Cereplast Inc (OTCMKTS:CERP) stock gets plastered in stock market

Posted by Nathan Alexander August 16, 2013 0 Comment 1004 views

Cereplast Inc (OTCMKTS:CERP)’s performance for yesterday was pretty appalling.
The stock dropped 12.80%. The opening price of the ticker was $0.02, made a quick run to $0.02 and plummeted to $0.01 at the trading close on Thursday. This value is almost 25% below what it stood at on Tuesday.

More than 44.54M shares exchanged hands on Thursday while the average volume of shares that were traded over a 30-day period was 16.48M. The company has a market cap of $6.12M.

The drop

Apart from the dismal performance for the quarter, the one thing that will make investors steer clear of the CERP stock is its massive dilution. From 17 May- 13 August, over 270M brand new Cereplast shares were pumped into the market. The management team has been ineffective with cutting-down on stock issuance and the rate at which this company shares are flowing into the market, the number of authorized shares will reach the permissible limit within hardly any time at all.

The revenue game

From this point of view, speaking about revenues in the range of $300m-$500 has no relevance really. At the moment, the fact is that CERP is down more than 10%. Unlike some other penny stocks, Cereplast has proved that they have the capacity to generate revenue. The one big problem is that profitability is a mere speck on the horizon. That is exactly why a potential investment has certain risks and you will have to evaluate the issue from every angle before deciding whether you want to invest in CERE or not.

CERE is involved in the development and commercialization of bio-based resins via 2 product families- Cereplast Compostables Resins and Cereplast Sustainable resins. The first includes renewable, compostable and ecologically-sound substitutes for various petroleum –based products. The latter includes the Cereplast Hybrid Resins product-line.

About Nathan Alexander

Nathan Alexander holds bachelor’s degrees in Journalism and European Studies from Boston University. Nathan reports round up the day’s business and financial market news and include keynote interviews with major business players and updates on Asian, European and US stock markets. He has interviewed heads of leading European banking institutions such as European Central Bank President Jean-Claude Trichet and HSBC Chairman Stephen Green, and CEOs from the business world including Microsoft founder Bill Gates, Virgin Chairman Sir Richard Branson and former Porsche President and CEO Dr Wendelin Wiedeking.

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