No matter your position towards American Green, be it positive or negative,veteran or newcomer, there is no denying ERBB has been kicked into high gear after releasing sensational (*edit - by sensational here I mean headline grabbing, I don't mean spectacular or excellent) news about their pending purchase of Nipton, California, a small ghost town the company plans to convert into a first-of-its-kind modern, legal cannabis community. Despite the deal still being in escrow and American Green having a history of 11th hour failures, speculators grabbed their picks and axes to mine the riches of some exceptional trading activity. Time will tell if the result is a river flowing with gold or a washout of muddier water but here are some considerations in the meantime.
Monday's trading volume was quite exceptional for penny stocks (and any stock for that matter). ERBB traded the highest volume in its history with a massive 130% gain in share price. This action was coming off 2 days of remarkable gains on high volume. The total dollar amount traded Monday was over $10,000,000 or nearly half of the company's market cap as of last Friday, again both figures of some exception. Although short trading doesn't play much of a role in penny stocks, there is no doubt anyone risky enough to play the downside of ERBB has long since covered. However, it is likely ERBB's 3 bagger over the past few days has enticed some short sided penny players. Should ERBB continue skyward these new short position would only provide more updrafts which is likely what happened Monday morning when ERBB gapped up due to shorts tripping over each other in their efforts to cover.
At this point technical analysis is silly because the obvious reason for the price and volume action is fundamental, based solely upon the news of an alleged purchase and project in Nipton, CA. By all means this news holds truly remarkable potential but it should be taken gingerly and scrutinized heavily. As stated above, American Green has a long history of FTD (failure to deliver). Maybe this time ERBB will be a wolf on Weed Street but it's just as likely Peter (Jacobs) and "project manager" Stephen Shearin are crying from the rooftops in a rouse to excite the farmers while the tricksters loot the barns. American Green has really stuck their neck out here. The newly found attention is and could be overwhelming as the company's website has crashed due to the influx of traffic. Social media sites like iHub and Twitter are unreadable streams of messages scrolling every few seconds.
The spotlight has been thrust upon American Green like never before. Even in the days of the Zazzz launch or Colorado's legalization and subsequent penny stock boom the interest was not as high as it is today. During that 2014 PotCom boom ERBB was a major laggard but came on in the end of the rally to be one of the top gainers with around 10,000% appreciation. Of course the fall from grace was swift, leading to massive dilution and share price erosion
Today is different because ERBB is now a leader going into another enormous cannabis event; the New Years recreational legalization of California. I cannot stress enough how absolutely massive this event will be. Having been in Colorado for the 2014 New Years legalization, I can say with confidence, that glorious moment will be dwarfed by California's legalization on Jan 1, 2018. California has over 10 times the population of Colorado and more people than all recreational states combined, as well as the planet's best cannabis (sorry folks, I've ingested cannabis all across the world and CA consistently has the best flower). In just 2 weeks of recreational legalization Nevada sold out of cannabis. After personally visiting many dispensaries and growers in CA over the past weeks, I can tell you everyone is planning to flood the market with product to meet the demand. The state could reap billions and the mood is quite elevated amongst the serious players.
If American Green plays their cards right here in California this could be an opportunity of a lifetime. Should the escrow on Nipton successfully close, there is a great opportunity to get real funding from big money players in the California cannabis industry. Hopefully for American Green's sake, the seller of Nipton and current residents will be pleasantly surprised by the mostly positive response to the idea of a green rush sweeping over their gold rush ghost town. California's cannabis industry, like the domestic and international cannabis industry as a whole, is a great community. The political talking points about weed cartel boogeymen are becoming a thing of the past and the real cannabis communities that have long been suppressed are proving they can offer safe, worthy products. Credible cannabis companies and brand like Kiva, Cheeba Chews, Dixie, Harborside and many more will become nationwide, perhaps even global entities.
There are many great stewards and curators of the cannabis movement. Cannabis billionaires will be made in the coming years but it is not likely they will be the result of OTC penny stocks. As I have said before, Stephen Shearin is no Bugsy Siegel and this ain't Vegas baby. American Green will have to follow through first with the successful closing of the Nipton escrow, then with the subsequent development of a town. The latter is probably the easy part as we have witnessed an enormous amount of interest in the concept of Nipton being developed into a cannabis community. But the former, the closing of escrow is far less likely. Supposedly American Green has put down a $200,000 cash deposit for the estimated $5,000,000 purchase. ERBB longs should hope that the American Green insiders and convertible debt holders put some of their newly made monies from the recent run up towards closing the Nipton deal as soon as possible.
On a personal note, it's nice to be able to write something slightly positive about American Green. At the very least, the wild notion of converting a gold rush ghost town into a booming homage to cannabis is a grand concept and I have to salute American Green for such an audacious effort even if it fails to come to fruition as is the likely outcome. The company has crafted a concept that resonates deeply enough to garner massive worldwide media attention or as the kids say, it went viral. I'm not one to call share prices, especially in the penny stock realm butI did expect the 2014 MJ bubble and profited immensely. As for the upcoming CA legalization, I fully anticipate an utterly bonkers amount of cannabis to be sold and consumed but by now, the trading public is aware of the penny stock shenanigans in the marijuana industry. ERBB could run to the end of the solar system, especially if the deal actually closes or it could finally implode in a last gasp after having failed in their most audacious move to date.
Unfortunately a previous post I wrote on OTC Watch was deleted but a few days before the Nipton announcement, I stated now may be the time to test the waters here on the OTC penny stocks through the end of the year in hopes to cash in on the California legalization event. I'm done playing OTC penny weed plays but it's interesting to watch because I'm a big supporter of the cannabis industry.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: I have and will not be compensated for this or any writing. The prior disclosure is bogus and was the only option I could choose to publish this writing.