The recent price movement of Muscle Pharm is really interesting. At Nasdaq, Muscle Pharm (MSLP.OB) was closed at $4.02 on January 14,2013. Just after three weeks on February 04, 2013 the company hit to $7.80 at the same bourse!!! What percentage return in three weeks? Yes, it was around double. The main reason behind this record price hike was the company’s initiatives to raise fund of $12.00 million by issuing a total of 1,500,000 shares (Series D convertible Preferred Stock) at a price $8 per share. Some investors have already gained by holding short position with this stock; some investors are going to take the advantage by holding long position. The company was closed at $5.53 on yesterday (12.02.2013). Analysts say that it is normal price correction of the stock due to profit taking by the investors albeit another group is stating that the price will hike again. What is going to happen?
From very neutral position, I am going to speak that the price may increase slowly having a sustainable growth over long time. The reasons are that the company will utilize the fund to generate more revenue, which ultimately increase profit margin of the company. The company has been trying continuously to expand its market presence and attracting more customers to its quality product. As Muscle Pharm has started its operation ver recently ( in 2008 ), it is just growing stage of the company. The company has experienced management team, which is one of the most strength. Thus, in long run, the company will show better performance and will star to give return to its equity holders. I will not be wonder, if the company declares dividend in 2014. So, my personal believe that buying MusclePharm at $5.53 and holding it for a couple of month is rational.