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Thursday, October 29, 2020

The Low-Down on Petrone Worldwide Inc (OTCMKTS:PFWI)

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Petrone Worldwide Inc (OTCMKTS:PFWI) has been under heavy distribution lately, with volume trending mostly lower. The company recently put out a 10-Q featuring data for quarterly activity ended September 30, 2016, which was relatively solid, all things considered. The company also put out a notice that it “plans to uplist from the OTCPink Exchange to the OTCQB Exchange by the end of the 2016 fiscal year.” This latter note was out on Friday. And then, seemingly out of the blue, the stock jumped 61% on 90x times average 3-month daily trading volume on Monday.

As you consider all of this, note that executives maintain in their recent release that the uplisting is necessitated by strong growth. But that growth isn’t particularly clear in the company’s financial data. However, the company notes that it “has been in a constant growth phase for the past year and is projected to increase revenues by over 500% in 2017.” Who has projected this, and on what basis is not made clear. However, we did also find that Stellar Media (an “investor awareness” newsletter group) was “compensated $30k cash via bank wire by a third party, Sunrise Media, LLC, to conduct investor relations advertising and marketing for PWFI.” That deal started this week and is likely the real culprit underlying the dramatic action in the stock.

Petrone Worldwide Inc (OTCMKTS:PFWI) trumpets itself as a company that imports, exports, and distributes tableware products, decorative hotel guest room amenities, lavatory, bathroom fixtures and furniture, food and beverage service items, and trendy accessories for Asian and European markets.

The company sells its products under the Front of the House and Room 360 brand names. Petrone Worldwide, Inc. is based in Weston, Florida.

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The company is, according to its more in-depth material, “an exclusive importer/exporter and distributor of commercial grade tableware products, decorative hotel room amenities, lavatory and bathroom fixtures and furniture, food and beverage service items, and trendy accessories for the Asian and the European marketplaces. Thru an exclusive licensing agreement with a leading supplier, our exclusive brands include Front of the House and Room 360 by FOH. Revenues and related costs of revenues expenses attributable to the sales of these products are included in our Product Segment.”

This is interesting. We would also note that the investor awareness campaign just got underway on Monday and may still have some oomph behind it depending on how well the market receives it, and how forcefully the message is driven home.

Overall, the chart shows 24% tacked on to share pricing for the stock in the past week, but that move comes in the context of a larger bearish trend. What’s more, the listing has seen interest climb, with an increase in recent trading volume of a bit over 1500% over the long run average. Traders should note this as important due to the tight float size in the stock (barely over 11M shares). Traders should not overlook this combination, as ramping trading activity can overwhelm available supply in a stock with this type of small float, leading to an upward burst in prices.

The history of the company is also somewhat revealing: “Our founder, Victor Petrone, has spent over 20 years building a significant global network of buyers, comprised of hotels, resorts and restaurants, for premium, chic, environmentally conscious products and services. We have sales, marketing, and product development expertise primarily in the hospitality business in Europe and Asia. We currently sell and market products under our own proprietary name and we act as exclusive distributors primarily to companies to the hospitality trade. The brand portfolio consists of vendor-approved items for key foreign accounts, which include large hotel groups, such as Marriott Hotel Brands, The Four Seasons Hotel & Resorts, Hilton Worldwide, Hyatt Hotels & Resorts, Starwood Hotel & Resorts, and Fairmont Hotel & Resorts, and smaller hotel chains and upscale restaurants.”

Currently trading at a market capitalization of $4.8M, PFWI has minimal cash on the books, in a pool of total assets just shy of $250K, which is balanced by almost no total accumulated debt. The recent financial performance of the company is hardly terrible, by any stretch. But growth is receding, especially on a larger time frame, and the company’s cash levels are quickly dwindling.

However, PFWI is not mired in debt, which is somewhat surprising given the market segment under discussion and the need for balance sheet flexibility at this middle area of a supply chain. We should note that the financial data is unaudited. In any case, the sudden jump in activity and pop in price is probably mostly attributable to the promotion underway by Stellar Media. Take it as you please. If the story warrants, we may follow up and see how the action played out after the dust settles. For continuing coverage on shares of $PFWI stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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