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Revenue-less Cynk Technology Corp explodes 25,000%

H.S. Borji
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Revenue-less Cynk Technology Corp explodes 25,000%

The social networking stock Cynk Technologies Corp (NASDAQ:CYNK) shot up 25,000 percent since mid-June, adding to existing fears the technology market is headed toward another bubble.

The company, which traded for pennies less than a month ago, advanced more than 25,000 percent since June 17, giving it a market valuation of more than $5 billion.

As of June 16, Cynk was trading at $0.06 per share. For no apparent reason, the stock surged above $2 per share by June 18. On Thursday the stock advanced another 14.55 percent to $16.85, having fluctuated from a daily low of $9.80 and a high of $21.95.

Little is known about the alleged social network, which has no revenue, assets or members. What we do know is it was founded in 2008 as Introbuzz, Inc, and changed its name to Cynk Technology Corp in July 2013. The company is based in Belize City, Belize.

The revenue-less company appears to be headed by Marlon Sanchez, who claims to have been a spokesman for Mexico’s Medical Tourism Industry council.

The company’s website, introbiz.com, welcomes visitors to the so-called Social Marketplace. Little else can be gleaned from the platform after that.

“Thru our marketplace you may both buy and sell the ability to socially connect to individuals such as celebrities, business owners, and talented IT professionals,” reads the “About IntroBiz” section of the site.

Based on its last quarterly report filed in November, the company has one employee and planned on hiring a web developer to launch its social networking platform.

Although Cynk has served as a light-hearted reminder of just how absurd the stock market could be, it has also fueled existing concerns of a another technology bubble. With the technology-heavy Nasdaq 100 having recently reached a 14-year high, generalizations about a bubble forming have swept through the financial markets.

Others claim it is the social media component of the technology sector that is in a bubble, with the value of companies such as Twitter (NYSE:TWTR) – companies with no price-to-earnings ratios – appearing extraordinarily high.

Others argue that the recent spike in technology shares reflects sustained growth. Given that the market has only had a few significant peaks and valleys since the dot-com bust of 1999-2000, the markets may have forgotten what a boom looks like.

It’s not hard to understand the concern, given that many investors were active during the 1999-2000 dot-com bust and the 2008 financial crisis. However, looking broadly at tech stocks, we see several major players (Google, Facebook and Apple, for example) trading well below their record highs.

Regardless of whether or not the technology sector is experiencing a bubble, the Cynk story demonstrates how out of touch some investors have become from the fundamentals. Whether or not you want to buy and hold penny stocks or flip them for a quick profit, there are several reasons why Cynk Technology Corp is a bad investment.

For starters, it bears repeating the company has no product, no revenue and only one employee. According to the company’s most recent quarterly financial report, Cynk has $39 in assets and nearly $52,000 in liabilities.

The company has had four chief executive officers since 2008 – a high number for a company that isn’t up and running yet.

The company’s business plan, as outlined in its IPO filing, is poorly written and offers no concrete business plan. Based on the IPO filing, Cynk believes people are willing to pay to expand their social networks.

So why did the stock explode?

The “pump and dump” scheme – a method of artificially inflating the price of an owned stock – could be one plausible explanation for the stock’s recent success.

Another explanation could be the bullish market sentiment attached to the stock once it started taking off. This is nothing new for internet stocks.

At this stage, it is unclear what tomorrow holds for Cynk Technology Corp. All the press the company has received this week could attract more investors into the fold, or it could drive them away once they realize the company has no revenue.

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