The meteoric rise of “social networking” stock CYNK Technology was halted this morning as federal authorities finally turned an eye to what just might possibly be suspicious trading activity.
Practically no one had heard of CYNK until early this week. It is thought to operate the half-baked website IntroBiz.com, a “social marketplace” that lets users pay to be introduced to celebrities, business professionals, and other random folk. (Intro to Johnny Depp: $50. Intro to Angelina Jolie: $50. Being thoroughly wary of these scammy “intros”: priceless.)
Then, suddenly, Wall Street began clamoring about how the former penny stock had gained nearly 25,000 percent and reached a market cap of more than $4 billion in only 16 trading days. To get a sense of how insane that increase is, Apple’s stock has added about 18,000 percent since going public in 1980, as Business Insider noted. Shares of CYNK peaked at more than $21 on Thursday before falling to about $14.
More absurd is that CYNK might not have any real value. Zero Hedge, the blog that first pointed out something weird was going on, dug through CYNK’s latest filings to reveal that the company had no product, no revenue, no assets, and one employee. Its business plan contains vague statements about social networks and this gem: “Instead of paying for a lunch that neither party wants to eat, parties can get down to business knowing that their time has been valued.”
The Securities and Exchange Commission this morning ordered trading of CYNK to be suspended from the market open until 11:59 p.m. Eastern on July 24. The SEC said in its order that the “public interest and the protection of investors” required a trading suspension “because of concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in CYNK’s common stock.”
While no one knows exactly what’s going on, one theory is that a small group of insiders has conspired to drive up the stock price by making a limited number of shares available to short-sellers. You can read the whole explanation of what might be happening at Seeking Alpha. For now, it’s probably best to steer clear of CYNK, unless you really want a shot at that online meetup with Channing Tatum.