TikTok Star Khaby Lame's Rs 8,980 Crore Deal Faces Market Scrutiny Amid Stock Volatility

The recent Rs 8,980 crore ($975 million) all-stock deal involving TikTok superstar Khaby Lame has come under the scanner from market experts. Lame sold his company, Step Distinctive Limited, which handles his global brand and commercial operations, to Rich Sparkle Holdings, a Hong Kong-based publicly traded firm. Following the announcement of the deal earlier this month, Rich Sparkle's stock surged dramatically, climbing over 650 per cent to a peak of $180.64 per share on January 15.

This briefly valued Lame's stake (tied to his ownership through the deal) at around $6.6 billion, according to a report in Forbes. However, since then, the stock has fallen significantly, dropping as low as around $41, a decline of up to 77 per cent from its peak. This rapid rise and fall of the stock price has prompted experts to raise red flags about the deal's sustainability and underlying valuations.

“It's very suspect. They filed a prospectus that stated they were going to pursue a certain business and within less than a year. They had entered into a completely different business and they issued large amounts of shares that resulted in a change of control," Brenda Hamilton, a securities attorney at Hamilton & Associates Law, was quoted as saying about Rich Sparkle's IPO.

Rich Sparkle was listed on Nasdaq in July last year with an implied value of approximately $50 million. As per SEC filings, its 2024 revenue was under $6 million from “designing and printing high-quality financial materials".

Terms Of Deal

Under the agreement, China-based livestream and content commerce operator, Anhui Xiaoheiyang Network Technology Co., Ltd., will act as exclusive operating partner for Lame's global commercialisation efforts for an initial 36-month period.

The commercialisation of Lame's fan base is expected to generate more than Rs 36,842 crore ($4 billion) in annual sales, his company said in a press release, with the focus on three core markets, viz. the US, the Middle East and Southeast Asia.

As part of the deal, Lame has also authorised the use of his Face ID, Voice ID and behavioural models for 'AI Digital Twin development' to create multilingual social media content.

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Who Is Khaby Lame?

Lame, a Senegalese native, has more than 77 million Instagram followers and over 161 million TikTok followers. His content specialises in simplifying overcomplicated online 'life hacks' through silent comedy. Lame's hallmark is his muted delivery, using wide eyes, a knowing smile, and his iconic 'palms-up' gesture to offer common-sense solutions.

Lame was in headlines last year after he was arrested by US Immigration and Customs Enforcement (ICE) at the Harry Reid International Airport in Las Vegas. The ICE added that Mr Lame entered the country on April 30 and "overstayed the terms of his visa".