How Much Will 50 Cent Make if His Penny Stock Hits 50 Cents?
50 Cent has been rocking the financial world (and perplexing CNBC), sending shares of a penny stock he owns up 300% by Tweeting about it. Just how much will 50 Cent make if his stock hits 50 cents?
In 2009 a scandal erupted for Jim Cramer, the frenetic host of CNBC’s “Mad Money.” It turned out one of his guest experts—retired baseball player and unlikely financial whiz, Lenny Dykstra—was getting paid by companies in the form of stock offerings to recommend those stocks on Cramer’s show.
Cramer’s show is influential enough to impact the stocks he recommends, so Dykstra was of course incentivized to tout stocks he owned. As reported in Randall Lane’s book “The Zeroes” as well as in numerous articles, these stock offerings were issued to Dykstra’s brother in law in order to dodge SEC regulations. And it worked like a charm—penny stock after penny stock soared as Dykstra predicted them as winners to “tens of thousands of followers on Cramer’s website.”
50 Cent famously titled his record “Get Rich or Die Tryin’.” By all counts, one imagines 50 Cent has already attained his goal of getting rich, but he’s not slowing down. 50 seems almost pathologically enamored of the hustle, recently making headlines for turning an east-cast snowstorm into an opportunity to make turn an extra buck shoveling driveways in his neighborhood.
Earlier this week 50 started hyping up a penny stock he owns, H&H Imports. From the looks of it, this latest money-making scheme shares some commonalities with the Lenny Dykstra story.
50 reportedly invested $75,000 in the company last year, for which he was issued 30 million shares. Like Dykstra, 50 Cent is an unlikely diving rod of financial performance. Also like Dykstra, he has a captive audience for broadcasting his seal of approval—in fact, his 3.8 million Twitter followers probably trumps Cramer’s newsletter subscribers and his show’s viewers combined. And like Dykstra, 50 has seen his chosen stock soar based on his buy recommendation. At least for now.
“[HNHI] stock went from 5cent to 10 in one day. You can double your money right now,” 50 advised his Twitter followers. “Just get what you can afford.”
Indeed, the stock soared 240% to 39 cents yesterday, before falling back to 30 cents today. This is despite the New York Observer’s figures that “the company claimed losses of more than $1.3 million dollars in the most recent quarter and $3.3 million since its inception.”
There’s no real-world scenario in which this company’s performance or promise of future performance warrants this kind of gold rush. But is it really unethical? In Dykstra’s case, he was deceiving Jim Cramer about the motives behind his stock picks (to the best of our knowledge). But telling all your friends to buy the stock you’ve got is as old as American entrepreneurialism itself—50 Cent just happens to have 3.8 million friends.
So how much would 50 Cent make if his HNHI stock actually goes to 50 cents? Yesterday he was up $8.7 million when the stock was up to 39 cents a share. Now he’s only up $6 million with the stock down to 30 cents. But if it shoots up to 50 cents a share, he’ll have made $12 million on the deal.
Not bad for a few tweets.