Small Cap Network Blog

When it comes to trading small cap stocks, you win some and lose some. And in some cases - as with Commerce Planet (CPNE) - you do both. Commerce Planet was one of our biggest winners in 2006. It’s a good thing we suggested taking profits when we did, since CPNE ended up being one of the bigger losers for 2007. Here’s a recent question from a reader… 

What has happened to CPNE? I had my finger on the SELL button at the PEAK but decided to go longer on the stock. Did I miss some nasty news or will it come back in ‘08? I bought in at $0.23

If you bought at 23 cents, then you bought it back in early 2006. That also means (like you said) you rode it all the way up and then all the way back down. Hindsight is 20/20, but I think we’ll both agree this is a good example of why it pays to use protective stops….and raise them every so often.

Be that as it may, I don’t think you missed one single event. Rather, Commerce Planet suffered from a slow trickle of poor investor communications, an increasing number of slow pays and no pays (poor cash flow and charge-offs), and each day that passed, it seemed like the flaws in the business (growth) model became bigger. Amazingly, the company let those issues persist for many, many months.

The company got an overhaul a few weeks ago - complete with new management - that could put the stock on the right path again. It won’t happen overnight though. There’s a lot of burned bridges and bad blood to overcome.

I think it’s possible they can recover, but I wouldn’t make any strong bets at this point.

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