The past few months have seen several highs and lows for Plandaí, leaving many shareholders wondering exactly what is going on. Since January 1, 2014, our stock has seen a high of $3.15 and a low of about $0.12. Most recently, the stock has settled to around $0.50 with average volume around 200,000 shares per day. We field several phone calls a day from shareholders, many of whom ask the same questions. Hopefully, this article clears up some of the confusion.
First, Plandaí does not engage in any stock promotional activities. Our goal is to build a company, and a stock price, based on a solid business foundation. This means assets, revenues, and net income. As of our latest fiscal quarter ended March 31, 2014, Plandaí still considered itself in the “developmental stage.” That is, pre-revenue. Until revenues commence and the company has a solid track record of operations, the value of Plandaí, and its stock price, is somewhat subject to speculation.
Second, no Plandaí affiliates, insiders, officers or directors has sold a single share of our stock. We are all in this for the long-term and are interested in building a company, not short-term gains. All officer and director shares are under a 5-year lock up agreement.
As the company has no “free trading shares” we did issue some restricted stock to clear off debt on favourable terms, but these shares have 6-month restrictions on transfer or sale and generally have leak out agreements. Very little money has been raised by selling stock, and again, any stock sold was restricted as to resale for six months.
So, the question remains: if affiliates are not selling shares, why is the stock so volatile? The answer is elusive, and probably has many components. The best answer is probably “speculation.” When Plandaí announced the license agreement with Diego Pellicer and its intention to produce a Phytofare™ cannabis extract, there was a great deal of speculative buying. Our offices received many phone calls from people professing to have bought our stock and now wanted to know what Plandaí was. There was no research involved, just emotional buying. These are not long term investors and, when it became apparent that the company was not going to start selling marijuana the next day, many of them probably sold their positions driving our stock’s price down. Several marijuana stocks had a similar trading pattern over the last few months as cannabis legislation was the hot topic and all companies in the industry became the subject of speculation. In addition, the SEC has suspended trading in several cannabis related stocks – something that has put a chill on investor interest in cannabis related stocks.
There is also undeniable institutional shorting happening in Plandaí’s stock. Several analysts have speculated that as much as 40% of our daily trading comes from institutional shorts. Given the amount of free trading shares in the market place and the volume we’ve seen some days, this number is probably accurate. While we believe the practice is contrary to free market forces, there is little we can do other than continue trying to build Plandaí’s fundamentals.
So, what can Plandaí shareholders expect in the coming months? To begin with, the Senteeko factory is expected to come online this summer, which means that sales can soon commence. On top of that, we are in the middle of our oral bioavailability study, which we anticipate will show that our Phytofare™ products are superior to other extracts on the market. This will open the door to further research including a weight loss study that will start once the bioavailability is validated.
As a Plandaí shareholder, this is an exciting time. Many of our shareholders have been involved with the company for more than a decade. They’ve watch us grow from just a vision of enhanced nutrition through the acquisition of Senteeko and the construction of the factory, to finally seeing everything we’ve been discussing being backed by third party research.
As a management team, we appreciate your patience and support as we face this final push.