Homie Recipes Inc (OTCMKTS:HOMR) Gets Crushed

Homie Recipes Inc (OTCMKTS:HOMR), which is focused on the growth of “stevia”, turned out to be a stock promotion that ended very badly. The share price went from $2.00 to $0.25 in only one day and then kept falling. Have a look at it: 1 month chart for HOMRDid the company explain what's going on?No.This is what's really worrying us.Nothing was released by the company on the OTC Markets website. Additionally, the new website of the company did not explain anything either.In these types of situations, usually the company has done something with the shares that decrease their value drastically. This is the first thing that we thought. A new capital increase or a stock split could create this type of market reaction.Another scenario is that the stock has been manipulated and heavily promoted. This is the most likely in this case, as we found many promotions on Twitter and in newsletters. We will show what we found in this article.The Stock Promotion - Newsletters and TwitterWe found information about the stock promotion of HOMR on the following website. It commenced on September 10, 2017. The stock promoter is said to be "Stacked Bid", have a look: Stock Promotion highlighted in otcdynamics.comAdditionally, the newsletter sent by the stock promoter contains the following text:

"Traders,We posted our current Spotlight Stock HOMR to our Pro Members on 821 when it was trading at $1.29. Since then the stock has done nothing but trend higher and make new 52wk highs. HOMR is now pushing the $2 mark and our Pro Members have had the opportunity for nice gains." Source

The interesting fact in this last stock promotion is that the promoter did not seem to disclose whether it got paid or not. Disclosing payments from third parties is the way to do it according to regulators, the SEC or the OTC Markets.On top of it, we could find on Twitter large amount of comments about HOMR. It is very difficult to get to know or prove that they are really promoting the stock. In one of the tweets, one of the market participants even notes that it is shorting the stock. Have a look:

"Homie Recipes $HOMR email pump continues "Resiliency". Price down 35% from $2.0.2 pump high; still $97m mkt cap cc @cromwellc // short a bit" Twitter at September 19

What did the regulators do?We appreciated that they reacted very fast. The OTC Markets noted by placing the Caveat Emptor symbol. It means that the exchange believes that market participants need to exercise additional care and perform due diligence before making an investment decision in the stock. Buyer Beware signal (Source: http://www.tmgnj.net/)More in detail, we believe that the OTC Markets was referring to the following when it placed the bad note on the stock:

"Promotion/Spam without Adequate Current Information: The security is being promoted to the public, but adequate current information about the company has not been made available to the public. Promotional activities may include spam email, unsolicited faxes or news releases, whether published by the company or a third party." Source

How does the promotion affect the stock?Stock promotion works are as follows. Stock promoters manipulate the markets by pumping the stock. That's the reason that HOMR's share price delivered outstanding returns in August.What happens next, where is the problem?Some market participants are able to make extraordinary returns in a short period of time, but there are some risks as well. When the promo dollars dry up, stock promoters stop calling and no money is left to send market orders to the exchange. Thus, everybody tries to sell the stock as fast as they can and the selling pressure causes a sharp decline. For this reason, the OTC Markets exchange rapidly reacted by warning investors.Conclusion Currently trading with a market cap of $4.7 million, HOMR turned to be a horrible story for those who were not aware of the stock promotion. We believe that the company needs to stand out and explain what happened with the stock. In our opinion, the market’s trust in HOMR's business model was damaged by the unethical activities of some people and the company needs to explain the next steps in order to restore investor confidence. If the company communicates to OTC Markets, its shareholders and gets the Skull & Crossbones removed, HOMR might prove itself a worthy investment. Until then, we will be watching from the sidelines.We will be updating our subscribers as soon as we know more. For the latest updates on HOMR, sign up below!Image courtesy of psykle via FlickrDisclosure: We have no position in HOMR and have not been compensated for this article.