Medical Marijuana: It's Just A Pump And Dump

Ashraf Eassa profile picture
Ashraf Eassa

Medical Marijuana (OTCPK:MJNA) is a penny stock that seems to have drawn quite a bit of speculative interest over the last several months. While some argue that there is a very legitimate case to go long the stock, others believe that the stock is a fraud and should be shorted to zero. While I believe that there are some serious questions that Medical Marijuana's management needs to answer in response to the short case (allegations of fraud and illegal dealings are serious), that's neither here nor there with respect to what's going on with this stock. This is all a question of stock market dynamics and it all has very little to do with the company itself.

This stock smells like a classic penny stock pump and dump. It doesn't matter to these buyers whether management is credible or not, and investors certainly don't really seem to care about whether this company generates any free cash flow (it doesn't, by the way). It's a penny stock that's been "going up" and you're seeing signs of retail investors piling in at these levels expecting to be able to cash out big.

Experienced investors have seen this before.

The Chart Doesn't Lie With Penny Stock Pump And Dumps

Everything you need to know about a penny stock that has moved several thousand percent is in the chart. This is not a stock that has any material institutional ownership, and things such as "cash flow," "earnings," and "balance sheet" mean nothing to the folks buying this stock.

The Anatomy Of A Pump And Dump

Everything you need to know is embedded in the chart, and the anatomy of a "pump and dump" is always, always the same.

Stage I: Accumulation

So you've got a stock that, well, nobody's really aware of (seriously, when did YOU hear about

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Ashraf Eassa profile picture
Hi there! I used to write articles here and elsewhere, but no longer do so. I have provided my Twitter handle and LinkedIn profile below.

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