A Business Valuation Blog? Not Today, Check Out This Craziness…
Alright, so I honestly set out today to write a bit about the concept of BUSINESS VALUATION, a very important facet for some of my clients who run their own enterprises. It’s a big deal (there are entire companies devoted to business valuation), but as I started my search for inspiration today, I instead uncovered one of the strangest stories I’ve ever seen, coming from the pages of a Wall Street Journal blog no less. If you think I’m exaggerating, let me share the first sentence I read, the one that immediately pulled me in:
“How can a social network that no one has ever heard of suddenly be valued at more than $6 billion?”
Now that’ll wake you up, right? 6 BILLION! Turns out the blog is referring to Cynk Technology, a one-time penny stock that has risen more than 100-fold in just over a month. Also turns out that I took only step one down the rabbit hole, however, as this whopper followed a moment later:
“The self-proclaimed social network has no revenue, no product, no assets and one employee.”
That sentence stopped me so fast in my tracks, I had no choice but to write about it. I mean how often do you take a figure like 6 billion dollars, and apply it to a business with essentially nothing in place, and only ONE employee?! As someone who’s lived in the business/financial space for many years now, and who’s gone through his own shares of trials and tribulations, seeing a number like this jump off the page really surprised me. Some people may point to Cynk Technology as a shining example of the money that can be made in penny stocks, but that’s a ridiculous notion. The risk involved in a venture like that is legendary, and as The Wall Street Journal noted this week, the penny-stock market is “a historical haven for con men and hustlers that the FBI says is ‘rife with fraud.'” Yes, the FBI says the penny-stock market is rife with fraud, folks. Not a safe place for investment, and I don’t care how big the one-month gains were.
I strongly encourage you to bounce over to the original blog here to read the rest of piece, as it most certainly provides an entertaining read. You’ll be left scratching your head on this one, as to who in their right mind would’ve been purchasing this stock, but I think it’s important to read about the dark side of the financial world as well. You can never know too much or be too prepared.
In the meantime, I’ll be back next week with that entry on business valuation. Promise!
