Why Khaby Lame’s $975 Million Deal Is Drawing Scrutiny From Securities Experts

Khaby Lame’s headline-making $975 million (approximately R15 billion) all-stock deal has briefly catapulted him into the ranks of paper billionaires. But behind the surge in valuation, securities lawyers and market analysts are warning that the transaction bears many of the hallmarks of a speculative stock promotion rather than a fundamentally sound business combination.

The deal, announced in January, saw Hong Kong–based Rich Sparkle Holdings acquire Step Distinctive Limited, a company linked to Lame, in exchange for newly issued shares. In the days following the announcement, Rich Sparkle’s stock surged more than 650%, peaking above $180 (approximately R2 869) per share and pushing the company’s market capitalization to roughly $16.3 billion (approximately R266 billion). At its height, Lame’s indirect stake was valued at approximately $6.6 billion (approximately R106 billion).

The rally was short-lived. Within days, the stock fell more than 75% from its peak, reigniting scrutiny around how such a small, thinly traded company could justify a multibillion-dollar valuation almost overnight.

A Sudden Strategic Pivot Raises Red Flags

Rich Sparkle listed on Nasdaq just six months earlier, in July 2025, after selling roughly 1.25 million shares at $4 (approximately R63) each—an IPO that implied a valuation of about $50 million (approximately R797 million). According to filings with the U.S. Securities and Exchange Commission, the company generated less than $6 million (approximately R96 million) in revenue in 2024, largely from designing and printing financial materials.

Following the acquisition announcement, Rich Sparkle repositioned itself as an influencer-driven commercialization platform, promoting plans to build an “AI Digital Twin” of Lame and grant him effective shareholder control. Legal experts say the abrupt shift in strategy is troubling.

“It’s very suspect,” says Brenda Hamilton, a securities attorney at Hamilton & Associates Law. “They went public with one stated business model and within a year pivoted into a completely different business while issuing a massive number of shares that changed control of the company.”

Hamilton also notes that Rich Sparkle has not yet filed an SEC form confirming the transaction’s closing, despite publicly announcing that the deal was complete, an omission that raises further questions about compliance and transparency.

Valuation Driven By Hype, Not Liquidity

At the core of the controversy is how Lame’s stake is being valued. While the stock’s surge briefly implied billionaire status, Rich Sparkle’s public float is less than 5%, meaning only a small fraction of shares trade freely. In such cases, market prices can be easily distorted by low trading volumes and speculative buying.

Veteran short seller Jim Chanos, founder of Chanos & Company, describes the situation as “completely like a Chinese stock promotion,” a phenomenon in which little-known companies experience dramatic price spikes disconnected from revenue or cash flow. “The whole thing just seems nuts,” he says.

Laura Posner, a partner at Cohen Milstein who specializes in investor protection, agrees. “I’ve only seen stock charts like this in pump-and-dump schemes,” she says, pointing to the rapid rise and equally rapid collapse of Rich Sparkle’s share price.

Celebrity Influence Meets Market Reality

Lame, who commands more than 160 million followers on TikTok, commented publicly on the deal nearly two weeks after it was announced, writing: “Congratulations to the team at ANPA, very excited to be a shareholder and looking forward to doing great things!”

The influencer’s rise is undeniable. After losing his factory job during the COVID-19 pandemic, Lame began posting minimalist, wordless reaction videos that quickly went viral. Within two years, he became the most-followed individual on TikTok, earning an estimated $20 million annually (roughly R319 million) through brand deals and partnerships.

But securities experts caution that social media reach, while valuable, does not automatically translate into sustainable public-market value.

The rapid inflationm and deflation of Rich Sparkle’s stock underscores a broader warning for investors; attention can move share prices, but it cannot replace fundamentals. When valuations are built on hype, thin trading, and opaque structures, the risks often emerge just as quickly as the headlines.