The penny stock world gasped in shock yesterday when DiMi Telematics (OTC: DIMI) collapsed to an all-time low. Rarely in the penny stock world do you see a company collapse the way DiMi has, falling 50% to $0.04 on July 18, 2012. Today’s trading session saw further declines, with DiMi dropping another 30% to finish the day at $0.028. It was only a couple weeks ago on July 5, 2012, that DiMi was at an all-time high of $1.92, suggesting that the company was on it’s way to penny-stock stardom. Many analysts, such as the reporters at www.stockreads.com, suggested that the company was following the same path as JWC Acquisition (OTC: JWCA), a penny stock that has sky-rocketed and then reached a plateau well past the $5.00 mark. It begs the question, ‘What went wrong?’
What did go wrong? The collapse first began on Monday July 16, 2012, when the stock ended 67% lower at $0.36. The company also filed it’s Form 10-Q on Monday, a detailed report on product development. The report contained a key update in the plan, one that suggested further growth in all platforms. Also, the report released the financial findings that the company had a net working capital of $873,366 on May 31, 2012.
DiMi Telematics is a cloud-based proprietary and business intelligence communications platform. The platform is unique in the way it captures and then seamlessly integrates real-time data from networked tracking, monitoring and sensor devices. The company primarily focuses on developing best-of-breed Internet connections for a variety of markets.
Many news sources, such as Reuters and The New York Times, have continually praised the various social media efforts DiMi has utilized. One of the reasons this praise has been so strong is due to the current trend of the penny stock market. One of the cardinal rules in the financial world is that stock gains are directly correlated with earnings growth. In today’s current exponential age of technology, the ability for a company to create its own publicity has never been stronger. Accessing the growing demographics of Facebook and Twitter give a company more credibility, which can ultimately increase earnings.
On June 26, 2012, DiMi Telematics announced it was going to commence a national televised and online media campaign. It was a spontaneous move that had DiMi senior executive Roberto Fata drive a DiMi-sponsored race car across the United States. The campaign was entitled ‘Smart Just Got Smarter’ and featured an animated video explaining the goal of the campaign. The video can be found at www.dimitelematics.com.
The company was recently cataloged with 24,000 followers on Twitter and over 22,000 likes on Facebook. With growing support in the online community, DiMi looked destined for revenue growth (and stock gains), so what happened?
Often what happens when social media becomes involved with major companies is that a ‘consensus’ is usually formed. This ‘consensus’ is often based around what individual people find for themselves about the company. Obviously, this conclusion can either be positive or negative. For DiMi, this week’s results suggest that the social media campaign has backfired. Sure, there is no such thing as ‘bad’ publicity – unless of course that publicity is a viral video on YouTube.
Will DiMi bounce back? The answer lies in whether or not you are willing to tweet about it.
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