ZZZZ Best Co., a Reseda carpet-cleaning firm headed by 21-year-old entrepreneur Barry Minkow, saw its market value shoot up $39 million Thursday in heavy stock trading fueled by an upbeat earnings projection.
The stock closed at $10.125 a share, up $3.375 in over-the-counter trading, as a record 2.1 million shares of ZZZZ Best changed hands.
The dramatic shift in the volatile stock stemmed from the company's announcement that it expects to post at least $5 million in net income, or about 50 cents a share, on revenue of $50 million for its fiscal year ended April 30.
Minkow said in an interview that the announcement was made because "stockholders had the right to know what the hell was going on in this company." He added that the nearly 6-year-old company "has never done better or had more profits."
ZZZZ Best's stock had been tumbling since The Times reported on Friday that the company acknowledged ringing up $72,000 in false credit card charges from November, 1984, to March, 1985. The story also said that Minkow previously admitted to $150,000 to $200,000 in false charges.
Minkow blamed ZZZZ Best's false credit card billings on six subcontractors and six of their employees who did carpet-cleaning work for ZZZZ Best on 50% commissions. Bruce T. Andersen, ZZZZ Best's chief financial officer, said the company has not used any carpet-cleaning subcontractors for two years.
ZZZZ Best's stock had fallen to $6.75 at Wednesday's close from $15.375 before The Times story appeared. At Thursday's close, the company had a market value of $117 million.
Minkow also said Thursday that he still expects the Drexel Burnham Lambert investment firm to arrange the financing of ZZZZ Best's proposed $25-million acquisition of Flagship Services in Newtown Square, Pa., which has a carpet-cleaning subsidiary, KeyServ Group.
ZZZZ Best said an "independent investigation" had found no wrongdoing on the part of ZZZZ Best or its officers. Minkow said that the investigation was conducted by Drexel as part of its normal procedure before arranging financing.