Promoters Make General Automotive Co. (OTC:GNAU) Liquid and Get Their Profits
16 Dec 2010

A paid promotion and an announced new joint venture program made General Automotive Co. (OTC:GNAU) stock form a large gap up on its chart. Though, the higher price does not seem likely to last that long.

Yesterday, General Automotive announced the launch of its new U-Joint Direct program for January 2011 which will cover the US, Asian and European markets and will supply a superior quality product line. Further, the company states that the products will be competitively priced to compete with other programs on the market place. At the same time, at least three promoters were engaged to fuel additionally the market demand for the company’s shares.

Two listed no compensation, but the third one’s disclosure almost predicts the rapid decline of GNAU share price as soon as the promotion expires. He has received 1 million shares for 12 months of service, another 748,000 shares were given to him by a third party and he bought another 800,000 shares from another third party at an estimated price of $0.0312 per share. The 748,000 shares have already been sold and the promoter intends now to sell the remaining 1.8 million.

GNAU stock gave a good opportunity for that promoter to make a nice profit yesterday, surging up to $0.098 during the session and getting liquid with over 2.1 million shares traded. The price settled then where it opened, at $0.07, and saw a 40% rise from the previous day close.

Fundamentally, the stock of General Automotive does not look like it could appreciate right now, or even hold the current levels. The market is generally not so optimistic about the future of the company, whose latest financial results are rather disappointing. The sales have increased, but the cost and the capital structure are not so favorable. GNAU loss from operations got substantially higher and as the company had $1.2 in working capital deficit it looks like additional fund will have to be raised soon, which will most probably be dilutive for the shareholders.

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