Torchlight Energy Resources, Inc. (TRCH) stock prices were up by 3.65% as of the market closing on June 11th, 2021, bringing the price per share up to USD$3.12 at the end of the trading day. Subsequent pre-market fluctuations have seen the stock rise by 7.37%, bringing it up to USD$3.35.
Meme Stock Craze
Several of the recent trading days having been dominated by the meme stock phenomenon, wherein members of the online social media community, Reddit, collaborate on pumping “meme” stocks that have no apparent rational basis for being invested in. These underdog companies, sometimes on the brink of collapse, are resuscitated (often only temporarily) by the fortuitous whims of the Reddit-driven retail investors. With no recent news or fundamental developments that justify significant upswings in stock prices, TRCH, too, seems to be the latest target of the meme stock craze.
Promising Track Record
Interestingly, however, this seems to be a long-term trend for the company, rather than a short-term surge in price. The past year has seen the stock price skyrocket by 576%, with the last 3 years representing a 90% increase in the value of the company’s equity. The most recent month had seen a 13% increase, with the price rising through both the latest trading day and the subsequent pre-market hours.
Shaky Foundation
In their recently disclosed financial statements, TRCH reported a meagre USD$111,230 in revenue over a 12-month period. This fails to signal confidence in the management and the execution of their business plan. Nevertheless, the stock has enjoyed consistent growth in stock price. It seems much more likely that investors are banking on the company’s untapped potential rather than its accomplishments. This is atypical because of the risks involved. Investors might be hoping for the company to stumble upon fossil fuels with an exploration program before it finds itself to have run out of money.
Sustaining Growth
Pinning hopes on potential future developments entails a very probably need for infusions of capital to sustain the company until it can support itself. This puts them at the mercy of capital markets, where share price itself impact the value of the shares themselves, as determiners of costs of capital. From here, companies can go on to execute their intended strategies and provide returns on investments made; or companies can suffer heavy losses and eventual de-listing. TRCH has consistently rewarded its investors who took the high risk.
Future Outlook for TRCH
Armed with a solid liquidity position from their private placement, as well as the fortuitous surge in the value of their equity, TRCH is poised to capitalize on the opportunities presented to it. The company is keen to continue its trajectory of success and usher in more organic growth over the long term. Current and potential investors are hopeful that the management will leverage the resources at their disposal to facilitate significant and sustained increases in shareholder value.
