CPNE is falling apart again today, and I just don’t know why investors would sell this stock at this price.
Actually, I do know. They are selling it because it is going down. Despite profit levels that suggest a $4 stock, institutional participation at the $9 million level at $1.90, and all the balance sheet improvements, CPNE is still under heavy distribution.
We are now flirting with my SSL level of $1.45- so once again, as is typical of the late spring and early summer, it is time to decide if you want to be a seller and move on, or become a long term investor.
I have watched about $100,000 in value erode of our corporate portfolio in the last few weeks, and a lot more from the January high of $3.43. Despite 20 years of grizzled veteran experience, stocks like this wear me out as much as anyone. In fact, this is far worse than a failed idea. It’s worse because the company succeeded- it’s simply a bad stock. When the companies fail you just sell and move on. No problem. It’s over. However, bad stocks can become good stocks a lot easier than bad companies can become good companies. We have every chance of heading in the right direction again.
I was talking with a good technician today who has been watching this one. He told me he was going to be a buyer today. He likes 61.8% retracements as I do, and he pointed out something I hadn’t caught.
Here’s today’s chart:
This is not a daily chart. It is a weekly chart going back to the stock’s all time low in December of ’05. CPNE traded to an all time low of $.16.
On a weekly basis, the stock has now given back almost exactly 61.8% of its entire gain from top to bottom. This is a pretty long term look, and the longer term, the more powerful and better predictor.
Also of note is the stock’s miserable perfomance over the last six weeks. Five of the last six weeks (as measured by the colored bars) have been down. That’s just abysmal.
Just as I suggested with TTGL a couple of weeks ago, you need to decide if you are long term and want to hold, or simply sell and move on. If you sell, you can always buy it back.
If you have decided to sell and move on, I would wait for a modest rebound. It’s hard to get a decent print when everyone else is selling.
I would be more inclined to buy right now. When these stocks make new lows they tend to blow everyone out and then reverse course when you least expect it.
I wouldn’t be surprised to see some sort of moderately negative announcement come out of the company, followed by a rally in the stock once everyone realizes the whole thing (whatever it is) has been blown out of proportion.
In the meantime, it has been painful to watch this one fall apart, but that’s the market.
I wonder how low the stock has to go for it to become irresitable to traders. We might be there now.
Comments and questions are welcome.
The business model at CPNE has not changed given 2006 and 1st quarter 2007 results so I am still in the game and adding to my position.
If this company can maintain its positive streak this year I have to believe that a bigger company will buy them out. The Internet business model works and many companies are jumping in with big $$.
No need to panic !
Editor: not panicking- it’s just a stock. But really disappointed. What a mess, but could be a spectacular opportunity.
http://www.ripoffreport.com/reports/ripoff239146.htm
Editor: I would imagine this is the sort of thing that happens all the time with this company. They have substantial reserves set aside in their financials for refunds.
Simply Dumb founded. Could this stock go to .50 again? Technically it does not make sense why it would, but then again it makes no sense why it is at this level either. Has this company given up on trying to get institions to buy in? What gives? They just need to buy back all their shares and go private. At this pace they will be able to buy them back rather cheap.
Editor: I believe you are correct. They could go private, or be bought out for a song. I wonder if the current quiet period is keeping them entirely on the sidelines as far as news is concerned.
Hi, I am in the market for about 15 years, also like more technical analysis than fundamentals. I bought CPNE around the $2 levels and still holding, but getting a bit worried now. Why?
I accept your argument with the 61.8 Fibonacci-Retracement and I also think this should be fine for atleast a rebound. The stock yesterday traded with over 600,000 turnover, compared to 330,000 on average (200 days).
That might have been the stop-loss orders of those following your publication. CPNE is also covered by a German “growth-stocks” newsletter, who had 1.45 SL as well.
Stock trades under pari in Germany currently, so probably the German readers are selling out as well.
But thats it now? Are the “weak hands” out and are we going back to “fundamentals”?
Of course the fundamentals seem to be great. 4 quarters of growing numbers. No debt. Institutionals bought in at 1.90. Seeks listing upgrade from OTC-BB. Stock-buy-back program. All nice.
BUT: The great thing about technical analysis is that it indicates the fundamentals before they get known to the public. The stock has been falling through the 200-day average at 1.70 with high volume. Looks like insiders are selling.
Why, if it is a company with growing profits, a bright future ahead and trading at a P/E of 6??? Are people so stupid that they don’t see? Is the market so intransparent that everybody is missing this “great opportunity”? I doubt…
You said yourselve that CPNEs management is weak in communicating transparently. Why? Are they just unprofessionell and stupid or do they have something to hide? If they believe in their company, they should be heavily on the buy side right now shoudn’t they?? Are they???
Why is no real analyst covering CPNE? This report of Amalfi research is just a piece of marketing crap, lots of coloured pictures and repeating the same phrases a couple of times to get the 10 pages filled… Reminds me very much on the E-Commerce Bubble.
Be honest: Do you really understand CPNEs business model and do you think its great? Have you been on their website and on the sites of their subsidiaries and have you tried out their services?
I have my doubts when company presentations and dubious “Research Reports” just talk in very general terms and do not give real details of what the company is actually doing. Look at the survivors of the E-commerce bubble: Yahoo, Ebay, Amazon, Google… all with very clear business models you can understand in 5 minutes. But CPNE…??
Well, maybe I am wrong. Maybe there is a huge opportunity here nobody can really see yet. Maybe I did not enough research. I will still hold my position for a little while to see if we get a rebound after the 61.8-level-testing and maybe the company improves their investor communication a bit. That’s a least what a professional and honest management would do in such a situation. If not, it might just be another e-commerce scam, like we have seen so many already…
Editor: I accept your argument concerning the company’s business model. Basically, they are simply very good at email marketing and “selling the online dream”. At first blush, one would assume this model does not have really long term legs, but their are companies selling all sorts of dreams, delivering hundreds of millions in revs for years, and very profitable.
The lack of coverage is definately problematic, and the company’s apparent inability to garner any institutional support shows a inepititude on the part of management in this arena. They retained Roth Capital and some other Mid West firm as “investment bankers”-they are doing a lousy job as well.
Perhaps there is a reversal on the fundamental side we will learn about later. However, I believe the current swoon is more likely related to one shareholder- Efund – this guy has been a seller of every single share he could possibly sell from day 1, and he has 7 million shares in the current registration statement. He received his shares back in the very early days for pretty much doing nothing, and has been a big problem. I’ll bet when he does his next filing, his number of shares is way down.
If we don’t have some sort of sustained bounce in here, I believe we could be in trouble. Looking a little better today, but too early to call. One pattern I have seen of late- stocks making a new multimonth low by a few cents then turning right around. Would like to see that here. I am very pregnant with this one- more than I want to own considering the current swoon.
Good comment about the 61.8 retracement. I also believe their should at least a rebound after this sellout. Over 600,000 stocks traded yesterday vs. 330,000 on average. Might have been the 1.45 SL-orders, also from the German investors, as a German “Growth-stocks” letter has been covering CPNE with a 1.45 SL as well. Stock is trading under pari in Germany right now, so the guys there are also panicking a bit.
But is it over now? Thats it? The weak guys shaken out? Are we going back to the “great” fundamentals of this “heavily undervalued” stock? Is this stock really undervalued?
I bought CPNE at the $2 level and still holding, but getting my doubts now. The good thing about tech analysis is that its indicating fundamentals before they get known to the general public. The 200-day moving average was blown at around 1.70 with high volume. Insiders seem to sell. Why? Shoudn’t the management be on the buy side, if the company is doing so great? Is the market so intransparent that it lets this stock trade at a P/E of 6 despite 4 quarters of profit growth, a bright future, a stock repurchasing program, a planned listing upgrade and so on….
Are people blind and stupid? Or is there something going on we don’t know yet, but the chart is already indicating us?
Do you really know what CPNE is doing? I mean, have you been on their various websites and have you tried out their “famous” products? Do you really think they are doing something unique?
Why is no real analyst covering it? That report of “Amalfi-Research” is just marketing crap with lots of coloured pics and repeating the same general phrases all the time to fill the 10 pages…
Reminds very much on the E-Commerce bubble. Do we have just another e-commerce scam here maybe?
You mentioned yourself a couple of times the bad investor communication of the management. Why is that? Are they just stupid and unprofessional? Can’t they afford to hire a marketing-pro for investors communications with all the cash they claim they are making? Or do they have something to hide?
Well, hope I’m wrong. But I have my doubts…
Editor: I have always been nervously optimistic on this one- just waiting for the other shoe to drop. However, after 5 consecutive quarters of growth in sales and earnings, you kind of have to give them the benefit of the doubt until proven otherwise. Hardly an ecommerce bubble- those companies never delivered the numbers.
Been in this stock for years. Rode it up rode it down, been buying on it”s slide down. I,m willing to support this co. I wish the co. would do the same. if there not buying back the stock now at this level when will they.
Do they still have that law firm retained??
And the capital group what are they doing??
OK I feel better now but don’t invite me to there share holders meeting.
George
Editor: Unfortunately, I don’t have access to that kind of information. I don’t know anything about a law firm. Clearly, the capital group is not doing a damn thing. I guess you just have to look at this as an opportunity to buy some cheap while the market hates it for some reason.
I Sold in the high 2 dollar range and kicked myself for not waiting to sell in the 3 dollar range. Since I bought under a dollar I made a very nice profit. I want to get in again big but am waiting for under a dollar. May never happen but I feel thats where the buyers are.
Editor: anything is possible with this thing. It wouldn’t surprise me to see it under $1.
There are a lot of excellent comments. The key question that has never been answered, to my knowledge, is what is the retention rate. Here’s a bit from Motley Fool that pertains:
“In addition to revenues, earnings, or other financial measures, there are other underlying fundamentals in companies worth evaluating. With retailers, investors should look closely at inventory management. With telecoms, they’ll want to look at trends in churn and customer additions. And with all businesses, investors should look beyond just the numbers and feel confident with the quality of management decisions. These may be critical in identifying a stock at its peak versus one ready to vault even higher.”
Notice how they say one should look at telecoms. Churn and retention. We don’t know either one for CPNE.
Therefore, I am left to speculate that SOMEBODY does know and that is why CPNE is selling down despite five straight quarters of apparently ‘outstanding’ results. When the market is going in the other direction to published results you can bet that a strong seller in the know is doing the work of getting rid of his shares. The 7 million alluded to could be one such. But, the other could be major holders who know the real story behind the numbers is not good—that it is like a ‘bottle hole’ in oil well drilling. Good initial results, no long term future because it isn’t connected to a major pool. I suspect CPNE is a bottle hole company, running out the string.
Paul
Editor: This comment goes to the real purpose of technical analysis. If you believe, as I do, that sometimes the stock tells you more about what is going on at a company than the company does, you have to believe something negative is happening at CPNE. If this one didn’t have a certain history, I would agree. However, this company has been sold off hard before, and the sellers turned out to simply be wrong. Remember when it dropped from $1.80 to $1 when Q2 numbers came out? Sellers at $1 gave up a triple in 4 months. In most cases, I would say the game is over. With CPNE, it’s too tough to call. Not giving information about their performance is a big problem. I believe it’s one of the main reasons this one can’t get a decent multiple.
Considering there were 4.8 million shares registered for sale, the action has anything but been surprising. It s likely there are no buyers however there are abundant of shares for sale. This should be healthy for the stock long term as new buyers get in. The long term support for this stock apears to be in the 1 – 1.5 range if one looks at the weekly chart over the last 3 years. Unless there are internal problems which only some people are privy to, this is simply a very healthy correction.
Editor: I just published today’s BLOG- I can’t call the bottom on this one. Sellers are overwhelming the buyers.
You know, this really peav’s me. There is reports about nwwv & plycf, please tell the co. to cut bait or close shop, no more nonsense b.s., let us know what the co. is doing or we’ll
dump the stock and leave them with nothing.
Editor: I couldn’t agree more – the lack of information flow is killing this one. They need to get off the dime and let people know what’s going on, but I can’t make them do anything.