Gibson's guitar stock plummets

TheBuffalo

Silver Supporting Member
Messages
2,696
I mean. Who's to say they won't go back up?

I think it's a stupid idea yes. But that does not mean that the price will stay down forever.
 

Sirloin

Silver Supporting Member
Messages
17,446
Gibson over extended themselves purchaseing a couple of companies a few years ago that continue to lose money. Thats the big reason why their guitars have become a wealthy or single mans guitar. Love them but when you can get a killer guitar from PRS, Schecter, ESP, Chapman and others for $600 to $1200 fully loaded with good stuff its hard to spend $3 or 4K on one guitar.
Chapman?!?! :rotflmao
 

Marco.au

Member
Messages
461
In other words, does Gibson want to get their name in items of dubious quality and value?
oh, wait…
 

rburkard

Double Platinum Member
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3,660
For the prices that Gibson are selling their guitars it is hard to imagine that they are again in financial troubles. Henry made several mistakes regarding acquisitions but even the new management seems to follow his path. Why the hell did they buy MESA? You don’t make money with amps anymore. Marshall’s amp business is less than 10% of their entire revenue. They are making their money with Marshall branded alarm clocks and the likes. Gibson wake up! We are well into the 21st century.
 

Scrutinizer

Member
Messages
1,384
Your understanding is incorrect. The shares are not actually shares in the company, they are worthless entries in a database that have zero legal standing. (So kind of like an NFT, but there is no blockchain involved.)

Rally may sell or transfer ownership of the guitar at any time, and has no onus to notify anyone that this happened. The guitars are not really involved other than the pictures of them. Watch the KDH video in the OP, he mentions this stuff.

It's a 100% complete scam IMHO. The only way anyone could have made money is to find a bigger sucker to buy their useless "shares".
Thank you for explaining this.

I looked at Rally's site but they do not explain how the scheme/scam actually works. #%@&^#%$ criminals.
 

Sundaze

Member
Messages
170
Gibson does not get a free pass on this ponzi scheme.

They actively advertised the deal, it is still live on Gibson's website (https://hello.gibson.com/rally/). so, passing the buck to Rally does not fly.

They sold the guitar for twenty something thousand dollars and allowed Rally to evaluate it at $65k. Everybody saw straight away that the guitars were not worth that money.

They arguably spent more money marketing the thing than the actual sale of the guitars. I guess they wanted to have a try on the NFT market. Every company's purpose is to make money, but you would expect ethical behavior from a company this big and influential.

Ponzi schemes like this work based on the trust that innocent people have on the brand. It sold because Gibson put its name behind Rally.

And no, I did not buy any of this Gibson's shitcoin. But I feel sorry for the innocent people that fell for Gibson's bs through Rally.
I agree with you fully...

This clearly falls under the RICO Act.
Also, the SEC...

While they do spell out that you own “Nothing” and are getting “ Nothing”,
it’s still a SCAM.

Rally’s false appraisals and obvious manipulation of the object and market are “ Theft” alone.

It boggles my mind, how anyone couldn’t see through this scheme.

BUT....
Its been said,

“There's a sucker born every minute, and two to take them!”

And then...
Mark Twain,

It’s Easier To Fool People Than To Convince Them That They’ve Been Fooled!

I love Vintage Gibson.
Anything made by Henry or the Latest crew are nothing, but copies...
You all know that all Gibson is, is the name. Nothing more...
 

nac

Silver Supporting Member
Messages
468
First of all, Gibson is a privately held company. Their stock didn’t plummet.

Second, they are making more money than they know what to do with.

How do you know they're making money?
 

ltsmash1200

Member
Messages
786
If I rob you and give you an FAQ and a disclaimer explaining the process it doesn't make it right, even if I never get prosecuted.

Gibson not inventing it doesn't do anything to absolve them either. If I go to them and say "Hey I am gonna go to a retirement home and fleece old people out or their pensions, I just need to use the Gibson brand to do it." And they give me their blessing, they are still scumbags.

You say you're not defending them, but IMHO, you absolutely are by trying to minimize their role in this and lessen how obviously scummy it was.

Nobody was robbed though. If you say to me, "have I got a deal for you, I'm going to sell you nothing for $10!" and I say, "great idea, here you go!" I haven't been robbed. I just gave you money. If the information is readily available and easily accessible, which in this case, it is, then it's the consumer's responsibility to know what they're buying. It's basically just gambling. It's not illegal for the casino to take your money that you're too dumb to stop giving them.

I also did say it's sleazy already. I just don't think it's fraudulent. It would be fraud if Rally never actually owned the guitars. They've been doing this for several years already though with other assets like cars (Porsche has actually invested in the company), comic books, action figures, and sports memorabilia so SOME people must think it has value.

I imagine what happened is people who don't play guitar but use the platform to invest in those other things thought it looked like a good thing to jump on and they did, especially given the names, Slash and Iommi. And honestly, after reading some older pre-guitar related articles about them, I'm not really even sure I'd consider it sleazy. I would just say their initial valuations of the guitars were ludicrously optimistic making it, as I have said, a really, really, incredibly, stupid thing to invest in.



That scheme does not sound like an NFT. Correct me if I am wrong about how this scheme works:
1. Gibson makes a prototype guitar, sells it to a 3rd party
2. 3rd party creates a shell company and transfers ownership of prototype guitar to this new company.
3. Shell company exists only to own and/or sell this one guitar.
4. Shell company may or may not sell the guitar at some point in the future.
5. Public can buy shares of this shell company.
5. Shares can be traded, so value can go up or down.
6. To buy the guitar, Trogly will have to buy the shell company from the share holders, at which point the share holders will get filthy rich or at least get some of their money back.

Yes, this is how it works.
 
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HERSCHEL

Silver Supporting Member
Messages
7,537
my personal opinion is that while Henry J and JC both have had some major faux pas (2015, Play authentically, NFT), i think a lot of the QC issues are a bit overblown, though maybe im not correct here.

I do like gibson guitars and the company as it currently is doing business is doing a lot right, some of the models they've put out in the past couple of years have appealed to me as a player. However, even as i sit here being a Gibson guitar owner, i feel like the prices the way that they are will only have me looking at the used market(maybe) which i don't expect to change. if i paid $4000 for a new guitar i would probably get nit picky about minor finish issues and whatnot, but I don't look at guitars like they are works of art, they are meant to be played and in the natural course of handling/playing/maintaining them they will take on some character so im willing to give some leeway here where others expect perfection. granted i have seen some obvious problems coming out, such as the fretless wonder that was posted last week, i feel like they could do a little better, but as with any handmade product, there will be signs of it being handmade good and bad. i know im contradicting my self here a bit, but really i don't think im their target market.
A single run of guitars with modern features is the same as getting in on a ponzi scheme? GTFOH with that nonsense.
 

ltsmash1200

Member
Messages
786
People were basically robbed, though, because Gibson and Rally deliberately made it as confusing as possible. Look how people even in this thread don't understand what the deal was. Including you, apparently, because you answered affirmatively to an incorrect description of this stuff.

Look, it's clear I am not gonna convince you, and you definitely aren't gonna convince me on that point.

At least we can agree it was totally scummy.

We can be done, but that is how it works.

"At times, Rally Rd may decide to sell an offering and liquidate the existing shares. Investors have no say in when this happens but will receive a portion of the proceeds from the sale that’s proportional to their investment."

"Although you may own a piece of an asset, Rally Rd is ultimately the one that can make the decision to sell it. There is no meeting or vote on the issue. Therefore the company could sell an asset that you would have preferred to hold."




"Can I make money on Rally Rd.?

It might be possible for an investor to make money on Rally Rd. If the company underlying your investment earns a profit, you'll receive dividends. If the value of your shares increases, you could also sell during the monthly trading window for a profit. Additionally, if your asset is sold by Rally Rd., you'll receive a proportional share of the proceeds. However, there is no guarantee that your investment will increase in value or that you will make money. Investing is inherently risky, regardless of what sort of asset you are putting money into."



"So we're always tracking the data through the app and trying to understand when the right time is to actually exit an investment. When we do the funds that come back from liquidating that car get distributed among the investors."


"Here’s how it works: Rally Road finds a classic car for sale and creates a new entity (a subsidiary of an LLC) whose sole function is to hold the car’s title. The startup then holds an SEC-registered offering where potential investors can view details about the car and if desired purchase one (or more) of 2,000 equity shares in the entity that holds the car’s title.

When the offering is completed there’s a 3-month hold period, after which Rally Road’s app provides a monthly trading window where new users can place bids and existing investors can place asks, allowing the equity shares to be traded on a marketplace. All trades are settled through a registered broker dealer (that’s currently licensed in 32 states with more coming), and the SEC permits any level of investor to participate in the offering and second-market trading platform as long as they pledge to not invest more than 10% of their net worth.

It’s a pretty novel concept, that’s for sure. The cars are 100% owned by the special purpose entity, which in turn is 100% owned by the investors that hold the 2,000 shares of stock.

The special purpose entity structure gives investors lots of interesting potential opportunities down the road. For example, someone could theoretically make a tender offer for all 2,000 outstanding shares, and if investors accepted the offer the buyer would own the car in full. Or imagine a world where museum wanted to borrow a certain car and offered to pay a one-time dividend to all shareholders."



"In general we intend to hold assets for the long term. However, we do keep close tabs on investor sentiment through the app, as well as broader market conditions. If we do liquidate an asset, the proceeds get paid to the shareholders (similar to a company acquisition)."




Since shareholders don't have any say when they sell, unless it's a buyout from another shareholder, you may still lose money on the sale if they decide to sell it when the value is lower than when you bought it, but they sell, they pay you out.

It seems to me the video in the OP is misinterpreting the disclaimer on Rally's site. When it says there is, "no guarantee of distributions," it means dividends because as the quotes above explain, there are some scenarios in which dividends may be paid out. Dividends are not guaranteed. The second half of that sentence goes with the line above it. If they choose to sell at an inopportune time, i.e. less than what the original asking price was, you lose money -- you may not have any return of capital if the value drops far enough. As he points out, they may not hold assets long term, so that gives you more risk. But all of this is on their website in the FAQ and the disclaimers which means it's available for anybody looking to invest to read.

He also says, "even if you own 100% of the shares you don't own the thing." They explain on their website that any shareholder at any time can offer to buy out the remaining shares and take ownership of the item:

"An asset is eligible to receive buyout offers at any point after the completion of that asset’s Initial Offering. In order for an asset to exit the Rally platform, a qualified, legitimate offer must be presented to investors.

All buyout offers are placed through the Rally app by selecting the “Buy this Asset” link at the bottom of that asset’s main page, and submitting an offer. Once placed, our team qualifies both the offer and the potential buyer to make sure both are legitimate.

All qualified offers are presented to shareholders for a non-binding poll. This poll is conducted via email and contains all pertinent buyout details including potential returns. Each shareholder may respond only once per poll and can select “Yes”, “No” or an option to lets our Advisory Board decide on their behalf. During the buyout process, all trading (Live and Post-Only) for the asset is halted, pending the results of the poll.

Upon conclusion of the poll, results are distributed to Rally’s 3rd-party Advisory Board that is composed of experts across the industry and our various asset classes. The Advisory Board takes into account both individually-weighted and share-weighted poll results as well as market conditions when making a decision. To date, the Advisory Board has only voted yes when either the individual- weighed results, share-weighed results, or both indicated “Yes”, but reserves the right to do otherwise if appropriate.

After a poll ends, results are shared with our 3rd-party Advisory Board who have 24 hours to ratify the results of the poll. After this period, results are then distributed to both investors and the potential buyer – if a sale is accepted, funds will be distributed to investor’s accounts within 7 business days of the sale."




Again, I think it's a really, really, really, incredibly stupid way to invest your money, but there doesn't seem to be any fraud involved.

The video in the OP also seems to misunderstand or misrepresent how Rally themselves make money. They find a person who wants to sell an item, the offer the shares, Rally gets a percentage off the top, the person who is selling gets the rest of the money, and the shareholders own a company that controls the item.


Anyway, nice chatting with you.
 

Stratburst70

Member
Messages
6,230
That scheme does not sound like an NFT. Correct me if I am wrong about how this scheme works:
1. Gibson makes a prototype guitar, sells it to a 3rd party
2. 3rd party creates a shell company and transfers ownership of prototype guitar to this new company.
3. Shell company exists only to own and/or sell this one guitar.
4. Shell company may or may not sell the guitar at some point in the future.
5. Public can buy shares of this shell company.
5. Shares can be traded, so value can go up or down.
6. To buy the guitar, Trogly will have to buy the shell company from the share holders, at which point the share holders will get filthy rich or at least get some of their money back.
Worst elevator pitch ever.

Don’t take this as a criticism of your post, but of the scheme that Gibson and Rally concocted. If someone had come to me with a pitch like this, I would have politely declined and promised myself never to do business with them again.
 
Messages
11
The venture in which Gibson partnered with Rally for trading guitar stocks.. they are now being sold at a significant loss.
Hope nobody here is heavily invested. :/

This might be irrelevant, but aren't most stocks plummeting right now, as they tend to do when massive inflation / CEO greed hits citizens and wars sever major arteries in the world's economy? All of my stocks have taken a massive hit.

I can't be an alarmist about that because that's how people lose money. I do think it's wiser to invest in no-management-fee index funds than individual companies most of the time.
 
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QuickDraw

Member
Messages
1,549
Sure, Gibson has made some great guitars, but when was the last time another company as big as Gibson did anything like what Gibson has done under its current or previous management?
are you kidding here? there are much bigger companies doing much, much worse things. that still doesn't absolve Gibson from wrongdoing. was there wrongdoing in this case? Legally, I'm not sure, morally yeah probably.
 

RetVet2018

Member
Messages
713
are you kidding here? there are much bigger companies doing much, much worse things. that still doesn't absolve Gibson from wrongdoing. was there wrongdoing in this case? Legally, I'm not sure, morally yeah probably.
Guitar companies? Which ones? What’d they do? I’m not talking about businesses in general. That’s how politics gets involved.
 

pointyguitars

Silver Supporting Member
Messages
90
In some ways this is not unlike what the Green Bay Packers have done in the past with their stock offerings. Per the stock offering website:

In connection with the offering, interested fans should note:
  • Stock in the Packers does not constitute an investment in "stock" in the common sense of the term.
  • The Packers will have no obligation to repay the amount a buyer pays to purchase Packers stock.
  • Anyone considering the purchase of Packers stock should not purchase the stock to make a profit or to receive a dividend or tax deduction or any other economic benefits.
  • The Packers believe offerees and purchasers of Packers stock will not receive the protection of securities laws with respect to the offering or sale of Packers stock.
  • The Packers bylaws and NFL rules severely restrict transfers of Packers stock."

So for $300 you get a certificate suitable for framing and an invite to the annual shareholders meeting. Seems that many fans are perfectly fine with that deal as the most recent stock offering raised $64M for the team.
 

MagusFaerox

Member
Messages
985
I'm not sure what this has to do with NFTs. NFTs make at least some kind of sense.

But, as for the actual scheme...I'm really not sure how different this is from certain other derivative securities except that a) there's no market for it and b) it's perhaps even more predatory.

Regardless....I think this is the line for me with Gibson. I've got my one Les Paul, bought before all this stuff new in a store with a discount. If I need more LPs, I'll buy PRS McCartys.
 




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