Phantom tech firm worth billions, inexplicably

Jul 11, 2014 by Luc Olinga
Traders work on the floor of the New York Stock Exchange on June 20, 2014 in New York City

It has no assets, no revenues and no business plan to speak of. But a company called Cynk Technology has seen its value soar as high as $4.7 billion.

Wall Street analysts have been at loss to explain the spectacular 24,000 percent rise in Cynk, which trades on the lightly regulated over the counter (OTC) market.

While its share price and market value fell at the close of trade, the company unknown in the technology or financial communities for a time traded in the range of the value of firms such as Groupon, Pandora Media or Yelp.

"We must sadly conclude that the company is nothing but a fraud," said the financial news website Zero Hedge.

"And it is nothing short of a testament to just how broken this excuse for a market is that a company with no assets, no revenues, no website and one employee can go from zero value to nearly $5 billion in market cap in a few days."

The stock trading at six cents on June 16 inexplicable surged to $2.25 the next day, and rose to as high as $16 on Thursday, before slipping to around $14 at the close—making its paper value still an eye-popping $4 billion or so.

The company avoided scrutiny until its disproportionate value drew the attention of Wall Street veterans.

The phone number listed on company documents was out of service.

Richard Green of the market analysis firm Briefing.com examined the company's regulatory filing, which indicated Cynk had no assets, no cash and an accumulated loss of $1.5 million.

Cynk calls itself a social network, based on its early incarnation as introbiz.com, which offered to put people in contact with celebrities like Angelina Jolie or Johnny Depp for $50.

"The company is no more of a functional business than your average college student's entrepreneurial dream," Green said.

"There was no news or other recognizable event to explain such stock trading activity."

Analysts note that the market value is merely on paper, based on trades of a small number of shares.

"We want to stop short of directly calling Cynk Technology a 'scam operation,' as we have not yet been able to find a reason for the unusual trading, but it certainly has all the appearances of the typical 'pump and dump' scheme used to deceive ignorant investors into buying into 'the next social media' giant,'" Green added.

One concern is that certain "momentum" investors who use algorithms to trade can be attracted to the stock simply because of its rise.

"There is no rational explanation for yesterday's trading activity and the $4 billion market capitalization," Green said.

"In short, Cynk has 'stynk' written all over it and we think the best approach to this stock is to avoid it entirely."

Explore further: Apple shares top $600 ahead of stock split

add to favorites email to friend print save as pdf

Related Stories

A look at recent tech sector IPOs

Nov 04, 2013

Here is a look at notable tech companies that have conducted initial public offerings over the past two years ahead of Twitter's IPO:

Google becomes number two in market value

Feb 10, 2014

Google overtook US oil giant ExxonMobil on Monday to become the world's number two company when rated by market value, behind its high-tech rival Apple.

Recommended for you

Clooney slams skittish Hollywood after Sony hack

2 hours ago

Film star George Clooney slammed the Hollywood movie industry for failing to stand up against the cyber threats that prompted Sony Pictures to cancel release of the movie "The Interview."

Atos shares soar after Xerox acquisition

4 hours ago

Shares in French tech firm Atos soared nearly five percent on Friday as traders cheered the news it had bought the IT wing of Xerox for more than $1 billion.

Two more former Sony workers sue over data breach

21 hours ago

Two more former employees of Sony Pictures Entertainment are suing the company over the massive data breach in which their personal and financial information was stolen and posted online.

Constantly changing online prices stump shoppers

22 hours ago

Online shopping has become as volatile as stock market trading. Wild, minute-by-minute price swings on everything from clothes to TVs have made it difficult for holiday shoppers to "buy low."

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.