This is an interesting one and appreciate both the positive and negative views on things. It is pretty rare that you have what people are calling a "pumped stock" where you can actually go see an event 5 miles from your house with 4,000 people waiting on the action. There is a real business here, obviously they can still mess it up and in some areas it is messed up but there is not a "we will create a better phone than the iphone" scam pump going on here.
Here is how I see it . As another poster stated , the Preferred shares are the problem. And ironically they become MORE of a problem as the price drops. The reason is, they are convertible into a dollar value of stock, not at a certain price. Right now with the drop from 15 cents to 5 cents the dilution from the same amount of shares would be triple.
My thoughts are the Surber has had a mixed past at best, but seems to be trying to do the right thing here. Unfortunately a crazy structure and money worries led to a crazy capital structure that is hard and painful to fix.
What I think he should do? He needs to lock up those preferred shares and not allow more than a minimum amount to be converted for 1 year (or longer) but at least a year to allow this to play out and grow..
For example if he does that and the stock goes to 50 cents (10x where it is now) on 18 million in sales and so on, the dilution from those shares drops to 1/10 what it is now. When I worked the numbers around 15 cents it seemed like about 80 million shares could "spring" from Pref C alone. At 5 cents that is 240 million shares. But at 50 cents its 24 million and at 1.00 its 12 million etc.. rough numbers off the top of my head.
So in essence those shareholders get the same amount of money and the company is less diluted. there is not reason why this should not be done immediately.
Aside from the investment angle here, these events are fun for people, people enjoy them and they are very popular. It is a feel good type of thing with great local media coverage. It would be terrible to see a good idea go the way of the dodo bird from some stupid capital structure mishaps.
I do think the GRNE spin off is a good idea to ditch the money losing operation over there . People might be confused about that structure despite his efforts to clarify it. No reason to own hair salons in this company.
It seems to me that the recent sell off was caused by two things. 1- an increase in short selling 2- some people bailing since this stock had been a 25 bagger over the last year and once something spooked the holders they took it off the table.
Without those preferreds being locked up you really do not know what you are dealing with when investing. You do not know if you are investing in a company with 150 million shares or 400 million shares, it makes a big difference.
The recent 5 cent price is a decent valuation assuming the preferred stock can be locked up.
Surbers only play here is to navigate the company towards success and share price increase and delay as much as possible the dumping. Otherwise no one will touch the company and financing will become harder not easier.
IF he makes the right moves this could be a 100 million dollar company or bought out by a big entertainment company like Cedar Fair or Disney etc etc.. Its the right idea, hope he proves he can do the right thing.
