This pitch has been around the block a few times, about a year ago, but there seems to be a big new push for it now — so I’m taking a second look. It was originally a “soft pitch” in a free article about Tesla last Summer, turning into a full on “Be First in Line” pitch for the company that “stole $16 billion in revenue from Tesla” last September, and now we’re seeing “free” articles that hint at the same stock again, and a repeat of the same “first in line” ad about the company that “beat Tesla.”
The “interview” with company management that is the basis for the ad is still the same, and, indeed, much of the meat of the promo is still the same… so I’m going through and updating this piece but have not started from scratch. Much of what is below was first published on September 26, 2016, though I’ve gone through and updated my thoughts and the numbers as necessary. And the ad still refers to Tesla as a $37 billion company, so it doesn’t look like they’ve done much updating since last year.
The ad is still for Alex Koyfman’s Penny Stock Millionaire from Angel Publishing. The heart of the ad is recounts an interview Koyfman had with the CEO of a company that thinks it has the edge over Tesla’s Powerwall when it comes to distributed energy storage (i.e., batteries).
The newest note, in a “free” Wealth Daily email from Koyfman, starts as follows:
“Last week I wrote to you about a tiny tech company whose line of Powerwall-rivaling domestic energy storage units is now threatening Tesla’s (NASDAQ: TSLA) domination of the home battery market.
“This week, that very same company hit a major milestone in its corporate lifecycle when it announced its very first volume order for these units, to be delivered for the Australian residential market.
“Since last week’s Wealth Daily, shares of this company have appreciated a robust 23%.”
I feel compelled to note that this surge since “last week’s Wealth Daily” of 23% was probably caused by “last week’s Wealth Daily” … and that the stock in question is still, even after that bump up from 19 to 23 cents, trading about 15% below where it was a year ago when Koyfmann started touting the shares. This is a microcap stock, with a market capitalization of less than $40 million (C$50 million) and an average daily trading volume across both the US OTC and Canadian markets of less than $100,000.
Wealth Daily, Angel Publishing’s free publication, has a subscriber list of several hundred thousand people — if just one percent of them sniff out a stock, or search out our solution, or subscribe to the newsletter and get Koyfman’s report, that could easily be more than a thousand people who get intrigued by this little stock. If ten percent of those interested few decide to buy a $5,000 position in the stock, then suddenly that’s five times the average daily trading volume of shares who are interested in buying this illiquid stock… and the price almost can’t help but go up, no matter what caution Koyfmann might share with his readers, or what skeptical thing I might say about the stock.
Of course, when that happens you get the flipside as well — if a microcap stock rises just because of a sudden wave of interested buyers who all come in on the same day, what happens to the stock when there are suddenly 10% as many interested buyers a week later? That’s why you’ll so often see heavily teased or touted stocks rise on newsletter attention, and then fall in the weeks after that when the promoter runs out of new investors to appeal to, or the newsletter stops covering it in their widely distributed “free” letters or teaser ads. You don’t have to have an actual illegal operation like a “pump and dump,” where nefarious e-goons promote a stock and then sell their shares into the sudden buying frenzy… just having a surge of buyers that appears quickly but is not replenished with another surge of new buyers is enough to create a stock chart that looks like a single mountain on an otherwise boring plain, getting the stock eventually back to where it “belongs” in a free and open market.
But I’ve gotten ahead of myself, again. What is the stock? Let’s go through the clues…
Here’s a taste of the ad:
“‘Our batteries are better, without a doubt, but that’s not where our advantage lies,’ he continued. ‘It’s our power control that make the difference. The brains behind the hardware. What Musk doesn’t tell you when he talks about Powerwall is that it’s only a battery. You still need a control system to use it. They don’t build those. A third party does.’
“‘So you build the whole package, then, battery and power control system?’
“‘We do, but we don’t necessarily sell the whole package every time. Our biggest clients make their own batteries and use our power controls to manage them.'”
So part of Koyfman’s spiel is that this makes this little startup more appealing — they don’t just think they have a better product than Tesla’s Powerball, they have clients who use their technology for batteries and power control.
And that’s where it gets specific enough to be certain of a match —
“‘How big are your clients?’
“‘I’m not allowed to disclose the identity of the largest one, but I can say that it’s a major German automotive company’ ….
“… this past March… Daimler AG, owner of the Mercedes-Benz brand, just told Tesla that it would no longer be needing an external source of batteries for its electric car line….
“I listened to him talk as I did a second search, this time using the ticker symbol of the company whose CEO was on the phone.
“Scrolling down the March news, there it was: dated March 11, an announcement of a development contract with a ‘German automotive subsidiary.'”Are you getting our free Daily Update
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OK, so “development contract” doesn’t exactly sound like “you’ll make enough money to buy your own Tesla”… but it is a clue. What else do we learn about this little company?
“A tiny company, with shares trading in the $0.20 range, with a market capitalization of less than 0.2% of Tesla…
“… essentially a venture-stage company with fewer than 40 employees, and yet its product was about to become a common feature in some of the most recognizable vehicles on the road….
“Could this company really have $50 million in revenue potential next year — a sum bigger than the firm’s entire current value?
“The CEO told me to expect more news flow in the coming weeks, but what happened the very next day was what sealed the deal for me….
“I received a frantic phone call from one of my business contacts….
“‘They halted trading,’ he said. ‘News is pending, but I can tell you right now that it’s about a financing. A major fund is getting behind them.'”
So there you have it — and yes, I can tell you that Koyfman is still hinting at a little Canadian company called Eguana (EGT on the venture exchange in Canada, EGTYF OTC in the US). It’s got a market cap of about $40 million (C$50 million), and, though it kind of looks like a startup company because of its small size and lack of profitability, they’ve been around for 15 years or so.
They had a decent amount of revenue for several years, culminating in a pretty strong 2015 that closed out with C$6 million in sales, but 2016 was a lousy year on that front. It doesn’t look like it’s a particularly steady business, so I don’t know that it’s on any kind of predictable path, but they have over the past year or two been focusing on the battery control business that