According to Google Finance, the beta for Lot78 is 38.00, while the beta for the market as a whole is 1. The people hired by Lot78 to promote the stock are obviously very effective at moving the stock price, as shown by the chart below.
In the body of the press release, Ollie Amhurst, President of Lot78, makes lots of bullish statements about the company's newly added e-commerce offering:
"The addition of our e-commerce capability is a very important step in diversifying our sales channels, opening up markets and growing revenue. We are ready to significantly grow and diversify our product line, which will enable us to enter much larger markets. In conjunction with our existing strategy in our wholesale division we intend to target not only the core fan base of Lot78 but also to reach a far wider audience through our website."Following, however, is the fine print associated with the mailer:
"CFM has managed a total production budget of up to $2,500,000 for advertising efforts and will retain any amounts over and above the cost of production, copywriting services, mailing and other distribution expenses, as a fee for its services."Smallcap Fortunes/Capital Financial Media are handling a budget of up to $2,500,000, which means that the actual budget could be anything less than that, and the promoters pocket the difference. Just like any other pump and dump scheme, Lot78 stock will collapse once the promotion winds down. Lot78 is a blatant pump-and-dump. The Securities and Exchange Commision defines pump-and-dumps at its Web site as follows:
"Pump-and-dump" schemes involve the touting of a company's stock (typically small, so-called "microcap" companies) through false and misleading statements to the marketplace. These false claims could be made on social media, as well as on bulletin boards and chat rooms."
The recent movement of the share price reveals there have been plenty of "greater fools" buying the stock. Over the last 52 weeks, Lot78 has traded from a low of 13 cents to its recent level around $7.75. If you own LOTE, it's time to take profits. Don't get caught holding that dirtbag as it will collapse back to pennies very soon. -- Written by Ben Brinneman in Charlotte, NC, owner of C Squared Trading, which teaches how to trade legitimate "penny stocks," priced between $2 and $10. Follow us at csquaredtrading At the time of publication, the author held no positions in stocks mentioned, although positions may change at any time. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.