(Bloomberg) — Torchlight Energy Resources Inc., the tiny oil company touted on Reddit as a possible short squeeze, moved quickly to cash in on its sudden popularity by selling about $100 million in new shares.
The Texas-based oil driller that started the year with a market valuation of $71 million disclosed the share sale in a federal filing late Monday. Torchlight, which has seen its valuation more than double in just the past week to more than $1 billion, said it may issue another $150 million in stock.
Torchlight shares fell as much as 25% on Tuesday and were down 18% to $8.11 at 12:34 p.m. in New York. Chairman George McCabe was the company’s largest investor as of Feb. 1 with a 10.6% stake; Chief Executive Officer John Brda was the No. 3 holder with 1.6% as of mid-March.
The company, which closed at an all-time high on Monday, was incorporated in 2007 in Nevada as Pole Perfect Studios Inc., which planned to offer fitness classes it said were “centered around a ‘fireman’s pole’ often found in gentleman’s clubs.”
Torchlight has been inactive for more than four years, according to data from Texas’s main oil-industry regulator, and the company warned as recently as last month that it might go out of business. The explorer has accumulated almost $114 million in losses since its inception and expects more losses going forward.
(Updates stock decline in third paragraph.)
More stories like this are available on bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2021 Bloomberg L.P.