Could Markiplier go to "Jail" for the GoPro "Insider Trade"

This is insane. What if I told you if you invested $1,000 in GoPro at the peak, that would now be worth $1764. Yeah, that's like a 97 plus% loss. But what if I told you if you invested $9 million just a couple of months ago, you could turn it into $15 million because now the company's announced it's getting acquired. and you just happen to avoid this collapse and just happen to fall in love with the stock right before you were able to perfectly time a $9 million investment into a company that's been collapsing to turn it into about $15 million. That would sound a little sus, but that's actually exactly what Markiplier just did. Now the question is, is what he did wrong? Did he know something we didn't know? Let's analyze this from the point of view of a financial analyst because, and I'll show you the video clips in a moment, but Mark tells us he just liked the stock. Kind of borrowing from the Roaring Kitty GameStop days, but this stock is very different from GameStop. GameStop was selling for less than they had in net cash. So, literally cash minus expenses. They had more cash left over after their expenses than the company was trading for on the stock market, mostly due to heavy shortselling in GameStop stock. So, is GoPro another GameStop? Well, let's look at the financials and let's see if there's value inside of the financials and if there really is a company to buy here because maybe the market is just mispricing it because after all that was the roaring kitty argument. Hey, you know, I like the stock. The numbers look good. It's selling for an upside down valuation. Why why should I not buy this? Seems like I'm making a good investment. Can you say that about GoPro? Best thing to do is actually just go look at the financials. So, if we look at their last financials from GoPro, we'll find out the following. First of all, their revenues are down about 31% year-over-year. Their costs are only down about 25%. Which means that their costs actually grew relative to their revenue, right? So, their profits got squeezed even more. Like, what you would want is if your revenue is down 31%, hopefully at least your costs are down 31%. No, the company is just operating on really bad efficiencies. And so their profit was actually down 42%. And their losses year-over-year were up 2.7x. So the company's clearly in decay. Not only is the company in decay, but the founder of the company literally had to provide a $20 million bailout loan to this company to keep the lights on. Not really good. In fact, we have a little note about exactly that here. Here's the note. The founder ended up on July 8th lending GoPro $20 million because they were so out of money. The CEO also got these inside options that basically gave the CEO more upside if the company ended up getting acquired, which it did as we heard on September 1st. And so now the CEO is going to get his $20 million loan back plus about 9 million on those options. Now in fairness, this was disclosed and so everybody kind of knew this loan that was going on. But what about Mark? Mark says this looked like a cheap company and that he liked the valuation of the company. And when we look at their balance sheet, that's where I get a little confused because see, the company has about $97 million in cash and cash coming in the door. They do have another about $86 million in inventory, but that assumes you can sell that for the value they have listed here. Okay. So, if we scroll down a little more, we can find out what their bills are, also known as current liabilities, which are due within the next 12 months. They have bills of $353 million, which if you're keeping track, that means they are upside down by about $200 million. Actually, more than $200 million. It's like $270 million that they're upside down. Closer to 200 if you assume they could sell all their inventory, which let's say they could sell all their inventory. Fine. You're still upside down by $200 million. And since the company's losses have just gone up by 2.7x and you're burning $51 million a quarter based on the last quarter's report and you're upside down by 200 million, your cash situation is literally getting worse by the day. This is a walking zombie that can't afford to pay its bills. Just to put this into perspective, a different day. GoPro was losing $560,000 a day, which means Mark's $9 million investment in an equivalent sense would be gone in 16 days of losses because their revenue has been bobbing around. They lost about 81 million in the first quarter here. They lost 9 million during the Christmas season. and they lost 51 million in the reporter that was just reported or the quarter that was just reported. Uh and they've been burning cash, right? They don't have a really good balance sheet. This is a company you look at and you're like they're about to go bankrupt. This doesn't look good. There's nothing fundamentally for you to like here unless you know you happen to think uh some uh some buyouts potentially about to happen. uh to put another perspective on this. Let's look at their balance sheet a little bit differently. Okay, so let's put it side by side. If I add together generously cash that they have, let's assume everybody's actually going to pay them the money they're uh that GoPro is owed. Those are the receivables. And they sell all of their inventory. In this case, they've got a total of $174 million of assets, but they got to pay bills that they owe, other bills that they already have on their desk. Like, these are bills coming up. These are bills already sitting on their desk, other debts, other debts, right? They got to pay all this crap within the next 12 months. That totals to $45 million. If you subtract these two numbers, you can see there's over a $200 million gap, $230 million upside down. Now, on paper, if you add in goodwill, they're still upside down. And if you calculate a tangible book value, they're also upside down. So, no matter how you look at this, whether you use long-term assets, which is included in tangible book value, whether you include their reputation, which is basically worthless on paper, any way you slice this company, they are upside down. The book value is negative. Okay? This is not something you would throw $9 million at unless for some reason you thought this puppy was just about to pump. In my opinion, I want to be clear, okay, that's just my opinion as a financial analyst looking in from the outside. This seems weird. On top of that, the company had already disclosed a few things. They already disclosed in March that they broke their loan coven covenants. In other words, literally debt they already had, they were already in default on. This was a walking bankruptcy. They also reported in May that they had substantial doubt that they would be able to last or survive for the next 12 months. That's called a going concern. Now, that's commonly heard of companies that are brand new startups, but it's really uncommon for a company that's been around and public for 11 or 12 years, unless they're about to go into bankruptcy, right? Um they're paying the bank $250,000 a week. they're trying to or that that actually ends up rising up to a million dollars as more of these uh loans come due. And they really disclosed that they need to refinance or get everything done by January of 2027. Otherwise, they're going to have a problem and they're going to have to pay a $5 million fee if they hit bankruptcy events. So, like the banks were already telling everybody, "Y'all figure this out because you are a sinking ship and we are about to foreclose on you essentially. Like, we're going to call your loan doing payable." That's not good. Now, in fairness, uh, on May 11th, the company did disclose that they were open to selling or merging, but that is a pretty common disclosure when you're about to go bankrupt because you're trying to put up the little like rescue balloon. It's like you're you're stranded in the ocean and you're shooting the orange flare in the sky. You're kind of like, "Please, please, somebody, somebody come buy us." So, you could actually see that in their last uh report. You can see that right here. In May, they authorized a process to evaluate a potential sale or strategic alternative. But like as you're going bankrupt, who would want to buy you? That's the question here. Like the fact that they're disclosing, hey, like please buy us, you know, somebody else has to take the yolo on you and cover some of these losses. So it's just it's weird to expect that somebody would buy a ship that is burning and on fire. And it's weird to put some rumors say up to 30% of your net worth, Mark. Uh some people say uh they don't know what his net worth is. They just know that he put in $9 million right before this acquisition was announced. Here's some other things to note in terms of timing. Okay. So on July 13th, Mark crossed a 5% ownership in this company. It took him about six to seven weeks to actually make the filing that was due within like five business days or within seven, you know, calendar days. Uh then on August 27th, he makes a sponsored video on GoPro and does not mention that he owns shares in the company. He just mentions that it's sponsored. On August 30th, there's a Bloomberg story about his ownership and two days later, a merger is announced at a $114 cents per share, which this stock, if you look at the stock right here, it's obviously cratered. But if we zoom in over here to the last hour, you could see the Bloomberg story drops over here about Mark's ownership and the stock goes from about 70 cents roughly where Mark bought it and just runs every single day uh up to aboutund or a buck 70ish. So if you bought it for 70 cents and you're at a buck 70 now, you're up uh you know in this case over 2.4x which is pretty impressive. Now to acquis like is Mark selling? Doesn't look like it. We don't know. Uh if he just gets the $1.14 from the acquisition price that was announced, he'd still be up like 60s something%. So still pretty impressive. But this timing is a little odd. Let's just be very clear about how that timing works. And we understand he's not in finance, you know, Mark. So maybe he just didn't know. But just to make it a little bit more clear. Okay, you owned more than 5% as of July 13th, which is literally per your own filing. Okay, you're required to file within 5 business days of crossing 5%. Which would have been on July 20th. You didn't file until August 20th, which just happened to be about 12 days before the merger was announced. Of course, the SEC only issues little slap on the wrists for late filings, but it's a little strange. So, what all of a sudden means basically you turned $9 million of investment at maybe an average uh cost per acquisition of about 69 into the cash deal price of a buck4. Uh which means a company that was losing $9 million every 16 days, you made a $9 million bet on and now have a $15 million stake at that deal price. But the stock is actually trading for even more than that deal price right now. So you're up even more. It's very interesting. So how does this all reconcile? Like how do we put all of this together? Because the other thing that's a little sussy is in the video that Mark made, he updated the video description to indicate that he was now an owner in the stock. See, take a look at this. I used the Wayback Machine and I just slapped in the YouTube link and I got a capture for August 27th and this is the description here. Pre-order your Mission One ILS. Use code Markiplier. Okay, so you and I, we know this is an affiliate link, but note it doesn't actually say anywhere that in the description at least that this is a sponsorship. There's no note that this is an ad. There's no note that this is a company that he owns or has exposure to. And it's unclear if that necessarily was required to be said. He could just be making an investment. He's not required to tell everybody that his portfolio. Uh but I, you know, whatever. Ignore this. I mean, I think most people know that affiliate links are sponsored in ads, but Kim Kardashian got smashed for doing exactly that. I mean, she got smashed in many ways, but um she, you know, she made had an affiliate link on her Instagram and then she got fined uh pretty heavily for not disclosing it was a paid sponsorship. Now, in fairness, in the video, Mark, which happens to be 1337 long. That's actually pretty elite. Uh but anyway, he did end up updating the description, and in the video, in fairness, he does say sponsored by GoPro, but he doesn't mention anything about the stock sale uh or ownership. He has since updated the description. It says here in red, this is the updated, well, some of this is the updated portion. I am the largest holder of GoPro and I've been yapping about Mission One. So, this little section right here, these words, I am the largest shareholder of GoPro. That's largest individual outside of insiders cuz he owns like 8 and a half% or whatever. Now, that was added uh right in Yeah, I've been yapping about GoPro for months now. Right there. I am the largest shareholder of GoPro and I've been yapping about GoPro for months now. Uh or the new Oh, he even updates it to new Mission One cameras for months now. Interesting. It's almost like he's trying to sort of restructure. Oh yeah, I bought it because I've been shilling the Mission One because I'm really excited about the interchangeable lenses. And you know, this looks like a refrigerator behind me, but it's actually dry storage for lenses because I'm so into lenses and now GoPro has interchangeable lenses. I love it. That's why I'm going to buy the stock because I'm really hopeful about the stock. That's a fine defense and a fine argument. I'm just saying to put $9 million on your belief that this company that's losing as much money as it is doesn't have a chance of surviving in the next 12 months. To put $9 million into the stock within, you know, 60 days in total here of a merger being announced just seems a little sussy because they could have just as easily been bankrupt by January. you just happen to nail the 60 days right before the merger. Okay, maybe let's go look at what he says on the Philip DeFranco show because this is where he gives his sort of side of the story, if you will, and um let's see if it checks out in alignment with what's being said. >> Reach out to Markiplier and among other things that we talked about, he explained, you know, why he thought that it was undervalued. I figured that what the market cap said it was is undervalued simply by the name. They are literally the >> So that's that's it. And that's fine. That might not be really good financial analysis, >> but I mean if you're looking at a $105 million market cap company and they're literally upside down, they're negative on the cash that they need by $230 million. Some people would argue even $105 million of value is way too high, that it should be zero. They owe way more than that. >> Kleenex of cameras. Um because people will colloally call an action cam a GoPro even if it's not that brand. >> That's fair. That's fair. It it you know, nobody's arguing that he's a finance guy. It's like, hey, GoPro is such a great household name. I think it should be worth more. The timing is just really inconvenient. if that's true. >> Uh, so I I just I just assumed from that alone they had value, but I knew that they were up to something. It seems >> I knew they were up to something. That's always an interesting line, especially when you have a what appears to be a branded affiliate link that you know is use code Markiplier. That sort of implies that you're talking to some people within the company, which doesn't necessarily mean that they gave you inside information. Is it possible that there are, you know, nudge nudge wink winks that occurred like, "Hey, man. Yeah, dude. the stock's about to pop. Don't tell anyone. Yeah. And if that happened over the phone, nobody will ever know. If there are documented emails or text messages that say things like you should buy the stock, that would be insider in information. Insider information would be really bad. Insider information is a form of fraud. So, uh, it's not illegal to trade on, you know, things that are publicly known. Uh, the company did announce that they were for sale. Uh, there was a very clear disclosure that the founder was issuing a bailout loan, very clear that they were going bankrupt. All that was public information, but insiders inside of GoPro would have known that they were in talks with a company to be acquired. So people knew about when it was going to happen, the price, who was buying it. So maybe this I knew they were up to something was enough of a nudge nudge wink wink to be confident enough to throw $9 million at this at the timing. Does that rise to the level of insider trading? It depends who gave that nudge nudge wink wink, I suppose. But uh let's put it this way. It's It always seems to be uh one way rich get richer, huh? >> Horribly ignorant of me to say that I accidentally got to where I am. Uh but there was no intention to get to this point. >> Even Even Philip's face here is like bro >> where I have to submit paperwork and say I am a blah blah owner of this company. I had never done that for any company before. It was just, you know, I I I really believed in it and I was like, "This seems like a good uh investment." And then I learned what a 13 >> this seems like a good investment based on which financial metric based on which part of the balance sheet, the cash flow statement or the income statement? The part where they're losing 51 billion, a million dollars a quarter. the part where their margins are getting worse, like their costs aren't falling as fast as their revenue is plummeting. Was it that part? Was it was it the fact that they don't have money to survive between now and January? Was it that financial? Which part >> G was and I'm like, "Oh god, I have to file with the SEC. Oh, oh god." >> And when you invested, >> this is a classic move, by the way. This is actually exactly the playbook that Roaring Kitty used. And in fairness, Roaran Kitty actually had financial metrics he could point to. He actually could point and say, "Look, here is why this is fundamentally dirt cheap." And he was right here. We don't have that. We have horrible financials. Now, Roaran Kitty, remember when he was perfect purposely late to his live stream and he comes with like the what was it? The neck brace or the broken arm or whatever? or he was like in a cast or a sling or something like that and he's acting like kind of like a clown or whatever. That's the point. You don't want to come across as, oh, I'm a suit, you know, I should have known better because, you know, then it could be branded as like, well, you should have known better and intent. And that's kind of why, oh, I didn't. Now I have to file paperwork with the SEC. This is crazy. This is weird. I had no idea. I believe did you file as like kind of a a passive uh investor? >> This part doesn't matter. D versus G. Who cares? anything about the company for your 13D and had like insider information. >> And so Mark, he appears to believe at least to some degree in the company. He's used GoPro cameras for some of his YouTube videos. He's shot the behind the scenes for his debut film, Iron Lung on one, right? He's clearly a fan of the company. >> I mean, I'm not I'm not trying to be a pie in the sky optimistically. No, they they could have had. It's like, look, they released their financials. You know, I I definitely looked at it, but >> I definitely looked at Well, that face is not the face of I definitely looked at it, but let's just say he did. Please point to me which part of their financials you found attractive enough to put $9 million on right before a merger for a 68% gain. You know, sometimes you got to swing for the fences. And I think >> Yeah. Yeah. Yeah. You just got to yolo it sometimes. You know, just, you know, this stock has been cratering for for five years. Let's just pick now to swing for the fences. >> This is an example of GoPro doing that with the Mission One. That is a swing for the fence. >> Notice how he's rebranding everything now. Like I it was actually the Mission One, man. That was the catalyst. Maybe it was. That's like going all out on a camera and it actually is legitimately great. >> Then also while you had many, you know, excited by or amused by Markiplier, you know, throwing himself into the space like this, you also had the news of his investment rubbing some people the wrong way. And part of that reaction appears to be connected to how a few days ago before this report came out that he was investing and before the the spike in the stock price, Markiplier put out a video hyping up GoPros's new camera, but it's called the ILS Mission 1. It's tiny. It's relatively or comparatively cheap, like 700 bucks minus any extra equipment. And you've got GoPro marketing it as a cinema camera suggesting that you could use it to >> right blah blah blah. You can watch the rest over with Philip. But uh I mean we'll pull up the part where he does acknowledge that this is a sponsored video. So what's useful about that is you can see he argues, hey, you know, I said it's sponsored. Now, why does that matter? Because if we keep going in the Philillip component, we end up finding a moment where he says, "Oh, well, you know, there just isn't a convenient place to disclose that I own the stock." I uh you know, I I checked it was sponsored and I thought that would mean like I'm covered then, but to each their own. So, I asked Mark what his reaction was to that. What's your reaction? >> I don't know actually what what is the line that's being crossed. I think for me when I look at it, I believe very much in it and I'm willing to put my money where my mouth is. The accessibility that opens up. I want more people to make movies. I want more people to make YouTube videos. I want more people to make content that looks really >> Yeah. So, I'm going to throw $9 million in and now I'm going to brand it as I I did it for society. >> I don't even know if GoPro was aware that I was an investor because it's like that's just filed with the SEC. Apparently, when you buy stocks, the company doesn't know who's buying it until they publicly disclose through one of those forms. >> And then he because you're not buying from the company, you're buying from other shareholders. >> Also added that he used what tools were available to let people know that there was some sort of money element for him here. >> But I've said sponsorship from the beginning because I wanted to imply that I had some monetary gain behind it. I do not know the exact rules for with which I need to disclose and I I want to make that very clear. I asked the >> This is like a little bit of looping things together here because he's basically saying, "Oh, I said it was sponsored because because I own the stock, but wait, you had an affiliate code. You had the Markiplier code." So, you would have said sponsored because you had the code if that was indeed a sponsorship. And if you were trying to imply that somehow the sponsorship label is now also supposed to mean, oh, by the way, I also gain a benefit if the stock goes up. I mean, I that's a pretty creative argument, but it just seems backwardly invented. So, bottom line, what are the odds the SEC comes after GoPro and Mark with some form of subpoenas or investigation? I'd probably give it about a 60% chance they investigate this. This is pretty public and it's sussy. What are the odds that anything actually ends up coming out of it? And there's documented proof like a smoking gun. Here's the text where we told you we thought this was about to moon because we're cooking something and we're giving you that nudge nudge wink wink. What are the odds that actually comes up? Probably closer to like 3%. So bottom line out of all of this, unlikely anything's going to happen. This company is expected to be acquired by a photonix company that works in like defense as well. Uh which is quite interesting. Uh the company is doing a reverse merger. So the stock is expected to still be public. That's one of the reasons I think why the stock is trading for more than a buck 14 because you're basically rolling this private company into GoPro and then they'll be reporting combined financials and then hopefully it's up from there. And it doesn't look like Mark has sold anything yet. And even if he tried to, I would imagine the stock would just tank because it's not very liquid. Uh so for right now, he's got some paper gains and a little bit of a story to defend. >> Why not advertise these things that you told us here? I feel like nobody else knows about this. >> We'll we'll try a little advertising and see how it goes. >> Congratulations, man. You have done so much. People love you. People look up to you. >> Kevin Papra there, financial analyst and YouTuber. Meet Kevin. Always great to get your take.