Does Today’s Setback Signal the End of a Monumental Climb? (VGTEL)

Prior to today, the good news for VGTel (OTC: VGTL) seemed to have no end. A stock dividend strategy boosted the company’s share price earlier this year, and the stock has been on a steady uphill climb. However, the company saw its share price drop by 25% today. In spite of today’s decline, VGTel has still had a monumental year with a gain of over 240%. A climb like this is considered a rarity in the penny stock world. Considering where the company began 2012, at a meager $0.22, today’s closing price of $0.75 is still impressive.

VGTel’s climb began back in late April and early May 2012. Interestingly, the beginning of the shift in momentum came after VGTel announced that its Board had passed a resolution declaring a stock dividend to all shareholders of record on the dividend date. This dividend gave shareholders one new share for every five shares held.

The announcement was made in the middle of April 2012, with a record date for the stock dividend set for May 15, 2012. This announcement also entailed that all shares purchased one day prior to the dividend date would qualify for stock dividend. This gave investors much more time to sift through the different facets of the company and ultimately decide if more money should be invested. However, one stipulation on this deal was that no shares held could be sold before the date of May 15, 2012. To put it another way, VGTel created a scenario wherein it could only increase its share volume.

The results speak for themselves:

  • May 31, 2012: The company sat at $0.43, a 25% increase from the Dividend Date.
  • June 15, 2012: The company gained $0.07 to $0.50.
  • June 28, 2012, saw the stock nearly double in a span of two weeks, rising 40% to $0.76.
  • Another $0.10 increase occurred between June 28, 2012, and July 15, 2012.
  • By August 2, 2012, the company had broken the $1.00 threshold, sitting at $1.01.
  • Twenty days later, the company still remained comfortable above the $1.00, hovering around $1.10.

The dividend date paid off substantially for VGTel. Typically, a dividend date can have polarizing results: it can either cause all shareholders to jump off the boat and sell their shares before the date, or, if the shareholders believe in the future of the company enough, it can cause shareholders to buy many more shares. In the penny stock world, volume is everything. The more volume a penny stock has, the more likely it is to keep inflating into penny stock heaven.

Has VGTel reached its peak, or is there still room to climb? Moving forward, investors have the task of deciphering what today’s performance means for the future of VGTel.

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Published by Van Bettauer

Van Bettauer is a financial aficionado from Vancouver, British Columbia. He currently studies at UBC, pursuing a Bachelors of Science degree. Van has been freelance writing for many years, specializing in copywriting, report writing and article writing. The combination of his scientific studies and writing experience brings a new and fresh perspective to the financial world. Visit Bettauer's Google+ page at the following address: