Why is Terra Tech Corp Imploding?
Terra Tech is the subject of renewed short selling pressure on a businessperson in Reno Nevada suing the company over claims of theft, stock manipulation as well as well as filling of misleading reports. According to Heidi Loeb Hegerich, the company has a history of inaccurate bookkeeping practices and filling of deceptive financial results.
In the lawsuit, Hegerich alleges that Terra Tech has continued to loot from the Blum Dispensary one of the joint ventures she co-owns with the company. She goes on to claim that the company didn’t properly audit the joint venture and also tried to remove her as a manager of Blum.
Terra Tech in a statement has already refuted the claims maintaining it is ready to defend itself against the ‘meritless claims.’
“Far from the image portrayed in recent interviews, Heidi Loeb Hegerich is, in fact, a wealthy, sophisticated investor with a history of disputes with business partners. We reaffirm our commitment to our shareholders to correct any misleading and inaccurate reports and remain committed to providing accurate information to our investors,” said CEO Derek Peterson.
While Terra Tech insists that Hegerich lawsuit and interviews are an attempt to manipulate the company, the stock has already taken a beating. Investors have already reacted to the news consequently sending the stock lower
In addition, Terra Tech sentiments in the market have taken a significant hit on Golden Leaf Holdings saying it is not ready to merge with the company. The two companies had already signed a binding letter as part of a proposed merger
The merger would have allowed Terra Tech to expand and strengthen its footprint in the U.S with the inclusion of 41 permits in key cannabis markets of California, Nevada, and Oregon.
Disappointing Earnings Results
The posting of a wider than expected net loss of -$13.7 million compared to -$7.8 million reported a year earlier did not go well with investors. The fact that the company also reported a slowdown in revenue growth all but spooked the markets triggering a sell-off of the stock.
The cannabis-focused company says it generated revenues of $7.1 million in the recent quarter down from $10.1 million reported a year earlier.
The Chief Executive Officer has since come to the company’s defense touting significant achievements achieved in the quarter. For starters, the executive insists they have streamlined operations at Blum retail dispensaries, poised to trigger sales growth
Terra Tech is also in the process of pursuing opportunities in the global scene as part of a new international expansion push. The expansion bid is part of an effort of positioning the company to be a market leader in the multi-billion sector
Terra Tech has paid a hefty price for reporting disappointing earnings results in 2018. Allegations that the company engages in stock manipulation, theft as well as reporting inaccurate results all but affirms the beating the stock continues to receive in the market. However, with all this aside, we stick to our belief that Terra Tech remains a dip buying opportunity.
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Disclosure: We have no position in TRTC, but may initiate a position within 72 hours of publication. We have not been compensated for this article.