Stocks & Markets

Cynk Is a Joke, Not Proof of a Bubble


The financial world is obsessed this morning with Cynk Technology (CYNK), a “company” that traded for a few pennies for most of its existence before suddenly exploding more than 25,000 percent, giving it a market value of more than $5 billion. Cynk supposedly operates a social network—but one that would appear to have no members, no revenue, no assets, etc., and its public filings reveal a hilariously inept business plan and dubious personnel.

When the markets are dead, dead, dead, this kind of price chart has the ability to light up the bored summer Wall Street Twitter community:

Business Insider is leading with the news. The Wall Street Journal has listed all the many ways in which Cynk is a bad investment. Zero Hedge, the blog that first flagged Cynk as a preposterous listing on July 7, is agape again—the stock has climbed another 46 percent today—calling it “pure madness. … As a reminder, this idiocy is a glimpse of what the Fed’s central planning has done to the S&P 500.”

Guys. Let’s be clear: Cynk may be a joke, but this has nothing whatsoever to do with a stock market bubble. It’s a penny stock with so little volume that a few trades can send its price skyrocketing, or plummeting. In theory, all its shares together, priced at its current $41, add up to a market value of $5 billion, more than a bunch of recognizable, legitimate companies. In practice, that means nothing: No one is actually going to fork over that much money and risk going broke if the entire operation proves to be a phantom. Over-the-counter stocks have always taken freakish turns like this and will continue to do so. Cynk is not a threat to your 401(k) account.

Cynk’s real value is as a yarn—entertainment for a Wall Street caught in July doldrums. BuzzFeed has what looks to be the first interview with one of the people involved.

Summers_190
Nick Summers covers Wall Street and finance for Bloomberg Businessweek. Twitter: @nicksummers.

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Companies Mentioned

  • CYNK
    (Cynk Technology Corp)
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