Penny Stocks On The Move: Seven Arts Pictures (SAPX) Part 2
Not too long ago, I highlighted Seven Arts Pictures (SAPX) in this column. And once again, this penny stock is on the move.
It’s a particularly interesting story…
When I first covered SAPX, they had just announced an agreement with Prodigy Pictures to produce Neuromancer. This highly anticipated movie is an adaptation of a popular sci-fi novel and has an expected budget of over $60 million.
In other words, this isn’t some direct-to-DVD, B-movie. We’re talking about a major production with blockbuster potential.
If you remember, the stock skyrocketed on the news… climbing over 200% in one day.
Well… that was then.
As of this writing, just two months later, SAPX shares are trading for a miniscule $0.35. The stock’s down over 50% for the month, and nearly 30% over the past week.
So what happened to this once high flying penny stock?
For one, the pump and dumpers got involved.
Well, that’s not entirely fair. SAPX had to pay someone to pump their stock. And they must have realized pumping is inevitably followed by dumping.
But, who knows what they were thinking. Perhaps the decision was made before they knew if the movie deal with Prodigy would go through. Or maybe something more nefarious was going on.
Regardless, pumpers were pushing SAPX, and I’m sure plenty of people bought the shares. Then, the huge Neuromancer news hit… and the shares soared.
Of course, with that kind of move, investors lucky enough to hit the SAPX lottery began locking in profits. And once the dumping starts, it doesn’t take long for a stock to plummet.
And clearly, SAPX has gotten hammered.
But here’s where this gets interesting…
Seven Arts may have been involved in a pump and dump, but their big movie announcement is completely legit. SAPX and Prodigy fully intend to produce Neuromancer. And it does truly have blockbuster potential.
Let me put it this way – if the Neuromancer movie makes it to the silver screen in any form, SAPX shares are an absolute steal at these levels. This kind of movie (with a large cult-like following) almost couldn’t help but make money.
Should you buy shares in SAPX?
It depends. The stock could still be manipulated by the pump and dumpers, or the movie deal could fall through. And these high upside, high risk types of penny stocks should be approached with extreme caution.
But, there is significant upside potential. And if you’re willing to take the risk, buying SAPX could pay off in spades.
Yours in profit,
Gordon Lewis
Category: Penny Stocks On The Move
Gordon. Great article. I appreciate the attention towards SAPX
I want to make sure that you consider another part to the story.
Dont you think it is possible that it wasn’t SAPX that pumped their company, but instead a 3rd Party that had a heavy investment in the company itself?
I have personally talked to the CEO Peter Hoffman and he told me very directly that they did not pay anybody to pump anything with regards to SAPX stock. He mentioned that he is very frustrated with the manipulation going on and hopes that earnings release in October will scare the heavy shorts (MM) away.
Again, I just want to ensure you see this as a possibility. As for me, it is the only explanation to the slaughter of stock price.
I would love to hear back from you.
Hey Matt,
Thanks for your comment.
While it may not have been the company CEO himself paying these IR firms to pump his stock, in most cases the third party investor who is is connected in some way to the company. There’s no way to know definitively what’s going on. In this case, let’s hope it’s just 3rd party market manipulation, which will eventually be worked out if the company is legitimate!
two highly relevant links
7Arts deal
http://www.docstoc.com/docs/75822264/Agreement—SEVEN-ARTS-PICTURES-PLC—3-11-2011
Litigation in Louisiana
http://assetprotectionbook.com/forum/viewtopic.php?t=1563&p=1899