Companies Offer Little But Are Worth a Lot
Having a skyrocketing stock price with no profits in the foreseeable future is old hat when it comes to Internet stocks, with Amazon.com Inc. leading the way.
But how about soaring stock values with virtually no products or services? For that, you can turn to the likes of Laguna Hills-based Rbid.com Inc. and Irvine-based 2TheMart.com Inc., who have been riding the mania over online auctions while producing little evidence that they can take on their claimed rivals, such as EBay Inc. and Onsale Inc.
Rbid and 2TheMart’s stocks have multiplied several times over since the firms announced plans some months ago to operate cutting-edge online auctions. Both companies trade as over-the-counter stocks and neither reports financial results. Both became publicly traded through a maneuver called a “reverse merger,” in which a privately held company buys a publicly traded one and then disposes of the name, assets and management of the publicly traded company while retaining its access to the public markets.
Since Rbid announced the launch of its Internet mall in March, its stock has more than tripled, from $2.50 to Friday’s close of $9.19, giving the company a market capitalization of more than $66 million.
It wasn’t until Friday, however, that Rbid even opened its online auction. And when it did, there were all of 13 items being auctioned.
The company’s online shopping mall, Rmall.com, has been open for several weeks. But it appears to be little more than a collection of links to other stores on the Internet--and not a very complete collection at that. Even if you wanted to buy the few items Rbid does offer for sale, the shopping cart function was malfunctioning last week. Several links on the site simply didn’t work.
The company sells Internet service, but at $21.95 a month it’s nothing special. Rbid also offers free e-mail, but again, nothing not offered by numerous other companies with much bigger marketing muscle.
The most significant marketing alliance the company has announced is a deal to promote the site through television infomercials by VHS Direct, the same company that brought us “Ginsu Knife” and “Secrets of Creating Wealth From Home.” Rbid did not say how much it would spend on promotion. Rbid did not return calls for comment.
2TheMart.com has an even more spectacular stock story. In January, its shares went from $2 to $50 in a matter of days after the company said it would open an online auction site. As of the close of the market on Friday, 2TheMart was worth $720 million.
The company said in February that its site would launch this quarter. Company officials could not be reached.
