How that might affect stock price
Every time we reward people with shares the number of shares potentially outstanding goes up. Increasing the bonus means the number will go up more quickly. So owners need to be aware of this, and take it into consideration as they think about their stake in iConsumer.
We extended the 500 share new shopper and 250 share referral bonuses through June 30, 2019.
More outstanding shares means each share represents a smaller slice of iConsumer. Whether that’s a good thing or a bad thing depends on what we get in return for issuing that share. If issuing those shares increased the value of iConsumer, it’s probably a good thing. (I think it’s a good thing.)
We believe strongly that each new shopper adds value to iConsumer. You’ll see us point out that when eBates sold to Rakuten, eBates investors received about $450 per member. (More members, more money.)
Selling Shares for Cash is Easy to Understand
When we sell shares for cash, the math of whether it’s a good thing or not is easier to figure out. Let’s say iConsumer has 10,000 shares outstanding (this is an example, we actually have about 121,000,000 shares of RWRDP potentially outstanding).
Assume the stock market values each of those 10,000 shares at $1. That means the market values iConsumer at $10,000 – in market parlance that’s a $10,000 market cap.
Assume we sell 100 shares at $1 each. Now, there are 10,100 shares outstanding. And $100 more in the bank. So, each share of stock represents a smaller slice of iConsumer, but iConsumer is arguably worth $100 more, so the share price of iConsumer is unlikely to change.
Let’s say we sell those shares for $2 a piece, instead. The price of the original 10,000 shares is more likely to go up.
Shares as a reward is more complicated
What happens when we issue a new shopper 500 shares? Is the price going to go up, down, or stay the same? First, the market is fickle, so no predicting. But, it’ll depend a lot on the value that the new shopper brings. Perhaps said even more clearly, it’ll depend on the perceived value that each shopper brings.
One of the questions that will be asked is “Is this a “good shopper?”. To get those 500 shares the new shopper has to make a reasonably significant purchase. We’re not interested in awarding 500 shares to somebody who isn’t a serious shopper. And we don’t want our members to receive 250 shares for referring just anybody.
If that new shopper is typical, they’ll generate a good amount of cash for us, paying for themselves quickly. If the market values that revenue the same way Rakuten determined the value of eBates members, that’ll add $450 of market cap to iConsumer’s value.
Which means we traded 500 shares in exchange for an increase in the value of iConsumer of $450. That’s a good trade in my book.
Disclaimer: Lots of assumptions here. No predictions. No offer to sell or buy our stock. We’re allowed to promise nothing, other than to try very hard to be as transparent as possible and to be worthy of your interest. Our members should expect to Share. Earn. Learn.
If interested in being an investor, please check out our invest page.