Justin Sun strikes again! Can the TRX reserve strategy disrupt the listing rules of the crypto world?
Justin Sun's move is truly remarkable! While others are still trading coins, he directly buys companies with coins! With 210 million US dollars worth of TRX tokens, he completely acquired the US-listed company SRM Entertainment, even changing the board to his own people, and now it is called Tron Inc!
Let's first talk about how he acquired it. In simple terms, it’s 'using coins to exchange for stocks, packaged control'. The transaction is divided into two steps:
In the first step, he took out 100 million US dollars worth of TRX to buy 100,000 shares of Series B preferred stock, which can be converted into common stock, with a par value of 1,000 US dollars per share. These preferred stocks can later be converted into 200 million shares of common stock.
In the second step, he obtained 220 million stock warrants, which can be converted into 220 million shares of common stock, but he has to pay 110 million US dollars worth of TRX at a price of 0.5 US dollars per share to buy them.
Adding the two steps together, he used a total of 210 million US dollars worth of TRX to acquire 420 million newly issued shares of common stock, accounting for over 90% of the company's total equity, directly becoming the big boss!
So can this stock still be bought now? Let's do the math. Assuming that the 210 million US dollars worth of TRX is counted as company money, and adding a premium, say 1.5 times, the company is worth about 300 million US dollars.
But don't forget, equity expansion is a huge negative. Currently, SRM's total equity is only 17.24 million shares, but after the conversion of preferred stocks and the exercise of warrants, the total equity skyrockets to 437.24 million shares! Based on a valuation of 300 million US dollars, each share is worth about 0.68 US dollars.
But the current market price for this stock is 9 US dollars! Why is it so high? Isn’t it because of the small circulating supply, combined with Justin Sun's fame, and the hype around cryptocurrency?
But what about in the future? Once those preferred stocks are converted into common stocks, and all the warrants are exercised, with such a significant expansion in equity, the stock price is very likely to fall, aligning with its real value.
So is this company going to be worth money in the future? It mainly depends on two factors: first, whether the price of TRX can rise, and second, whether Justin Sun can use his capital operation to make the company more valuable. If both of these points succeed, then the stock price might soar again. But if not, then the stock price will need to be carefully considered.
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