Last Friday, November 4th, right after the market closed down for the 9th straight day in a row, we received a major sign. Not a sign of a potential bottom, but the sign of a potential major top. It came in the form of a tweet from a 26-year-old-one-hit-wonder-mega-hip-hop-celebrity-has-been by the name of Soulja Boy.
Anybody that knows more about the stock market tweet me I will follow you back I'm studying it right now and need some tips thanks.
— Soulja Boy (@souljaboy) November 4, 2016
For the geriatrics out there who don’t know who Soulja Boy is, here is a video of his first and only hit, Crank That (Soulja Boy). If you have been to a wedding in the past 10 years you have most likely heard and/or tried to dance to this song.
I am always intrigued when celebrities try to dabble in the stock market. See: Oprah, Martha Stewart, Jose Canseco, et. al. But, when I saw this tweet come out, it drew a major red flag. The way he said “I’m studying it right now and need some tips” just screams future bagholder. I will give him credit for trying but he could be going the way of becoming the next Gartman. I guess he has never heard the saying that tips are for waiters, especially tips from $TWTR paper traders.
I did some brief research over the weekend on Soulja Boy and some of his previous endeavors to see if I could gauge his market interest. According to TheRichest, he has a net worth of approximately 23 million dollars. It also appears that back in May he got a 5-year $400 million endorsement deal with World Poker Fund Holdings (OTC PINK: WPFH), a leading developer and operator of online and event-based social gaming platforms and brands.
$400 million deal confirmed. I still they think they low balled me though. I was thinking 2 or 3 billion..
— Soulja Boy (@souljaboy) May 1, 2016
From a press release from World Poker Fund:
Soulja Boy, “I invest in things I understand. I enjoy music, and of course gaming. Being an influencer is a form of currency. Having portfolio diversification is critical if you want to be an effective brand ambassador. With regards to World Poker Fund, I believe in its strategy, its team, the vision, and management’s ability to target its financial goals.”
If you are really interested in reading how a reported $23M man somehow stumbled upon a $400M deal from a pink sheet OTC stock read: The Real Story Behind Soulja Boy’s ‘$400 Million’ Deal, Forbes
All of this promise is not yet reflected in how much investors say the company is worth. According to CNN Money, World Poker Fund Holdings has a market capitalization of around $52 million. WPFH’s own annual report lists losses of over $400,000 last year.
So how is a company that is worth just north of $50 million going to pay out $400 million to their celebrity endorser? The answer is, they’re not. The deal, according to Bird, includes both stock and revenue-sharing.
“He really kind of jumped the gun” by using the $400 million figure. The deal is capped at $400 million, and it’s based on a forward-thinking valuation of the company. He’s young, he’s 25 years old. He got really excited, and he tweeted something he probably shouldn’t have tweeted. He was getting a lot of pressure from within the entertainment community, so he wanted to put a statement out. Obviously, the company’s market cap is at $51.8 million. There’s no way they could cut a $400 million deal. Endorsement deals are calculated on a lot of different factors. This is not a fully cash transaction.”
More information on this deal was dug up here: Soulja Boy’s Deal Isn’t Really Worth $400 Million: “He Tweeted Something He Shouldn’t Have”
We all know how this deal will most likely end up for him. I imagine it will be just like how 99% of the time OTM options end up for everyone else: worthless. The stock currently shows 770,000 shares at a price of $0.55 which puts the market cap under $500k. I guess Bieber dumped all of his shares already.
Just typing in a simple Google search of Soulja Boy + stock market gave me this gem below. Watch this video and tell me if you think this guy will be a good investor or trader. I would gladly take the other side of any of his trades after looking into his investing history. Hopefully he publicizes them on his social media more.
And this is why, sadly, we may have topped. I like when people try to invest and get coin, but I don’t like when people act like they are impenetrable to the forces of the market. Hopefully he stays away from $SPY OTM calls.