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Monday, November 23, 2020

Here is the Shakeout in PotNetwork Holdings Inc (OTCMKTS:POTN)

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PotNetwork Holdings Inc (OTCMKTS:POTN) is a stock we profiled a couple weeks ago, stating that “we will likely see some further declines in the name before we are ready to get traction on a more meaningful bounce”. That was followed by about $10M in lost market cap as shares broke below recent range support. To combat that, the company just announced plans to kick off its African business development strategy by co-sponsoring a series of community-facing events in Kenya with their exclusive affinity marketing partner, Exponential Inc.

According to the release, “Between April 17th and 27th, 2018, Diamond CBD Inc. is contributing material support and resources towards community action projects taking place across Kenya. Among the activities planned is a reforestation project in the Ngongs Hills, direct service endeavors at nonprofit around Nairobi, and a range of other charitable endeavors near Mt. Kenya and other locations.”

PotNetwork Holdings Inc (OTCMKTS:POTN) has two wholly owned subsidiaries, First Capital Venture, the makers of Diamond CBD OILS and Sunrise Auto Mall Inc.

Diamond CBD is focused on the advanced research and development of “the industry’s finest premium hemp extracts” and making them available to the global marketplace. The Company’s “notable team”, consisting of hemp industry pioneers and natural product experts, chemists, and scientists, is dedicated to producing “the finest and purest Cannabidiol (CBD) oil.”

POTN’s message continues: “Setting the Company ahead of its competitors, First Capital Ventures Inc and Diamond CBD Inc. deliver advanced product quality to market through the team’s creation of diverse and top quality hemp extracts that contain a broad profile of cannabinoids and other natural hemp derived molecules.

The result is a robust selection of Diamond CBD Oils, made from Industrial Hemp, which enhances the formula to be considered among the most powerful natural CBD E-Liquids on the market. Sunrise Auto Mall, Inc., launched in June of 2014, as an operation geared toward enabling people challenged with bad or no credit in securing quality transportation while simultaneously rebuilding the client’s credit.

POTN has developed a highly profitable business model around the continually rising subprime lending industry. Potnetwork Holdings Inc. acting as the holding company for the present subsidiary is planning to continue to expand from within as well as through future acquisitions.”

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The key to understanding this Kenyan trip are to be found further down in the company’s release put out on Monday:

“Recently, Diamond CBD, Inc. entered into an exclusive agreement with affinity marketing company Exponential, Inc., a cause-related technology marketing firm that develops white-label e-commerce platforms and impact strategies serving charities, clubs, and non-profit organizations globally. The African continent is comprised of over 1.2 billion people living in 54 sovereign states and 10 non-sovereign territories. Combined, the gross domestic product (GDP) of the continent represents over $3.4 trillion. As an addressable cannabis market, Africa represents a clear opportunity for PotNetwork Holding Inc. and its subsidiaries. In seeking to align itself with institutional stakeholders and local communities across Africa, PotNetwork Holding Inc. is focused on expanding its market reach to cultivate lucrative opportunities in untapped markets.”

This represents a bold move to attempt to cultivate a new distribution avenue. Time will tell as to whether or not it can generate a return on investment. So far, the market is skeptical.

Recent action has seen about -20% stripped out of share values of the name over the past week of action. That said, POTN has a history of dramatic rallies so it should be monitored closely in the days to come. Moreover, the name has benefitted from a jump in recent trading volume to the tune of 0% above the average volume levels in play in this stock over the longer term.

Currently trading at a market capitalization of $89M, POTN apparently has about $576k in cash on the books as of its latest reporting documentation, which compares quite favorably with about $30k in total current liabilities. The company has also pulled in about $4.4M in sales for the quarter ended September 30, 2017. We will update the story again soon as developments transpire. Sign-up for continuing coverage on shares of $POTN stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $POTN, either long or short, and we have not been compensated for this article.

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