The latest OTC report (the guy with all the cheap shares) is worth reading. It is quite a bit more realistic than previous reports. He wonders if people, including himself, will have the guts to stay in spicy for 2 years in this market. He points out that 7 million free shares are now or shortly coming on the market and could drive the price below $1. He points out that the most of the recent insiders that paid .85 probably will probably not sell at these prices so are in for the longer haul. Like I say worth reading. Disclosure-STill no position
Pickle Bermuda Triangle Extends as Franchisees Ink Five New Locations
Shares of Spicy Pickle gave a little ground this week as the stock drifted back down to the bottom of its ever extending Bermuda Triangle.
Today, just after the market closed, SPKL announced that franchisees have signed leases for five new locations- three of which are in states that don't have a store- yet. As CEO Marc Geman points out in the press release, nearly every state that got a first location ended up with one or more additional locations. First stores tend to act as a foothold for expansion.
Brooklyn NY, Ocala FL, and Norman OK are all going to have Spicy Pickle locations. San Diego is getting a second store, and Austin is getting its third. San Diego and Norman are expected to open in late spring, and the other three will be summer openings.
The Brooklyn store will be the first in the NY Metro area, which is a very important strategic move for the company. There's a value added component beyond just one more store. The NY Metro area support a very large number of additional stores. On the more intangible side, this will give investors, investment bankers, m&a specialists, and a whole raft of other important figures the opportunity to try the food. Many people who have an interest in small stocks who try the food become shareholders. The Brooklyn store could become a milestone in the company's development.
As I was thinking about today's news, I couldn't help but mentally fast forward to a time when the company will have 100 locations open and who knows how many more in development. I wonder what price the stock will be trading at when it happens, and how many shares anyone who is reading this coverage will own?- myself included. It's worth asking yourself if you can mentally commit to holding this stock for another two years and seeing where we end up. It will be an interesting journey. The overall stock market environment is making it a bumpy road, but it should lead to a rewarding destination.
These five leases will end up as new stores, and there are a number of others in development. SPKL does not announce new locations until leases are actually signed, but there is a lot more going on at the company. By the back half of 2008, SPKL will probably be opening 3 to 4 new stores per month.
On to the chart. As you can see, the SPKL Bermuda triangle is continuing to extend, with the stock now bumping along the bottom towards the ever narrowing apex.
There seems to be a bit of supply hitting the market these days, and the wide spread volume shortage has the sellers winning by a very small margin right now. This is hardly surprising against the back drop of this Bear Market.
In the last two weeks the registration statement covering the shares underlying the December $6 million financing have become free trading. About 7 million new shares are now eligible to be free trading with a cost basis of $.85. Technically, this potential supply could be a bit of a negative in the very short term- which spells opportunity for you.
It's worth noting that 2 of the company's independent board members participated in this financing to the tune of $1.3 million- probably not for a lousy $.30 gain.
If supply outstrips demand for a brief time, the stock could possibly drift down into the $1.00 to $1.10 region. I can't see it trading much below there- it hardly seems worth selling $.85 stock for $1 in light of the upside over time.
On the other hand, today's five new lease signings is just this week's news. Who knows what's coming next week that could put a charge into the stock- SPKL seems to make a substantive announcement about every 10 days delivering real corporate progress. The company is certainly getting a lot of momentum.
Consider the following: How many shares will you own when the 100th store opens, and more importantly, where will the stock be trading? I can't wait to find out.