Sorry to tell David Einhorn this, but absurd valuations for silly penny stock companies have been around for years.
To wit, the $100 million Grilled Cheese Food Truck circa 2015. @mattmiller1973 @tomkeene @lisaabramowicz1
bloomberg.com/opinion/articl…
To wit, the $100 million Grilled Cheese Food Truck circa 2015. @mattmiller1973 @tomkeene @lisaabramowicz1
bloomberg.com/opinion/articl…
If you took that as your sell signal, you left some money on the table: Markets have more than doubled since then.
ritholtz.com/2015/02/would-…
ritholtz.com/2015/02/would-…
The key point here: There are always examples of silly valuations, especially among penny stocks, a hotbed of fraud, self-dealing, manipulation and nonsense.
My 2015 grilled cheese truck lesson? Be wary of drawing broad market conclusions from illiquid microcap scamcos
My 2015 grilled cheese truck lesson? Be wary of drawing broad market conclusions from illiquid microcap scamcos
The company above - $GRLD -- seemed to have stoped trading in 2019 
Another lesson: Markets are not perfectly + instantly efficient, but they are kinda sorta eventually efficient.
ritholtz.com/2004/11/the-ki…
ritholtz.com/2004/11/the-ki…
These stocks went public through shell companies + reverse mergers. They were the province of boiler room sales pitches, heavily promoted stocks or pump & dump schemes.
When US stock exchanges tightened listing rules, most of these junkcos were banished to the pink sheets.
When US stock exchanges tightened listing rules, most of these junkcos were banished to the pink sheets.
Incentives (Arbitrage, paired trades) help keep stock prices in line relatively to indices + comparable stocks. But who wants to police microcap stocks whose prices are out of whack?
No one.
They are too small + easily manipulated for institutions to get involved with
No one.
They are too small + easily manipulated for institutions to get involved with
When the short squeeze began on Gamestop $GME it had a $3 billion market cap.
Does anyone really want to short a tiny $100m company?
How many Reddit/WallStreetBets posts would it take to make that rally 10X?
Does anyone really want to short a tiny $100m company?
How many Reddit/WallStreetBets posts would it take to make that rally 10X?
I bet there are dozens of tiny companies trading on the pink sheets right now that are at absurd valuations.
No one has the incentives to go find them to short/arbitrage them back to reality.
Hence, lots of examples of really dumb stocks trading at really absurd valuations
No one has the incentives to go find them to short/arbitrage them back to reality.
Hence, lots of examples of really dumb stocks trading at really absurd valuations
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