Support.com (NASDAQ:SPRT) stock saw a 231.78% surge in its share price after announcing a merger with integrated Bitcoin miner Greenidge Generation. Trading volume of the stock sky rocketed to 243.1 million shares on Monday compared to its full-day average of 148,000 shares. This resulted in the stock being the strongest gainer on U.S exchanges for the day of trading. Here’s everything you need to know about the Support and Greenidge merger.
Firstly, Greenidge Generations Holdings have entered into a definitive agreement with Support to complete reverse merger. The deal is expected to be closed within the third quarter for 2021. Support.com shareholders will gain 8% ownership of the combined company, while Greenidge shareholders will hold the remaining 92%.
Under the terms of the transaction, 5% of Greenidge common shares will be paid to Support.com shareholders, and the additional 3% will be paid in cash. In other words, Support.com stockholders will receive approximately 0.124 shares of Class A common stock of Greenidge for each share of SPRT (based on the current trading price).
The cash portion of this merger will value Greenidge at $1.1 billion, and the shares portion to be valued at $860 million. Investors are using this data to compare Greenidge’s value to competitors such as Riot Blockchain (NASDAQ:RIOT) and Marathon Digital Holdings (NASDAQ:MARA).
Risks associated with the SPRT merger
Firstly, the merger deal is subject to Support.com Inc’s shareholders’ approval and both companies meeting all regulatory requirements. A delay or failure to close this deal could cause the merger to collapse. In addition to the merger agreement, the pricing stability of bitcoin mining can be volatile. The industry has a cyclical structure meaning there is a boom and a bust period which was seen in 2018. The performance of Greenidge is dependant on the pricing of bitcoin, much like a traditional mining company. However, with Bitcoin being an unregulated security this may exceed some investors risk appetite.
Furthermore, it is unknown whether Greenidge has a positive balance sheet, meaning the companies financial positioning is unknown. Once Greenidge is listed as a public company information regarding the financial health of the business will more accessible to investors.
SPRT Merger Summary
In conclusion, the reverse merger has intrigued investors on Wallstreet. With the value of Bitcoin entering new heights in 2021, the mining industry is seeing serious stock growth. However, investors should always incorporate risks associated with any merger into their own risk management strategy.
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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