Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Advanced Emissions Solutions (NASDAQOTH: ADES), a Colorado-based developer of clean coal technologies, jumped 27% to $11.94 today. Today's increase in share price should be taken with a huge grain of salt as it's a minor rebound from last week's near 50% collapse in price -- when Advanced Emissions Solutions was trading near $20.
Now what: The reason behind Advanced Emissions' plunge was brought when the company received a letter from NASDAQ Stock Market LLC on Jan. 30 explaining its shares would be de-listed. The shares will now trade on OTC Markets, OTC Pink Tier under the symbol ADES. Investors initially sold off the stock for good reason, but it appears some are willing to come back as the company intends to file its delinquent reports with the SEC and apply for a relisting on NASDAQ as soon as possible.
So what: Investors looking to jump on this potential rebound should think twice. Jeffrey Osborne, an analyst with Cowen & Co. in New York, puts it nicely in his letter to investors when he lowered his price target to $15, down from $35.
"While we believe the company has compelling technology solutions, the lack of transparency in financial statements" and ongoing accounting issues "gives us pause," noted Osborne.
Investors can expect a very volatile stock price in the near-term and I would recommend watching from the sidelines. Mismanagement like this should raise a huge red flag.
