When another biz is set up it makes me wonder. Years ago I owned a stock that IPO'd around $8 bucks. The CEO (like many who do the same) was able to get the business up and running but it wasnt all the successful. The stock eventually dropped under a dime. I bought shares as the business itself looked very promising and I knew for a fact that they product manufactured had decent sales.
It turned out that the CEO had set up ANOTHER BUSINESS and the other business was the main customer of the primary business. So the way it worked was like this:
BIZ #1 (the public company) manufactured the product.
BIZ #2 (the privately owned biz) was the biz that bought the product from BIZ #1
So BIZ #1 could sell the product at breakeven of even below cost... didnt matter cuz CEO didn't want to mess with shareholders.
BIZ #2 bought BIZ #1 product on the cheap and was the marketing arm that made all the $$$.
It's pretty screwed up, but there isnt much I havent seen in penny land over decades of trading.
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