Barry Ritholtz and Bloomberg last week drew attention to the fact that shares of The Grilled Cheese Truck Inc. had commenced trading on the OTCQX marketplace under the ticker GRLD:
“Let’s look at the fundamentals of the Ft. Lauderdale, Florida-based company. Based on the 18 million shares outstanding and a recent stock price of $6 the company has a market value of about $108 million.
No matter how much you like grilled cheese… I can’t see this as a reasonable valuation.
“If you go to the company’s website, you will learn that ‘The company currently operates and licenses grilled cheese food trucks in the Los Angeles, CA area and Phoenix, AZ and is expanding into additional markets with the goal of becoming the largest operator in the gourmet grilled cheese space.’
“[A]ccording to the company’s financial statements, it has about $1 million of assets and almost $3 million in liabilities. In the third quarter of 2014, it had sales of almost $1 million, on which it had a net loss of more than $900,000.”
“I can’t think of a more interesting sign of the old irrational exuberance in equity markets than a publicly traded grilled cheese truck (four in this case) business trading at a $100-million-plus valuation. That sort of thing doesn’t happen unless there is significant excess in the markets.”
Any reference to a company seeking to dominate the “gourmet grilled cheese space” is desperately seeking a twin reference to a slogan from late 1999 (right before the bubble burst):
“Our business strategy is to lose money on every sale but make up for it in volume.”
Enjoy the party, but dance near the door.