Khaby Lame’s bios on TikTok and Instagram no longer display Rich Sparkle’s stock ticker. The concealment dates back to early April when several brokerages, including Fidelity, E*Trade and Charles Schwab, blocked online trading or imposed restrictions to the roles of the company behind the recent merger with Step Distinctive Limited, responsible for monetizing the brand of TikTok’s biggest influencer, with more than 160 million followers.
Three months after the announcement of the operation, valued at US$975 millionhowever, no formal documents confirmed that the integration was completed, and there were no records showing that Lame’s company had received a stake in the new entity.
Shares of the Hong Kong-based, publicly traded corporate services provider and financial printing company soared in January to almost US$180. Short-term investors seized the opportunity. Now, they have plummeted by more than 90%.
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Business Insider revealed the details of what it calls an “agreement shrouded in mystery” on the 9th. And only last week, the facts that came to light began to resonate in the creator economy bubble environment.
Billed as a milestone, the collaboration envisioned using TikTok’s most-followed creator to drive a broad e-commerce strategy, using AI to recreate Lame’s image, manage brand partnerships, and sell games, toys, and consumer products.
Or combos influencer + artificial intelligence sounds like music to the ears of investors, driven mainly by the sound of hype and the promise of trillions from these two industries.
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At the time, analyst Adi Tiwary even declared that the time for the IPO of creators was approaching. The reality, however, tells a different story.
Heard by Business Insider, Jeff Frommer, an investor with business in the sector, was incisive: “Going public is like getting a large-scale investor. You need to have a real business behind it.” Which does not seem to be the case with Lame and the plan called “Digital Twin”.
The illusion of 75 million new shares issued by Rich Sparkle to acquire Step Distinctive and secure 36 months of exclusive global commercial rights to the influencer’s content, name and likeness is timely to revisit a discussion that took place just over a year ago: vanity metrics can cause froth in creator economy multiples.
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Indeed, marketing has become a complex field, and investors are beginning to treat online personalities as real business assets.
The Lame & Rich Sparkle fiasco, in turn, is clear proof of the warning made by Andrew Duggan when the deal was announced. When you step outside the platform ecosystem and compare this value to already established entertainment transactions, the valuation becomes much more difficult to reconcile.
The advisor made a timely parallel with music to justify the red flag raised. Weeks after the announcement of Lame’s (fake) deal, it was reported that Britney Spears sold her catalog for US$200 million.
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“These assets represent multigenerational intellectual property with proven royalty durability in radio, streaming, synchronization, filming and live performance,” Duggan wrote.
He then used the example to confront Lame and his deal with Skechers. According to Duggan, based on recent legal documents, the collaboration was worth approximately $1 million over two years, and was structured around content deliverables rather than equity or long-term revenue.
“While significant, this is in line with performance-based influencer pricing rather than enterprise valuations approaching a billion dollars.”
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The investor and advisor, with 20 years of experience in the market, Phil Ranta, reinforces Duggan’s premises. He recently wrote that the industry is highly driven by “vibes” and believes that highly capitalized companies cannot be “creator-first.”
Khaby, in turn, shows that the line between real and synthetic (and inflated for the market) influence is more easily broken than capitalists might believe.
The “shell company” valuation lie
At the end of last year, with his irresistible peculiar irony, the Entertainment Strategy Guy wrote a satire about headlines related to production companies and creators “seeking” huge valuations for their “media empires”.
Because the agreements for these deals are not public, the analyst strongly believes that many of these “absurd” valuations have loopholes in the financing agreements, such as investors having rights to exit early or part of the investment being a loan.
Along the same lines, analyst Ian Whittaker echoed Duggan’s criticism and added: “The $975 million valuation has more to do with the shell company trying to inflate its value than a true valuation.”
It’s true that the wordless comedy translated with Lame’s explicit in-your-face mockery didn’t just give the influencer millions of followers. Really, he built a business.
As Scott Van den Berg detailed, Step Distinctive Limited managed licensing, e-commerce and brand partnerships. Khaby owned 49% of the money. The remainder was held by strategic partners, including a Chinese e-commerce giant called Anhui Xiaoheiyang.
Under the terms of the agreement reached by Berg, Rich Sparkle projected that its audience would could generate US$4 billion+ annually in sales live trading. The expansion plan targeted the US, Middle East and Southeast Asia over the next three years.
Again, in a comparison to the music industry, Duggan points out that online cultural cycles move faster than at any other time in entertainment history, while traditional music catalogs have proven that they can survive technological transitions because their intellectual property (IP) cuts across formats and generations.
The main question posed by the expert is that creators’ IP is still proving whether it can maintain its defense once the algorithmic advantage normalizes and the audience’s novelty wears off.
Duggan argues that a serious assessment, based on established entertainment comparables and endorsement benchmarks, not headline momentum, would need to consider concentration risk, platform dependence and uncertainty about longevity. “And most of all, Lame’s involvement and production over the next five years.”
For now, the only certainty is that the influencer and his team remained silent in the face of Business Insider’s questions about the developments in the case.
The same law as the media economy
In 2024, it generated about $250 billion in revenue last year, about 10% of the global media and entertainment (M&E) market.
The fragmentation of consumers into microcultures reinforces the accelerated erosion of the traditional media business model, while creator media grows exponentially, with a projection of reaching US$600 billion by the end of the decade.
Two months ago, Night Media Inc., a talent management company that represents social media celebrities like popular Twitch streamer Kai Cenat, raised US$70 million to finance acquisitions and expand its activities into the gaming, sports and music sectors.
Linked with Mr. Beast in the recent past, Night is one of the leading talent representation agencies for contributors to platforms such as YouTube, TikTok and Twitch, and plans to use its new capital to acquire companies that can expand their business beyond management.
When the investment was announced, Ranta questioned whether it would be another bubble investment. From this point of view, the analyst understands that, just like in MCN 1.0 (multichannel networks), investors are convinced that they are buying the future of entertainment, when, in fact, they are acquiring relationships without major competitive barriers.
If the assessment is understood from a structural point of view, Ranta argues that, unlike MCN 1.0, Today a creator’s path to success is clearerrequiring more knowledge, tools and operational work.
Therefore, these capitalized organizations will buy companies that already master the best routes for efficient monetization.
Despite the counterpoint, Ranta concludes that “this strategy smells like a bubble.”
After Night’s round, Simon Owens wrote that the creator economy is getting “a little euphoric” when it comes to venture capital investment rounds. And he brought a pertinent provocation:
“What is the fundamental difference between an influencer marketing agency that raises $70 million today and Vice that raised US$70 million a decade ago? Both are subject to the same laws of the media economy.”
It’s true that traditional media took decades to optimize their business models. And, as Doug Shapiro so aptly puts it, the creator economy must undergo similar refinement and “hardening” over time.
The moment calls for the prudence suggested by Entertainment Strategy Guy: someone will need to discover this gigantic disconnect between social media statistics and the inability to translate into any other media, because “there is something wrong.”
In one of my first articles of 2025, in which I analyzed long-term returns and valuations in the creator economyI left three questions: are the valuations of the creator economy justified? Are they sustainable? Who are the winners and losers?
We are in 2026, and we still have no answers.
