A FITE for survival: What the death of Triller might mean for fans
A media property that has become a fight fan's best friend is on the ropes.
The good news for Triller is that it appears their years-long efforts to get access to stock market cash is finally here.
The shaky news is that the savior is a penny stock that was trading as low as 34 cents a share — a month ago.
The Securities and Exchange Commission last year sent the dreaded 30-day delisting notice for AGBA being under $1/share for more than 30 consecutive trading days.
Last week's announcement that Triller would merge with Hong Kong-based AGBA on the NASDAQ was heralded as a financial lifeline to keep the lights on. The merger between Triller and AGBA means Triller shareholders will get 80% ownership of the stock shares and AGBA gets 20%. A key part of the transaction deals with Restricted Stock Unit holders. When do those stock options vest, how long of a waiting period before selling, and other considerations will be important for insiders.
Triller needs cash. As this report at Music Business Worldwide notes, they have under a million dollars in cash and/or cash equivalents. The company has been sued by multiple parties for allegedly failing to make payments. As the MBW report claims, there is supposedly millions of dollars in unpaid music royalties.
AGBA is claiming that by combining forces, the new company is worth $4 billion. How a penny stock with a market cap of $182 million USD merging with a well-known company that only has a million dollars in cash somehow equals a $4 billion dollar valuation? Your guess is as good as mine.
What’s at stake for fight fans
Over the last decade, many fight fans have had some type of interaction with a Triller service.
All of those independent and mid-major PPV events around the world? FITE TV.
AEW fans certainly know the value of TrillerTV and FITE. When HBO MAX didn’t stream the All-In event last year from Wembley Stadium, there was FITE. When recent challenges arose with Bleacher Report, there was FITE.
If you’re an independent promoter or a hardcore fight fan, you’ve probably purchased an event or watched a show through the FITE TV app.
One of those promotions happens to be Bare Knuckle FC, which is majority-owned by Triller. Dave Feldman, the wildcatter of fight promoters, claimed that he had to refinance his mortgage in order to promote a major PPV event. He claimed piracy made a big dent in their PPV projections. Since that PPV event, Mr. Feldman has been aggressively networking with all kinds of power brokers — including Dana White.
This Saturday, Bare Knuckle FC is pushing their poker chips to the middle of the table with a major event at The Peacock Theatre in Los Angeles. The administrative costs to run such an event in the state of California are astronomical.
The future of Bare Knuckle FC very much is dependent on the success of the new Triller merger with AGBA. Should that merger fail, who knows how things might play out in a bankruptcy court. FITE (Triller TV) and BKFC are obviously assets that a buyer would be interested in. Would one of those buyers include TKO?
Getting into bankruptcy would not be an ideal situation for all parties involved. That is why the AGBA story is such an interesting last-ditch effort to access cash.
And yes, I am predicting some forthcoming complications.
Triller, Tiktok, and CFIUS
Triller’s marketing campaign is that they were a competitor to Tiktok. Well… we all know how that has played out.
The regulatory environment, however, is changing in America.
As The New York Times recently reported, the Congressional push to force a sale of Tiktok to new owners faces legitimate and difficult legal hurdles. There are also political hurdles, as Republican Party mega-donor Jeff Yass reportedly has billions of dollars at stake over Tiktok’s future.
With a higher level of scrutiny over Tiktok, you would assume that this is good news for AGBA and Triller. Initially, the stock market seemed to believe so as well. The problem for Triller is that CFIUS, the Committee on Foreign Investment in the United States, is wielding an unpredictable hand in regards to big business ties with companies associated with China or China-adjacent locales. China-adjacent would include Hong Kong and Singapore.
What happens if CFIUS decides to mettle into AGBA’s business affairs?
The hope amongst those who benefit the most from the merger is that we don’t get to this point, but nobody can predict with certainty what the financial and regulatory road map is going to look like — especially in a 2024 election cycle involving former President Donald Trump.
What’s the financial end game with AGBA?
If the proposed merger between Triller and AGBA goes smoothly, it won’t be the same as a SPAC. Nonetheless, it is a risky undertaking.
On paper, the idea is that Triller merging with AGBA will allow the combined forces to access money it previously didn’t have at its disposal.
Throw in a legislative ban on Tiktok and hope can spring eternal.
The biggest question is whether or not AGBA can sustain, over a period of time, a substantial increase in the price of the stock to encourage more investment — or at least keep the stock price high enough so that more stock shares can be issued on the market: Stock dilution. The risk of stock dilution is that Wall Street investors hate it. Stocks can get punished for it big time.
As we recently saw with SOFI, a “mainstream” upstart got somewhat punished by the market for issuing up to $750 million dollars in convertible senior notes. The idea of raising liquidity in exchange for cash and stock did not go over well. We’re talking about a company like SOFI here with a respectable CEO like Anthony Noto.
Now imagine the impact of possible stock dilution for AGBA.
There will be plenty of insiders with RSU (restrictive stock units) who hope that AGBA can survive long enough in order to sell shares. The question is whether or not that dream can come true.
What story are the charts telling us?
At the time I am currently writing this article, it is Thursday morning in New York and we’re in pre-market trading conditions.
At this chart shows, AGBA closed at $2.97/share on Tuesday afternoon. On Thursday morning, it’s down to $2.09/share. Welcome to the world of trading penny stocks.
On April 17th, AGBA was trading at $0.40/share. Trading volume was 237,000 shares for the day.
On April 19th, the stock was trading at $1.29/share. Over 129 million shares were traded for the day.
Whenever you see incredibly wild swings in volume trading, good or bad, you are at the mercy of the institutional players. As the old adage goes, somebody always knows something.
We’re right back to where AGBA was one year ago for share price. In four months, from April 2023 to August 2023, the stock lost half its value and entered the danger zone of being under a dollar/share for 30 consecutive trading days.
It’s not that you can’t survive or raise capital through penny stocks. The problem is that you are at the mercy of some very wild swings. One day you are in the penthouse, the next day you are in the outhouse.
What does modern fight finance teach us?
If you have a long enough memory, you might recognize a few different fight entities with exposure to capital markets: Elite XC, the IFL, Bellator and New Japan Pro-Wrestling.
The International Fight League, with its various team franchises, went national in America on MyNetworkTV. Their debut featured flatlining imagery and stretcher jobs. The promotion was the one that soon flatlined.
Promoted by the late Gary Shaw, Elite XC was the precursor to Strikeforce nationally on Viacom. $55 million dollars in losses caused a major collapse. They lost $18 million dollars buying the Cage Rage promotion.
Bellator and Paramount? Well, we know that outcome.
Which leaves us with New Japan Pro-Wrestling. Their parent company on the Nikkei, Bushiroad, is currently trading at $2.35/share. They have lost over 57% of its market value as a growth company in a single year. If you want the gruesome details on that plunge, read my Fight Opinion article about the 30 days that changed everything for Bushiroad.
What you’ll notice with penny stocks in combat sports is that things proceed slowly for a while and then they change very, very fast. In either direction.
Triller needs AGBA to retain value at a steady clip — at least enough time to bring in new investment or to “extract value.” The consequences for the promotions and services you enjoy as a fight fan are substantial.
Zach Arnold is a lead opinion writer for The MMA Draw on Substack. His archives can be read at FightOpinion.com.
Triller hasn’t paid for PPV sales commission either.