The stock price rebounded from its lows and held up for a little while but is now starting to sell off again. The reason for the most recent sell-off is the company issued a dismal earnings report last Friday. Converted Organics reported revenue of $260,000 and a loss of $2.4 million. That is pretty egregious. Some of the greater fools that are still buying Converted Organic are going to say that this earnings report is better than the last earnings report because the company actually reported some revenue. However, this company was actually a better speculative investment when it had no revenue.
When you buy a company such as Converted Organics you are buying the story not the actual stock. The reason Converted Organics made such a big run was because it had a small float and was in a hot sector. It also helped that the company was a “developmental stage” company and had no revenue. This meant that people could justify their purchase of Converted Organics because of the potential of the company.
Now however, the hype has faded away and the brutal financials have to be taken into account. The reality is that Converted Organics is nowhere near making a profit. On top of that, the chart is starting to get pretty ugly.