GARY TALKS IPOS

In the pre-market, I want to talk about this King Digital. It was a $23 IPO and we questioned the IPO here for you, just like we questioned Groupon and Zynga. We questioned Facebook at $40 and watched it go down to $15 before finally kicking in gear. King Digital comes out and as we simply told you, a large humongous percentage of their business was this Candy Crush, and it does not take a rocket scientist to know that all of these games go in and out of fashion. It seems to me that they brought this King Digital public at the peak of the Candy Crush phenomena and things were already heading south just about the time they were going public. They have a couple other games in the hopper but to repeat something like a Candy Crush, no way Jose. So, it was a $23 deal that never got above $23.50, the stock was down $4.25 to $14 and let me be clear, this thing is probably going to single digits if not more. The bottom line is simple; things are heading south, games only last so long. Candy Crush will not be around forever even though my family is insane with it.

So, that is the Candy Crush story. Again, it is very important that you recognize that there has been a ton IPOs that came public in the next couple years. Here is the good news, a bunch of them are going to go up threefold, fivefold, tenfold and there maybe one or two of them that go up twenty fold if not re. Here is the bad news. There is going to be a ton of them that go to zero. So, please pay attention, especially to those bio-techs that have been brought public when they should not be brought public. They have zero sales. I have told you on this show that when I was in the penny stock business we brought out things public at five cents a share that had more revenues then some of this crap that is being foisted upon you, the investing public, by these wonderful and fabulous investment banking companies that almost brought down the system a few years ago. They are repeating what they did in 1999. Know that you have somewhat of a hottish type market so they just bring anything out that breathes because they know you guys are going to go after it.
What is the message? Read the fine print. Check the stuff out. Remember that during a bull phase you can get away with some things. During a bear phase, the curtains come down. Any company that is losing money is going to get clipped big time. Any company with no sales, see you! 90% to the downside. This is not me being opinionated. This is me telling you we have studied all the bear markets out there and the same thing happens every time. The investment banks go into their bunkers, hear no evil see no evil speak no evil, while you guys lose a ton of money. Of course the regulators say nothing because when they come out with the IPOs they are not saying to buy or sell, but that we are just bringing it out. They don’t care if you lose 100% of your money.They never have and they never will. Back in 1999 they slapped .com on companies’ names just because they knew the stock would go up because of it. Some mutual funds did that too. And of course when the .com went out of fashion, they just took .com off the mutual funds’ names or the companies’ names. Welcome to the marketing machine that we call Wall Street.

But, guess what? It is your job to do the leg work. It is your job to understand that a company with no sales should not have a five billion dollar market cap. If you don’t understand that, get out. That is the best message I can send you guys as I am watching some of this nonsense go on. I found about 15 companies with no sales brought public in the last six months. That is just a cursory look. 15! No sales! Open up a lemonade stand on your corner, sell the first glass of lemonade, you will have more sales than these companies that are actually in the public domain. Way to be Mr. Investment bankers.