My Size, an Israeli startup with 17 employees that develops an app to help users buy clothing online, saw its stock price shoot up 185% on Wall Street on Monday night, on massive turnover. Even executives at the company said they were baffled by the stock price increase.
The jump came even though the company had not published any new information, and had not made any new moves.
My Size’s share price jumped on Monday from $3.85 to $10.97, meaning that the company’s valuation shot up to $200 million overnight. The company has never had any revenues, and had an operating loss of 15.6 million shekels for the first nine months of the year. During that period, the company went through 6.7 million shekels in cash.
To compare, as of Monday afternoon the company was trading in Tel Aviv at a valuation of only $37 million (138 million shekels). Following the increase on Wall Street, the stock jumped 50% in Tel Aviv trading on Tuesday, but still closed at only one-third of the valuation on Wall Street – reflecting an arbitrage gap that should not exist.
While some traders tried to buy the stock cheap in Tel Aviv in order to sell it at the higher rate in New York, that still didn’t close the arbitrage gap.
On Monday, 980,000 shares of My Size changed hands. In comparison, no shares of the company had been bought or sold on Wall Street on Friday.
The interest in the share drew unusually high turnover in Tel Aviv on Tuesday as well, totaling 16 million shekels – making it the 18th most traded company on Tuesday.
Meanwhile, the Wall Street share price declined 6% during the early hours of trading on Tuesday.
My Size’s product is an app that enables consumers to find clothing that fits, after taking a scan of their bodies. It targets retailers that sell clothing online and are seeking to reduce the number of items returned.
Sources close to the company say it has had 200,000 downloads to date. No information is available on how many of them actually use the app. The company still does not have any major business partners, and is still essentially unknown, both in Israel and the United States.
A website named Stock News Union wrote a few sentences about the stock, mentioning it positively and citing a growth outlook of 25% over five years. The source for that statement was unclear. Yet it’s extremely unlikely that such a brief mention could make the stock’s price nearly triple.
“The jump caught us by surprise, too,” a My Size executive told TheMarker on Tuesday, confirming that the company had no plan on the way that would justify such a valuation.
My Size’s controlling shareholders are Shoshana Zigdon (20%), Ronen Luzon (10%) and Israel Levy (8.6%). TheMarker found that Zigdon is the wife of Yitzhak Zigdon, who at one point was wanted by U.S. authorities on suspicions involving stock fraud. When the story emerged in 2015, My Size said in response that Yitzhak Zigdon had no connection to the company, and that he had reached an agreement with the U.S. authorities in 2013 that had led to the accusations being dismissed without any admission of guilt on his part.
My Size stated that it had nothing to add on Tuesday beyond what it had already published.