Key points in regards to AVCT current situation

I’ve seen many panic over the AVCT (American Virtual Cloud Technologies Inc) reverse split (rs) news. I think everyone has the right to understand what’s going on so that everyone could make their own judgement since it’s everyone’s valuable investment. (Again disclaimer, no financial advice, you need to do your own dd for everything said here.)

As you guys know, there are many sayings that AVCT is :-

1. Looking for a buyout.

2. Has already done a deal in regards to buyout.

3. It’s a scam playground.

All of these have been around for more than a year. A refusal of AVCT accepting $9 per share proposal was mentioned on 7th April 2021 when AVCT was valued at about $7 per share. Later on, there were many news in regards to AVCT buyouts with supporting speculations and evidences that there is a high posssiblity that that might be the case which includes:

1. AVCT hiring buyout professionals.

2. Change in AVCT management.

3. Ribbon returning AVCT shares.

4. AVCT debt clear.

5. SEC fillings in regards to AVCTWarrant

6. Kandy - AVCT integration

etc….

However, the most important info which causes the escalation was about Microsoft buyout, which is because of the fact that Microsoft’s needs in cloud-based provider is in lined with AVCT’s needs of a buyout. And in the same time, the dates of Microsoft’s announcement is also in lined with AVCT’s buyout point (which is before the potential AVCT delisting date on 23 Jan 2023 if it doesn’t reach $1 per share before that date.) (If someone could help to clarify this date below, it would be great!)

Microsoft has been in a partnership with AVCT for quite some time and with AVCT’s need in selling out, under speculation, instead of paying them for their service, it would be better for Microsoft to just buyout AVCT to strengthen their cloud-based service in order to compete with Google Cloud. 1st October was mentioned as a potential announcement date because Microsoft is intend to announce its newest cloud-based service and AVCT SEC filling’s date in regards to “maximum of 10 days for any announcement” was coincidentally 10 days before 1st October. However, this included the non-business days, which is why people are speculating it might be 4th Oct or 6th Oct if it’s 10 days business days (because Microsoft will announce two major news on the 4th Oct as well as the 6th Oct, you could see it around Microsoft websites / official twitter to verify it.)

Recently, during these 3 days, AVCT’s stock price suddenly plummet from 0.37 to 0.28 and kept occilating between 0.28 and 0.32. With a backup evidences (you could check my previous post in regards to “why AVCT stuck at 0.3?” for the video link to the evidences), which highly likely to be Hudson Bay selling off shares at around 100k shares per time. Hudson Bay can’t carry over the shares to the new company and their shares will become worthless, which is why Hudson Bay wants the shares to be gone even though they know there is/might be a buyout in place. Under agreement, if the price goes below 0.3, Hudson Bay could only sell 9.9% of their share in a day, meaning that if they want to dump more into the market, they need it to be above 0.3 per share.

However, there is one problem about it, which is time. It will take them at least 11 days to dump if the price is below 0.3. Under speculation, with the oscillation closer to below 0.3, there wasn’t much space for Hudson to work with, thus causing them not able to keep selling more than 9.9% of their shares. Some might think that the previous 3 days are just to test out whether the market is able to absorb their shares placed into the market, which is totally reasonable if that's case.

A quick downfall to 0.22 was taken place before most are able to react on. At the same time, a news regarding AVCT rs was published by GlobeNewsWire. Those two basically happened at the same time and the downfall started from 0.31. As you could see, current close is at 0.298 and it was increased to 0.30 during post-hours and from the graph, you could see right before it went straight down to 0.22, it was increased to 0.31 deliberately in an extreme short priod of time. Thus, under speculation, in order to sell more than 9.9%, 0.31 is an ideal start since minor oscillation won’t make it below 0.3 and if it started with 0.30, there is a chance it will go below 0.30 during that minor oscillation. However, most aren’t notified about the rs news at that instant so people will still buy as it goes below that 0.28 support level. In order to make this a success, they need a catalyst which could instantly drive people down to hit on people’s stop loss, forcing them to leave, which was at 0.22. This caused a mass panic, which caused a further downfall to 0.19. Some might ask, “If Hudson drives it down, Hudson won’t be able to gain profit at 0.3 anymore, and it causes a huge loss if it’s down to 0.19 sales.” Personally (under speculation), as mentioned before, Hudson tried to sell off their shares instead of doing shorts. 0.3 -> 0.19 is a 0.11 loss but if you think about the long run, if there is a buyout, you can scoop up the 0.19 or below (since everyone is in the middle of the panic, so there is likely to be a further drop or even a straight up [which I’ll explain below], no one knows for sure.) Think about it, a 0.19 per share that becomes 1.00 in exchange for a 0.11 loss per share. You could do the maths. It becomes way better if there are others who are informed about it beforehand. (Again, this is pure speculation)

Some might be thinking whether the AVCT rs is a fake news / real news. So, AVCT is in no obligation to announce wether there is a rs or not. And what really bothers me is the fact that GlobeNewsWire is the one publishing the news instead of AVCT itself. Why would AVCT inform a third party to announce the rs and no announcement in its own website? As the time goes by, the news are copied by others and it kept on spreading, and again instilling more fear among the public. Moreover, if the company is planning to make rs announcement, the announcement should be at least 10-15 days before the date, which is not in this case. I have no idea what’s going on there, you guys have your own opinion but it does sound fishy to me. Leaving whether the buyout will happen or not, this rs thing doesn’t convince me at all. (Again, disclaimer, personal view XD)

Some might wonder what happen if there really is a rs going on? (Of course, I won’t say that rs definitely won’t happen because there is a minor chance it might happen) Again, I’m not an expert, just a beginner passerby, from my knowledge, rs usually happen either to prevent delisting or when a company believe the price is too low to attract investors. Pennystocks are usually quite a worry for investors because pennystocks are a playground for scam. By doing a rs 1:15 from as low as 0.10 will make a 1.50. As mentioned before, if the price doesn’t reach 1.0 by 23 Jan 2023, it will cause AVCT to be delisted. So a rs in this case could prevent that. People are worried about “rs = no buyout” or “rs = bearish”. I mean if you look at Moomoo’s learning tutorials, reverse split is not an instant death flag, it just mean that the company has a plan going on and they need to revalue the stock price in the market, that’s all. Rs doesn’t mean bearish and Split doesn’t mean bullish, it’s not a definite term. It could go both ways. Even if there is no buyout, in what situation could you drive it down to 0? Only in delisting situation! And rs prevents that. If you look at the other charts, you could see that there is no company that’s always at the low end and well as the high end, it’s just a matter of time. This is especially true for a pennystock, where it has high volatility. Lastly, why would AVCT even announce rs if it wants to rs (it has no obligation to) in this situation where AVCT has a huge amount of buying pressure and a high potential for it to skyrocket after Hudson sells off their shares. This annoucnement is just driving down its stockprice, it doesn’t make sense at all.

Again, there is no financial advice here, you need to do your own dd. I might be wrong. This is just my opinion and a few pieces I gather here and there. We learn mistakes so whatever your decision is, it will path a road to a better you ^-^

I would also like to thank everyone out there who shares valuable insights in regarding this, be it agreement or disagreeemnt, from lovely moomoo users, twitter users, reddit users etc… especially today’s twitter space discussion by Theresa, john, Tech_team, wolfie, EHB, Frankie and many more, the discussion is really mind-blowing :)