On October 10th, Jon Desmoulins wrote an analyst report on the World Stock Exchange (WSE) about SL Risk.

SL Risk describes themselves as Second Life’s “First Fully functional Credit Reporting Acency [sic] (Credit Bureau).” They say, “Need to know if an avatar is a good risk for that loan that they applied for? Just grab a complete report from slrisk & you now have a wealth of additional information to base that decision on!”

Unfortunately, Jon was not impressed and listed SL Risk as a strong sell. His target price was L$ .50. SL Risk had traded at L$ .50 as recently as August 30th. It had climbed up to L$ 1.12 on October 9th and traded in the range of L$ .78 to L$ 1.27, closing at L$ .55 after Jon’s report.

On October 26th, SL Risk Investor Whitfield, CEO of SL Risk issued an announcement informing investors of their decision to delist from the World Stock Exchange and list over on the ACE. In the announcement, Investor Whitfield wrote,

At this time when we are posting decent profits and have a viable business model & great response to the credit reporting service - to have a decrease in share price can only attributed to one factor - that is the "Strong Sell Rating" issued by an analyst. Until analysts have some Guidelines set down by the WSE regarding the way analysis is done, I fear that this type of "opinion written as fact" will continue to plague other companies as well.

IntLibber Brautigan, head of ACE wrote in their announcement,

Investor Whitfield, CEO of SL Risk (RIS) has made the decision to relist RIS on ACE. RIS is a profitable company with excellent prospects, whose stock dropped in price only due to an unqualified "analyst" on WSE issuing a strong sell rating on the company without any quantifiable evidence to support such a decision. ACE is bullish on the future of RIS and is very happy to see RIS relist with us.

This move appears, at least initially, to have benefited SL Risk shareholders. SL Risk has been trading in a range of L$ 1.50 to L$ 5.50, well above its range over on the World Stock Exchange.

The view of Investor Whitfield and IntLibber Brautigan appear to be that the analyst’s report is unfounded, and so far, shareholder reaction appears to be bearing this up. However, the concerns that Jon Desmoulins raised in his report appear to still be concerns. Financial statements by SL Risk are not currently available on either ACE or the SL Risk website.

In a discussion with IntLibber, he noted that SL Risk was now trading in the L$ 2 to L$ 4 range, which he considered a fairer valuation of the stock. He noted that enhanced financial reporting would be available soon on ACE and SL Risk will provide financial statements which will help substantiate the valuations. He suggested that the WSE needs to tighten up its standards on analysts. He suggested that Jon has an axe to grind and suggested that I should see whom Jon is connected with. Jon has quite a few connections. He is involved with Apez Corp (APZ), SL Marketing (SLM), SL Public Radio (SLR) and Virtual Games LLC (VGI). There are no apparent reasons from this as to why Jon would have an axe to grind.

In speaking with Jon, he dismissed the idea and noted that he only writes reports on companies that he has no involvement with. The goal of his reports are to highlight issues that the average investor, who is not closely following the capital markets in Second Life would not be aware of.

He noted that some of his concerns have been addressed, and there is no way to tell for sure what the proper valuation of a company should be. However, he did reiterate his concerns about the security of the information that SL Risk is gathering and whether or not their business model violates Linden Labs terms of service.

Despite their differences in opinions about the prospects and proper valuation of SL Risk stock, both Jon and IntLibber agree that WSE should refine the way it handles the information it provides.