Short % of float: 5.4%
Cost of borrow: around 6%
Market cap: $91M
This stock is the intersection of:
- Stock promotion.
- Fake wrestling (World Wrestling Entertainment).
You On Demand is a colorful company formerly run by Shane McMahon, the son of World Wrestling Entertainment’s CEO and chairman. According to his Wikipedia page, he was a WWE referee from the age of 19 to 28. From 28 to 40, he was a professional wrestler. Outside of the ring, he hasn’t had as much success running You On Demand as the company has a history of GAAP losses. He became the company’s CEO on July 30, 2010 and stepped aside on July 12, 2013. He currently serves as the chairman. You On Demand’s current CEO is Weicheng Liu.
The YOD webpage has a investor news page that has lists of press releases that the company has issued.
I find it interesting that YOD decided to highlight the following stock promotion websites that have said good things about YOD:
- Five Star Equities
I went to Five Star Equities and downloaded their report on YOD. One of the disclosures in the YOD report was the following:
Five Star / Providence receives compensation from third party organizations for advertising services provided in the form
of email newsletters. Five Star / Providence and its affiliates, officers, directors and agents have been compensated for
featured company coverage and therefore information should not be construed as unbiased.
To be fair, the disclosure doesn’t seem to reference YOD directly. It is unclear to me whether or not YOD paid Five Star for “featured company coverage”. However, Five Star is clearly in the business of paid stock promotion and they happen to be based in an offshore country (St. Kitts and Nevis). It is strange that YOD thinks that it is a good idea to highlight positive coverage from such a company. Not surprisingly, the company decided to issue those particular news releases on Accesswire, which is not a major newswire service like PR Newswire.
Do your own research
The 10-K is pretty interesting (for a 10-K):
- There are related party transactions.
- There is a $473k loss on an “uncollectible shareholder loan and related party loan”.
- There are material weaknesses in the company’s internal controls.
- There are warrants at a $150.00 exercise price (on a split-adjusted basis). The current share price is $5.79, so the strike price is roughly 26 times the current share price. The price history of this stock is interesting (Yahoo Finance has a chart).
If you are interested in this stock, I would encourage you to do your own research.
*Disclosure: Short YOD. So far this stock has elbow dropped me and put me into an inverted facelock neckbreaker.