Cynk shares fall below $1; traders see further decline

By Rodrigo Campos NEW YORK (Reuters) - Cynk Technologies, which was briefly worth billions of dollars last month, saw its shares fall below $1 on Monday, and traders say it is only a matter of time before the stock is once again worth next-to-nothing. Cynk became a big market story as trading volumes soared and the company was briefly valued at more than $6 billion despite having no revenue and being described as "development stage." Trading was halted by U.S. regulators on July 11 for 10 days. Since that suspension ended, trading has been solely in privately brokered transactions, and brokerages are not allowed to solicit buyers or sellers. The stock dropped to 60 cents a share on Monday, after hitting a high of $21.95 on July 10. Most traders interviewed said the stock is likely to keep falling until it is once again worth no more than a few cents. Volume-weighted average price was $1.04. On the sole day in May that Cynk shares traded, Cynk was worth 6 cents a share. On April 9, the only day it traded that month, the stock was at 8 cents. Among the reasons cited for the current price was the minimal liquidity. With a thinly traded market, sellers have a bit of additional leverage, preventing the price from dropping to pennies. In addition, short sellers who had borrowed the stock were also buying it to close out positions, also elevating the price a bit, traders said. On Monday some 191,000 shares exchanged hands. Some 31,000 of those were traded through KCG Holdings and 32,000 more through Canaccord, according to a source familiar with the trades. A trader at Canaccord, who would not identify himself, said any volume was attributable to short covering -- traders who are buying because they had borrowed stock to sell it on the expectation of a price drop. KCG did not respond to requests seeking comment. Traders at other firms declined to go on the record because they did not want to be associated with the trading of the stock. Trading in Cynk stock was halted by the Financial Industry Regulatory Authority and later suspended by the U.S. Securities and Exchange Commission on July 11. It closed at $13.90 on July 10, for a market value of $4.05 billion. At Monday's close of 60 cents, the company is now worth $174.9 million. The SEC had no comment, and FINRA was not available for comment. "There’s no revenue, no employees, one person has an office in some foreign country and yet traders and investors somehow saw a reason to bid this thing up like crazy. I’m at a loss to explain it because it doesn’t make sense to me,” said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York. "Once it collapsed it should have gone to zero. Why is anyone still paying anything for it is beyond me." Volume in Cynk soared to almost 470,000 shares on Friday, the most on any day, but the stock traded off exchanges and only on buyers' or sellers' request. (Reporting by Rodrigo Campos; Editing by Leslie Adler)