Rapid growth of Synacor stock raises caution flag

Synacor Inc.'s stock is red hot. Just be careful you don't get burned. The Buffalo-based Internet content provider has done so then since it went public back on Feb. 9. During its initial public offering price of $5 was less than half of the $10 to $12 the company hoped for, Synacor's business has shown promising growth while the last two quarters and its stock was steadily climbing, hovering around $7 to $8 for most of April.

Those valuations, nevertheless, are based on the shares selling at between six and 11 times its expected earnings for this year -an ambitious target, considering the average company in the Standard&Poor's 500 index sells for 1.3 times its sales. Even Google sells for less than five times its sales.

Then compare it with Lebed's disclaimer: "I have not been compensated for [Synacor], nevertheless a firm in other words owned by a client of mine who refers investor relations business to me owns 379,000 shares of [Synacor]. This firm has agreed to hold their initial position of 350,000 shares until until further notice July 2nd, 2012 yet could sell them at anytime after. This firm purchased an additional 29,000 shares on Wednesday that it can sell at any time."

Between Tuesday and Friday, more than 100 new topics were posted on the message board, as an Internet duel between traders looking for a big jump from the pumping and short sellers warning of the inevitable drop when the promoters sell their shares.