Catching Falling Knives Can Be a Bloody Vocation (IZEA)

Traders in IZEA (OTC:IZEA) had to dodge several sharp utensils falling from the sky this summer. First, the Facebook (NASDAQ: FB) initial public offering debacle and subsequent swan dive has weighed heavily on share prices of other social media stocks, including IZEA. Secondly, on August 1, 2012, IZEA completed a 1 for 40 reverse split of its common stock. The latest knife to fall came today when the company announced the price of $1.00 for its 2.2 million-share common stock offering. The offering, managed by Aegis Capital, is expected to close next Tuesday, September 11, 2012. The news this morning sent sellers into a frenzy and the stock dropped over 47% from yesterday’s closing price.

Sellers wasted no time dumping their shares as the stock gapped down 30 cents on the opening bell to start the trading session at $1.50, which was the high for the day. And then things got really ugly. Within the first 30 minutes of trading, share prices declined another 50 cents to $1.00. Buyers literally packed up their lunches by noontime on the east coast as the stock continued to drop below 90 cents. In the final hour, sellers drove share prices to a new annual low when the stock traded for $0.85. Buyers gave a little push towards the end of the session with the stock recovering a bit to $0.95, or down 85 cents for the day. Compared to the average daily volume of 4100 shares, volume exploded today with 250,000 shares traded during the session. The number of shares traded today was the heaviest seen over the last year.

Taking into account the 1 for 40 reverse stock split, the last year for IZEA traders has been rather bloody. The stock has experienced a wide range of prices from an annual high of $64.00 to the low established today. Since Facebook began trading mid-May, the stock has declined from $25.00 with barely a hint of a rally. The question awaiting traders in the morning is whether more knives are poised to fall or if today the last one in the drawer.

In other recent news, IZEA announced yesterday that its Social Spark platform is now integrated with Facebook, Twitter and Pinterest.

Stock promoters and newsletters have been muted on shares of IZEA since May. A total of five promotions can be viewed on Stockpromoters.com and two newsletters are available for reading on Stockreads.com. Twitter saw several comments made about the stock offering, including one from @Research Trading. Yesterday, @SuperStockPicks mentioned the platform integration with Pinterest.

IZEA platforms focus on consumer-generated advertising where advertisers connect directly with publishers in Social Media such as bloggers, tweeters and Facebook users. The company operates several marketplaces that include WeReward, Sponsored Tweet, Social Spark and PayPerPost. The company derives its revenues from the sale of social media sponsorships to its customers.

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).