Can One Horizon Group Inc (NASDAQ: OHGI) Rise From The Grip Of Misfortune?
One Horizon Group Inc (NASDAQ: OHGI) is still in the throes of a litigation by one of its shareholders. Interestingly, the litigation took a new turn when the shareholder, Zhanming Wu demanded constitution of a new Board of Directors.
Interestingly, Mr. Wu seemed to have no confidence in the existing Board. In a press release, the Company and Mr. Wu allegedly reached “tentative agreement, which will resolve all of the issues raised in the two actions that Mr. Wu commenced earlier this year in Delaware against the Company and its Directors.”
One Horizon Group Inc share price in the red
According to Mark White, Founder and CEO of One Horizon Group expressed his satisfaction about the developments. “Always, communication is key and we are pleased that we are putting our differences with our shareholder.”
However, the reports are not having the desired effects on the share price. The price is still stuck in the red and the various indicators are unfavorable.
For instance, the relative strength index (RSI) that shows strength of price action depicts a lot of weakness. Normally, RSI readings above 70 show that the stock is very strong and its momentum high. On the other hand, readings below 30 are indicative of weak price action. With an RSI reading of 28.25, it is clear that OHGI’s stock is weak.
Another indicator that help investors to predict the future direction of a stock is average true range (ATR). Further, the ATR is important when identifying whether a stock is volatile or not. Particularly, a volatile stock depicts huge shifts in the ATR values and also has high positive values.
Stock highly oversold
For OHGI, the ATR reading stands at 0.021. As such, the stock is on the opposite side of volatile. Like earlier mentioned, there is very little price action for the stock. The small ATR reading also implies another situation that the Williams Percent Range (Williams %R) can best explain.
The Williams %R helps the investor to establish whether a stock is oversold or overbought. Usually, the oscillator measures values within a 14 day period. In this case, the 14-day Williams %R reading is -98.66.
Particularly, values below -80 indicate an oversold situation for the stock. On the other hand, values above -20 indicate an overbought situation. For OHGI, the 14-day Williams %R indicates an oversold situation for the stock. As such, the indicator agrees with all the other indicators that the stock is weak and lacks price action.
Further, the moving averages indicate that the price could see some growth in future. Particularly, the 50-day moving average establishes a price resistance at $0.20 which is a bit lower than the 200-day average.
The 200-day moving average puts the resistance at $0.47. As such, the long term growth prospects of the stock are positive. However, the smaller 50-day moving average values indicate the short term is still in the red.
Despite the negative growth of the share price, OHGI reported increased revenues in Q2 2018. Particularly, the entertainment division contributed most of the revenues.
On the other hand, the software division contributed only $102,000. This is in comparison to $192,000 derived from the entertainment division.
Further, the firm entered a deal to become the majority shareholder in Browning Productions & Entertainment, Inc. As such, the agreement will help the firm to add more to its revenue stream.
Additionally, the company entered another deal that gives it an 80% interest in 123Platform. Particularly, the platform is kind of a marketplace for software and source codes and other intellectual property.
Unfortunately, the strategic moves are not enough if the litigation still hangs on the company’s head. Therefore, shareholders will count on the Board to restore confidence before price action returns.