Varchild issues opinion on (MTXX)
I am loaded with 1,000 shares of MTXX due to my emotional feeling and ignorance that this company is severely oversold. Am I wrong? Should I dump my stake and succomb to the sell off spree that has been going on at least since September?
Well... you be the judge....
First.... The Laundry List of Negatives:
1) It will be MONTHS before the legal, lawsuit, FDA, assault is over against Matrixx Initiative's Nasal ZICAM versions which contained ZINC, which made some people lose sense of smell.
2) The company is pumping out cashola to invest in marketing and advertisement. None of this expense ends until MARCH 2010. This plus #1 = projected net loss for the 2nd half of their fiscal year.
3) Even with an RSI of 22% before the opening bell.... this stock found away to plunge another 8.5% or more. Now it is RSI 17% and I laugh at this cause I don't know how low the RSI must be for anyone to think the stock is oversold.
4) Walgreens, some weird Air Bender or whatever company, plus who knows who else have their own version of some if not all of what Matrixx Initatives sells. Walgreen's product works the same as ZICAM for a cheaper price.... oh...how nice....yay.....yippe..... MTXX is getting NETFLIXED.
In this ridiculous recession people are flocking to off-brand beverages...off-brand clothing...off-brand everything...well...except for video games.... So of course people will flock to the off-brand drug versions of ZICAM when it means a savings of $1.00 or more per box.
5) With MATRIXX Initatives carrying a steep debt burdon + Lawsuit battle + only a meager $23.5+- million on the balance sheet.... They don't have the DOLLAR POWER to beat back the off-brand momentum....
6) Yes.. Rush Limbaugh keeps pumping ZICAM on his radioshow. But that could easily just translate to people buying the WALGREEN version of ZICAM and not necessarilly specifically MTXX's ZICAM.
Ok.....Before I decide to dump my entire stake in MTXX first thing on MONDAY for a hefty loss here are the positives:
1) Rush Limbaugh (IS) talking about ZICAM and not mentioning off-brands. Many customers may not realize and it may take months before they realize there are cheaper off-brand products that do the same thing...... Of course I am not helping the situation at all by giving VOICE to these off-brands...*sigh*
2) AgFEED Industries (FEED) was a 2008 investment I gave up on based on exact same scenario in share price action. The Stock dipped to $1.01 or so.... before finally in early 2009 jumping back up eventually going to about $5.00 a share. Whose to say MTXX doesn't have similar experience in 2010? Whose to say?
3) IAW with a PR Newswire presser issued by MTXX, pharmacists ARE recommending ZICAM to customers.... Before you suggest that a Walgreen's Pharmacist will point to a Walgreen's version and not to ZICAM..... I know that CVS in early September was issuing a pricing discount and a huge banner advertisement for ZICAM drugs at their store...
So pharmicies ARE..at least I have personal witness experience...trying to sell ZICAM...
4) ZICAM gets prominent display in many stores... Walgreen's has it at their cash register counter AND at TOP SHELF in their Cold/Allergy aisle. I personally witnessed several empty gaps where a box would be.... So the stuff is getting sold.... inspite of the Off-Brand products.
5) There are only 9.5 million shares of MTXX outstanding. That is a riduclously small amount of outstanding shares.... Therefore.... As dillutive as it would be... MTXX can and probably will / should issue more shares of stock to help pay off their pending Court Case expenses and especially if they lose in Court and have to fork over a pretty penny to the Lawsuit's Demands.
I witnessed a stock (EXXI) that is a Oil/Nat Gas play skyrocket after they performed a manuever to help their finances. MTXX can do similar things to help their finances simply for being a public traded stock.
Ok..... 6 powerful negatives.... 5 powerful positives.....
hmm.... To sell....or suffer? which will it be....?