Pumping and Dumping


Other of the concepts that I have learnt in theory, on movies (The Wolf of Wall Street) and then in the practice is Pump and Dump.

In that monthly chart, you can see how in 18 months, 1.5 years, the stock value of the company rallies up to 300% of its previous value.

Then, in 5 months, the company loses 60% of it stock value returning to the previous value seen two years earlier.

The trigger probably was a quarterly result indicating that the net cash had decreased substantially due to a expansion in China.

That company does not have any financial debt, and is using its own cash to expand to China.

In following quarters the company was showing income growth while the expansion operations in China were being successful and was already operative in that country.

In the more recent quarter, the net cash and revenues seems to be growing.

What it has not grown indeed is the value of the stock.

Leave a Reply

Your email address will not be published. Required fields are marked *