![]() Sounds too good to be true, right? The Pump…Īs news of the merger spread, social media platforms like Twitter and Stocktwits churned out misinformation and hype about the deal. Just imagine-investing $800 and getting $5,000 back! ![]() The low trading price of Torchlight's shares-often under a dollar in late 2021-proved irresistible to unsophisticated investors.Īt 80 cents a share, the prospect of buying 1,000 shares for $800 and potentially receiving a $5/share dividend seemed like an incredible bargain. The key part of the deal that attracted the attention of retail investors was the disposition of Torchlight’s single asset-potentially oil-rich Texas land that, when sold, would grant shareholders in Torchlight a “special dividend.” In the case of the Torchlight-Metamaterials combination, Metamaterials sought to gain access to the NASDAQ stock exchange by merging with Torchlight, which was a failing company already listed on the NASDAQ.Įffectively this meant Metamaterials became a NASDAQ-listed company without having to go through the traditional Initial Public Offering (IPO) process.īecause the process doesn't involve the same level of regulatory scrutiny and due diligence as an IPO, investors can be exposed to greater risks.Ĭonsequently, regulatory bodies like the Securities and Exchange Commission (SEC) have issued warnings about the potential dangers of investing in reverse-merger transactions.ĭespite these red flags, however, the SEC approved the Torchlight-Metamaterials merger in 2021. Over the years, reverse mergers have gained notoriety for being associated with fraud, lack of financial transparency, and other unethical practices. would have been a crazy tale its own right.īut now that news of the financially disastrous merger has attracted the attention of investigative journalist James O’Keefe of Project Veritas infamy, things are surely bound to get a whole lot wilder still. ![]() If things had played out as they always do in these situations, the story of the merger between Torchlight and Metamaterials, Inc. What followed was a rollercoaster of events that exemplify the dangers of speculative trading manias in the era of social media. With bank accounts fattened by pandemic benefits and PPP loans, retail investors dove into penny stocks, handed over their money to blank-check companies called SPACs, and tried to “squeeze the shorts” by investing in dead-end companies like AMC Entertainment (AMC), Gamestop (GME), and Bead Bath and Beyond (BBBY).Īmidst this financial Wild West, a Texas company named Torchlight Energy Resources announced a reverse merger with Canadian company called Metamaterials, Inc.
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