TUBR
I received some “research” in the mail the other day about a company called Tubearoo (Ticker: TUBR.PK). Apparently, they are going to be the next MySpace or YouTube and get bought out for hundreds of millions or perhaps even billions of dollars. I’ld hate to be the one who missed out on that. Especially after they sent me glossy research telling me it was going to happen.
There are some major differences between TUBR and the other companies that make a buyout unlikely. In fact, I question whether the company can continue as a going concern.
In the ten years since the company was founded, it has been able to recognize $960 in revenue. Each quarter the company is losing $40,000. They have less than $200,000 in cash and have $300,000 in debt coming due next February. Somehow the price of the stock reflects a market value of around $140 million.
I doubt a company with such a history of non-performance will be able to refinance it’s debt. If they can’t refinance, they will be forced to sell equity if they can; unless operations improve substantially, they may be forced into bankruptcy.
In the meantime, a shareholder will continue to send out research so he can, presumably, drive demand for the supply he is releasing into the market. Every few months he releases more “research” into the market. Please don’t fall prey to such marketing efforts.
I just wish I could short the stock. Since the stock trades as an over-the-counter stock, we can not short it. If we were allowed to short stocks built up by the puffery of interested parties, less people would be sending out “research” like this and fewer people would be trapped by such false claims. Not allowing investors to weigh in and vote in these circumstances is anti-capitalistic and encourages misleading claims. Hopefully one day we will help to bring down such shady operators.
