Gediminas Jasionis
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Should Short-sellers Pay Attention to Yangaroo Inc. (CVE:YOO) (PINK:YOOIF)?

by Gediminas Jasionis May 23, 2011
yoo_chart.pngYangaroo Inc. (CVE:YOO) (PINK:YOOIF) demonstrated a short lived increase in trading activity by the end of last week. Short sellers can still profit from the outcome of the recent price action if the momentum continues into this week.

Stock price failed to stay up after a massive run-up from Thursday. YOO had then added 58% at the end of trading session and had better than average trading volume. The price collapsed 23% on Friday under heavy selling, but there is still space for short seller to push it further down. The closest support is at 9 cents, providing an opportunity for 10% profit.

yangaroo_logo.jpgNo material events were announced on Thursday, thus the rally was not sustainable to begin with. The stock likely got up ridding short squeezes. The market cap remained as high as $11 million since Friday, which is hardly sustainable considering the poor fundamentals:

  • YOO has a working capital deficit of $300 thousand;
  • Revenue was up merely 3.4% over 2010;
  • Net loss doubled since 2009 and was $5.1 million;
  • Company issued $2.6 million worth of convertible and common stock over 2010;
  • Dilution rate was 56%;
  • Yangaroo's authorized share count is unlimited.

The company is still fighting a lawsuit with Destiny Media technologies over patent infringement and the last couple updates on the case favored Destiny. Yangaroo was sued for $25 million.

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