H & H Imports Inc. (OTC:HNHI) Lifted Up by a Rapper, But Not for Long
20 Jan 2011

After H & H Imports Inc. (OTC:HNHI) stock price got lifted up by a star promotion last week, yesterday it looked even more like the higher price channel cannot hold.

HNHI kept falling down and even opened the market with gap down. The stock then closed at $0.231 for a share, losing another 17.50% of the gained value. At the beginning of last week, rapper 50 Cent recommended strongly HNHI shares on Twitter and the illiquid stock got suddenly loved by traders. Then it turned out that 50 Cent, born Curtis James Jackson III, has a significant shareholder stake in the company that he acquired a while ago.

According to the SEC filings, the rapper owned 30 million shares of HNHI common stock, and was thus in a severe conflict of interest to make such kind of investment advice. Though, as he was not the only one and trading alerts distributed his recommendation further among traders the stock got quickly upgraded to a higher trading range, reaching the incredibly inflated market cap of over $90 million.

What the company has to offer is much more modest, however, maybe predicting the stock losses are just about to begin. At the end of June 2010 H & H Imports Inc. reported total assets of around $1.6 million, minor revenues and a business model that has never been profitable. In that sense, it is no wonder that without the celebrity promoting HNHI shares are rapidly and surely losing big pieces of their charm.

Also, HNHI recently filed a registration statement with the SEC to register 179 million new shares of its common stock. Part of the shares have already been issued, others are yet to get issued, but in any case the dilution is another thing that could not raise the share price up without any fundamental improvements in the company’s headphones business.

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