ROCKY MOUNTAIN HIG COM USD0.001 (OTCMKTS:RMHB) is a micro-cap name that just broke key support in a rather striking fashion. We want to talk about why that break happened, and take some time to get a fresh perspective on this interesting name in the cannabis space.
First off, the breach of support, and the subsequent dive in the stock was a function of the interplay of two forces. The chart for RMHB has been defined by a bid that came in during the middle of the month of May at around $0.06-0.07/share. That bid prevented a test or break of the stock’s 200-day simple moving average. Since then, the level has been a key pivot that, once breached, would represent an important bearish technical development for the stock. That level was broken. Second, the company released news that it was restructuring its preferred series A equity holdings from a 1:1200 ratio to common to a 1:100 ratio. In essence, they are curing a bloat of preferred equity ownership in a manner that may signal more dilutive steps to come.
ROCKY MOUNTAIN HIG COM USD0.001 (OTCMKTS:RMHB) bills itself as a company that develops, manufactures, markets, and distributes hemp-infused food and beverage products.
The company offers hemp-infused beverages, including energy drinks, black tea, and lemonade; hemp-infused edibles, such as energy bars; and hemp-infused energy shots and coffee shots. It is also developing wine based ready-to-drink cocktails; cannabinoid infused beverages; hemp protein bars and hemp chia seed bars; and hemp infused natural spring water.
Rocky Mountain High specializes in brand development of health conscious, hemp-infused food and beverage products. The Company currently markets a lineup of four naturally flavored hemp-infused beverages and a low-calorie Coconut Lime Energy drink. Rocky Mountain High Brands also offers hemp-infused 2oz. Mango Energy Shots and Mixed Berry Energy Shots, as well as a new Relaxation Brownie. The Company recently launched a naturally high alkaline spring water, Eagle Spirit Spring Water.
RMHB markets its products through brokers, distributors, and retailers. The company was formerly known as Totally Hemp Crazy Inc. and changed its name to Rocky Mountain High Brands, Inc. in October 2015. Rocky Mountain High Brands, Inc. was incorporated in 2000 and is based in Dallas, Texas.
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As noted above, shares of RMHB broke key support in a big way last week in reaction to a key technical bearish trigger as well as news of a preferred share restructuring that could be perceived as a dilution of preferred ownership and signal of other similar steps to come. This is often seen as share prices decline and it becomes harder to raise funds in the public market for real operations.
Recent action has seen nearly -20% clipped out of share pricing for the company just in the past week, which extends somewhat bearish action up through the recent timeframe ladder. That said, the situation may be worth watching. RMHB is a stock who’s past is littered with sudden rips. What’s more, the stock has seen interest climb, with an increase in recent trading volume of 14% beyond its prior sustained average level.
This is the same company that recently announced that it will soon start producing a line of both Cannabidiol (CBD) infused flavored waters and CBD-infused flavored energy drinks and beverages.
Michael Welch, President and Chief Executive Officer of Rocky Mountain High Brands, stated, “Our new Blueleaf CBD-Infused flavored water product line will be produced in the next 30 days and will available for purchase this summer. We will be offering three flavors of Blueleaf CBD-Infused flavored water – Water Cucumber, Lemon/Lime and Watermelon.”
With weaker hands washed out, one must still entertain the possibility that this is a stock with potential. However, we need to see some very strong signals from management soon to prevent a spiraling of the recent weakness as more experienced OTC players start to anticipate further dilutive decisions from the board.
Earning a current market cap value of $51.8M, RMHB has virtually no cash on the books, which stands against about $1M in total current liabilities. One should also note that debt has been growing over recent quarters. RMHB is pulling in trailing 12-month revenues of $767K. However, the company is seeing declines on the top line on a quarterly y/y basis, with revenues falling at -25%. We will update the story again soon as developments transpire. For continuing coverage on shares of $RMHB stock, as well as our other breakout stock picks, sign up for our free newsletter today and get our next hot stock pick!