On Wednesday’s trading session, HDS International Corp (OTCMKTS:HDSI) recorded a green closing. It was not about a green closing; instead it was more about a strong green closing. The stock price of HDS International jumped massive 166% to close the trading session at $0.00080 with huge share volume of 316.20 million more than double of average volume of 124.76 million.

As of now, the gains seem to be sustainable as it was followed by a small pull-back on Thursday’s trading session. The share price declined 12.50% to close the trading session at $0.00070 with share volume of 160.31 million.

The momentum

With the sharp gains on Wednesday’s trading session, HDS International erased a major part of losses reported in past few weeks. The decline can be attributed to problems associated with dilution. Last week, the stock dropped over 50% to trade below $0.00025 mark. It even attempted to touch the low levels of $0.0001 few weeks ago.

The decline was then followed by increase in volume and strong gains of over 1000% in three trading sessions. The company’s stock price is giving ample opportunities to swing traders to make huge money and punch a hole in the pocket of long-term investors.

The concerns

Despite the strong gains posted in last few weeks, it is necessary to understand the red flags associated with the company. Unlike, other OTC marketplace firms, the problem is not of financial performance. The concerns are not related to revenue generation or cash balances. However, the problem is linked with the share dilution. HDS opted for a massive amount of stock dilution in past four months, issuing its stocks at a meager price of quadruple zeroes.

The company submitted 8-K filing couple of weeks ago in which it was mentioned that 83 million new common shares were issued to settle debt of $4,000. The lenders who opted for conversion received the shares at price of $0.00005 a share.