🤔 How Did All These Promoters Pick The Same Stock?

With no news…. [Image] Something doesn’t smell right… Typically, companies pay tens of thousands of dollars to marketers to promote their products. I can’t say I’ve seen a one-day promotion cost less than $5,000. Usually, they run between $15,000-$20,000. But every so often, when clients slow their spending, or there’s a gap between campaigns, promoters need to feed their readers’ voracious appetites. That’s how Kaspien Holdings Inc. (NASDAQ: KSPN) picked up some free advertising last week. Four top promoters filled my inbox with similar writeups on Thursday, all of which came out right near the opening bell. And wouldn’t you know it, KSPN saw more volume and price movement than any day since December. This is EXACTLY why penny stock traders follow these stock peddlers. You never know when they’ll send a stock like KSPN on a 44% rocket ride with no news catalyst… But wait a minute…how did they all pick the same stock? It had no premarket volume and no news. So how did they all recommend the same ticker within a minute of the opening bell? Let’s see if the stock itself has any answers… Kaspien Holdings Inc. (NASDAQ: KSPN) - 1-month trading range: $0.450 - $0.847 - Typical average daily volume: ~170,000 - Float: 2.37 million Kaspien’s Business Some promoters did a better job than others explaining Kaspien’s business. One looked like a copy and paste job that took the Yahoo company description and threw it into a rewrite engine. However, a couple did an excellent job highlighting the important points and calling out the compay’s history, which we’ll get to in a moment. Currently, Kasipien holdings ‘operates and e-commerce marketplace growth platform that offers a suited of software and services.’ After watching their explainer video, it appears as if the company will sell your products for you through major e-commerce platforms, manage a specific channel, or provide you with the online tools to manage your brand across multiple channels. The following slides helps explain things better. [_uGIAQNafQNaE2cXO6A7Gc2mkJ-oN2R5BFYYTsqpNSZifTFthnGCRXIGLB8lcn3fkVUlq3mosyLpowQ4VL3fet-7HWIhXb-4ozRVVTgWwnhrjbS9fv8TTlUQ49heDaxwfP1iuqutNQ9CJza8VYmeQdU] [WT5ucTlkrzi9tsl4b_iKjYsEranmPuilT6jfsJNJlvqW5BbzzA2B3nfH5aKBYhYt-hxteHTxH_fYP4Ld7_n99aju-pGyvrcHMdueA_y4iZ7uCR7tBFi4iHEXoPxTkGlufgN2UKKNzy6dGCvxy9fA-0w] [Source: Kaspien Investor Presentation]( It’s a pretty unique value proposition and would seem to be a brilliant business plan. However, stocks don’t trade under $1.00 unless there is a reason. So, let’s step back in history. Shall we? Who remembers f.y.e. Stores? Probably no one. These ‘90s relics exist in shopping malls selling pre-owned music, movies, and t-shirts…not exactly a winning combination these days. Trans World Entertainment Corp. (TWMC), the parent company, bought KSPN for $75 million in 2016. In 2020, Trans World sold f.y.e Stores and rebranded as Kaspien Holdings. Seems shady, but if you were tied to a garbage business like f.y.e. Stores, wouldn’t you want a makeover? Now that we’ve got a handle on the current business and history let’s move on to the financials. Financials With a pandemic and a complete corporate overhaul, Kaspien’s financials changed wildly. Revenues dropped from $413 million to $133 million from 2019 to 2020. Operating income last crested breakeven in 2017 by $1.4 million. Last year, it ran at negative $15.2 million. The underlying business is a challenge, with gross profits only hitting 20% of revenues while operating expenses are just above 30% of revenues. Unsurprisingly, cash burn is heavy at around $15 million annually. With no cash on hand, the company went through two stock tenders, one in March 2021 for $13.5 million and another for $8 million in July 2022. Given the lack of cash on hand, declining revenues, and the barest of gross margin improvements, I expect we’ll see another tender in the near future. Promoter Activity Since this wasn’t a paid campaign, a lot of what I saw was copy-and-paste jobs probably run through an online rewrite engine. That’s probably because there hasn’t been any news on the company since its poor earnings release in December. While a few did a decent job of explaining Kaspien’s business, most either touted their own pick performance or talked about the stock’s low flat. Straight to the Facts We know enough about Kaspien as a business that it should do well, but it doesn’t. But that’s not what is the most interesting thing here. Clearly, there was no reason to recommend the stock. And the promoter criteria laid out in their emails could have led them to choose thousands of other stocks… …Yet they all chose this one… …And it moved hard… Why? I’ll leave the answer in your hands. 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