ZST Digital Networks, Inc. (NASDAQ:ZSTN) Draws Back After the Run-Up

Investors draw back from ZST Digital Networks, Inc. (NASDAQ:ZSTN) again, despite announced highly promising deals. The promotion for the stock yesterday was more a bad choice, rather than a success.

Yesterday’s promotion for ZST Digital Networks was worth 13,000 shares of the company’s common stock, but could not help for the started uptrend to be continued. After the first rise for the past five trading days on Tuesday, the stock went back down again by 0.85% and almost touched this year’s low of $7.00 from Monday, closing at $7.04.

Such low values have not been seen recently, at least since the beginning of the NASDAQ listing in October last year. A press announcement about two agreements of ZST Digital Network to provide GPS hardware installation and monthly call center services, both contracts having the value of $1.6 million, also failed to hold back market’s interest and to retain the high trading volumes from the past couple of days. Probably, because of the still missing corresponding 8-k filing.

It was not the typical IPO in October, as it started with a sharp drop. The price run-up followed in December when promoters finally got on board. As the following rise in March was also promotion driven, the back trend observed now is not really surprising.

But ZST Digital Networks’ performance so far is comparably good, as the stock retained most of the time levels above the initial offering price of $8 even after end of January stockholders declared the resale of 1.1 million of the company’s stock. The down move started then end of March, as the financial results for the past year were filed.

The company shows significant improvements in its business activity, including high growth of revenues and profit. Statements, raising some concern for shareholders, might be that most of the cash raised over the IPO in October last year is still not properly invested and the company’s growth strategy includes acquisition of other companies and expansion of product portfolio, so additional debt or equity may have to be raised.

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