On March 30, 2014 GeoInvesting stated that it was taking a closer look at Great Basin Scientific (GBSN) as just 3 months after the company went public on October 9, 2014, we received a promotional pump, e-mail newsletter. The day of its IPO, GBSN reached an intraday trading high of $9.08 before closing at $5.97. Since its IPO and until recently, GBSN shares had been in a steady decline, touching $1.48 on February 10, 2015. The pump campaign initiated by several promotional newsletters last week helped push the stock as high as $5.40 yesterday.
Great Basin Scientific (GBSN) is a rapid molecular diagnostic medical test firm that commercializes breakthrough chip-based technologies. Our initial due diligence is beginning to reveal a number of red flags. We are still in the process of performing a fuller analysis on the company’s products and competition. Again, this is a preliminary overview of our take on Great Basin Scientific. In general, biotech and healthcare companies pose challenges to investors contemplating short positions since the market can quickly push up shares to irrational levels.
Great Basin Scientific IPO Underwritten by Dawson James Securities
GBSN’s IPO was underwritten by Dawson James Securities, Inc. (“Dawson”) out of Boca Raton, Florida. This immediately gave our team cause for concern due to Dawson’s past regulatory infractions and its association with one of its previous brokers, arrested in connection with his participation in a “nationwide Ponzi Scheme.” Furthermore, Dawson has had investment banking relationships with other stocks we consider to be pump and dumps, as well as with a high a profile Chinese company accused of fraud whose registration was revoked by the SEC. But more importantly, while Yahoo, GOOG and other financial portals indicate that Great Basin Scientific has only 5 million outstanding shares, a February 2015 secondary offering created convertible preferred stock and warrants that will allow an additional 35 million shares to flood the market.
We plan to release the remainder of our findings to our Premium members as we put all of the pieces of the puzzle together.
To stay ahead of the market with GeoInvesting arbitrage and learn about investment ideas not yet digested by the market, Sign up now for More Research and Insight