MOJO Organics Inc (OTCMKTS:MOJO) Gets Pumped

The market interest in MOJO Organics Inc (OTCMKTS:MOJO) seems quite high after the company's stock spiked from the $0.18 mark to hit the 52-week highs of $1.82. The capital returns interested our team, so we decided to assess the stock chart as well as the recent announcements received.

Readers will not like what we found; please read until the end of the article to understand what happened, and subscribe to our distribution list if you want to receive more information from us.

Let's commence with the chart. After seeing very little share price volatility and low volume for quite a long time, on January 25, 2018, the share price jumped with an extraordinary momentum that pushed up the price to a one-year record. Then, the momentum moved in the opposite direction and made the price to be pulled back to close at the $0.66 mark on the same day. Everything happened in only one hour, right after the opening bell, which is quite a strange event.

The following day, the share price opened again very high; more than $1.0. But, in less than an hour, it went down to touch the $0.66 psychological resistance. The share price movement was similar to the one in the previous session; significant share price increase right after the opening bell and a decline before 10 a.m. We need to admit that the pattern interested the team quite a bit.

The trading volume was also impressive. On January 25, 2018, more than 2 million shares changed hands, which is also a new 52-week record. The following day, the volume declined a bit, as market participants seemed to wait for the company to explain what's going on.

Check the following stock chart before we provide more details:

Two months chart for MOJO

Brief History

Founded in 2007 and headquartered in New Jersey, MOJO Organics Inc. focuses on the product development, production, marketing, distribution, and sales of beverage brands that are natural, USDA Organic and Non-GMO Project Verified.

According to the company materials, MOJO runs three products; coconut water, sparkling coconut water, and tropical juice. We did due diligence and found out that some of the beverage brands are quite popular. At Amazon, many clients have given good ratings to them, and have noted beneficial commentaries:

Mojo Product in Amazon - MOJO Organics Inc OTCMKTS:MOJO Customer Review - MOJO Organics Inc OTCMKTS:MOJO

Great Financial Shape

We also reviewed the financials of the company and found out that the business is quite buoyant. According to the recent quarterly earnings release, from December 31, 2016, to September 30, 2017, the total amount of assets has increased to $0.458 million; showing 10.5% increase. This increase in assets is due to 19% increase in the total amount of cash. Additionally, the most important is that the company is capable of selling accumulated inventory. From $0.312 million, the inventory has decreased to $0.213 million, which is quite beneficial.

Additionally, due to the decrease in the total amount of Accrued payroll to related parties, which decreased from $0.484 million to only $182, the total amount of liabilities has decreased in this period at a high pace.

Regarding the revenue line, the company reported revenue of $439,560; a decrease of $71,098 from revenue of $510,658 for the three months ended September 30, 2016. The company said that the decrease in revenue was primarily due to promotional costs incurred in opening new accounts and transitioning the MOJO brand from private label business.

Overall, we believe that the revenue is increasing in the long term, so we are not worried about this small decrease. Just to give some proof of the excellent performance, the revenue line went from $0.159 million in 2013 to $1.3 million in 2016.

The demand for the products seems to be growing, so the working capital need is also rising. In the company materials, we found out that the company may be selling equity or debt securities or obtaining credit facilities. Be ready to assess news regarding these matters, as they could move the share price quite a bit.

The Real Problem of this company - The Stock Promotion

When we first saw the incredible decrease in the amount of debt shown in the last quarterly report, we believed that it was the origin of the share price increase. Less debt is always welcomed, as the financial risk of shareholders is decreased. So, it is usually followed by increases in the share price. But, this cannot be the real reason for the share price increase. The report was released in November, but the spike in the share price occurred in January.

So, what happened?

We believe that the increase in the share price was the result of a stock promotion that commenced precisely when the share price increases began. We received an email sent by promoters, in which the upside potential was said to be enormous. Check it here and form your opinion before we provide ours:

Email From Promoters - MOJO Organics Inc OTCMKTS:MOJO

We believe that the business is growing at a decent pace and the financials are very beneficial. However, telling that the upside potential is close to 97% is an exaggeration. Additionally, talking about WalMart, Whole Foods, and Publix, which are not business partners, can confuse market participants.

The promoter stated at the bottom of the email that it has not been compensated. However, it also said that the email is "a commercial advertisement."

"This report/release/profile is a commercial advertisement and is for general information purposes only. We are engaged in the business of marketing and advertising companies for monetary compensation unless otherwise stated below. The paying party may own shares and may liquidate them during the promotional period."

What's our take?

We believe that the email was sent to many market participants, which created a tremendous demand for the stock. Many in the market seemed to be seduced by the upside gains claimed in the email, and the expectations pushed up the share price.

Did the company react to the promotion?

Yes, the company noted that it was apparently not involved and the directors and principal shareholders had not bought and sold any share recently. Someone else seems to be acting here, but not MOJO.

Conclusion

Currently trading with a market cap of $12 million, MOJO is an interesting story among small caps. But, we need to be very careful. Market participants, who bought on the first day of the promotion, are already nursing heavy losses. To sum up, buyer beware!

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Disclosure: We have no position in MOJO and have not been compensated for this article.Image courtesy of Stephen Pougas via Flickr