A lot of people have pretty conflicted feelings when it comes to sponsorships on YouTube. On the one hand, it helps creators fund their activities so they can make a living providing the free content we all get to enjoy online. On the other hand, it sometimes leads to

creators pushing pretty sketchy products and services onto their audience, especially when it comes to the finance space. But lately, there's been a particularly concerning trend seemingly picking up speed in the space: YouTubers being paid to promote risky publicly traded stocks onto their audience at

times without being all that upfront about it. Now, influencers doing shady promotions maybe not the most shocking thing, but what is shocking here is how much money we're seeing being thrown at creators. We're talking tens of thousands, at times hundreds of thousands of

dollars to promote these stocks onto viewers, and in at least one case, a $1.25 million campaign to push these stocks. Now that last example did also include a newsletter, but you get my point. It's a lot of money and makes it harder not to

sell out every day. Even in the world of influencers, these are pretty ridiculous rates and it all raises a number of questions: Why are these companies paying so much, and are these stocks really as attractive as these YouTubers highlight, or is there something else going on here?

Well, to try and get to the bottom of that, I decided to do what I do best: I put everything to a spreadsheet. I went through 123 videos across over 50 different channels to gather a list of 56 different stocks that have been promoted over the last 3 years, and I

looked into them, gathered some key details, went through their filings, trying to figure out what caliber of company these influencers were choosing to partner with here. And to be clear, this is not a full analysis or recommendation as to whether we should buy, sell, or short any of these stocks.

And this definitely isn't a comprehensive list of all the videos on YouTube promoting different positions. I know for a fact there are more out there, I just had to stop looking at a certain point or else I'd never get this video out. But with the list of securities I

did come up with, I wanted to see if there were any commonalities or themes among them that we could maybe dive into. And what I ended up finding was pretty wild: from sketchy head office addresses to companies being promoted while on the verge of

bankruptcy, and even some companies seemingly admitting to paying for these videos and then trading off of them. It's a wild ride, but we're getting ahead of ourselves. Let's start with the videos themselves. You can see here that I've

listed out all the videos I came across with these types of integrations. And the first thing you probably notice is we have a pretty wide range of channels and content here. Some of the videos are just paid interviews with executives of the company, so definitely a more tame type

of promotion, more in line with how companies have traditionally tried advertising their stocks. Others are your typical video with a sponsored segment or fully dedicated deep dives where the YouTuber highlights the company as an attractive investment. Some even ending on the note that they've invested.

themselves, and once you hear the story you're going to know why I just bought a good chunk of it myself. A number of channels are, interestingly, right-wing political channels or other sorts of conspiracy-focused videos that talk about corruption, power, and influence.

This is why the Deep State cabal is so worried about President Trump, because they know they can't control him, which does seem like a good fit. You know, they're experts on the topic, makes these integrations a match made in heaven. Now I also have listed here the amount of

money that these creators were paid for these videos, and the reason we know this amount is thanks to a nifty Securities Law known as the anti-touting statute, or Section 17b of the Securities Act of 1933 in the US, which requires that

anyone who is paid to promote a security disclose how much they were paid and who's behind the payment, among other details. Something that, while not regulated at the federal level in Canada, we do have similar expectations at the provincial level, namely in BC where

similar laws have actually been put in place. And again, we have some pretty hefty payments here ranging from $500 for smaller channels to pretty commonly tens of thousands of dollars, and in a few cases even more. Now, companies advertising their stock isn't inherently

anything new, but a number of these videos are pretty shady with how they go about telling you that they were paid, with some disclosures being incomplete. Furthermore, this video may or may not have been sponsored, and others never mentioning in the video itself that they

were paid to talk about the stock, only including a disclaimer in their description. So while I want to be clear that some videos were very upfront about the arrangement, a good chunk of creators seemingly try to present the stock as though it were their own

genuine or honest idea. And while virtually every channel highlights that this is not financial advice and these are risky positions, the message is pretty obvious, right? And sure, not every video here has a discernable impact on the stock's price, but a number of the larger

channels do seem to move the needle from time to time. I reached out to them to sponsor this video because of what Trump is planning. They're listed on the NASDAQ under the ticker symbol PO, symbol on your screen now. I asked them to sponsor today's video. Let me break

down five reasons why I think this company has enormous potential. I reached out to them because of what Trump said the other night and I asked them to sponsor today's video. Yeah, it's a pretty notable correlation, we'll call it, with there being no other notable press releases

or updates for these companies that would otherwise explain these jumps. What's also pretty sketchy here is the seeming coordination across different channels for these sponsorships. Well, it's not uncommon for companies to carry out these kind of marketing campaigns and these types of bursts for any given

stock. We do often see YouTubers posting their sponsored videos all around the same date or two, almost as if those paying for these videos are trying to have the biggest impact on the stock's price by kind of concentrating the buzz around it. So yeah, it's all pretty shady.

but let's take some time to get to know the companies that these YouTubers claim have attractive investment opportunities for their viewers. You can see here that I've listed out all the public publicly traded stocks that I came across who are running these types of sponsorship

campaigns on YouTube. And as a quick aside, it is worth noting that the companies who are having their stocks promoted here aren't themselves directly paying YouTubers. Instead, they're usually hiring a third-party investor relations or marketing company who themselves are

going out and paying these creators. So it is unclear how involved the companies themselves are with these marketing decisions. But regardless, they're the ones who are ultimately behind the payments. And when you look across the list, the first thing you probably notice is the sector these companies all seem

to operate in. Well, we do have a handful of IT or healthcare companies, the majority of firms are resource plays of some sort. Whether it be uranium, gold, oil, or some other mining operation, which is a pretty complicated area to invest in. It's incredibly capital intensive. It

requires a lot of industry expertise to properly analyze and compare companies. And so much of your success just depends on what the fluctuating commodity price is. So pretty risky area to be pushing on to retail investors. The second notable point is that a lot of these businesses

are tiny, which in a way makes sense. You wouldn't expect Apple, for example, to pay YouTubers to promote their stock because at their size, it would take a lot of buying activity to move the price. So a YouTube sponsorship isn't likely going

to have any impact, but when I say tiny, I mean the median market cap for these companies is $16.6 million US, meaning most of these stocks are classified as nanocap stocks. You know that prefix we use when we talk about measuring atoms and other tiny things, that's the size of these companies. A handful of these companies even have market caps of just over $1 million, which is like having a publicly traded company for a single McDonald's location. It's crazy, but the craziest similarity we see

here is that the majority of these stocks, 40 of the 56 in fact, are all based in the same country as yours truly, Canada. Even the stocks that you'd otherwise expect to be American, like American Airs or Alaska Energy Medals, a slip up that even some of the YouTubers

make an American company that has one of the best setups I've ever seen. Now given that Canada is a big resource play, maybe that makes a bit of sense, but it is weird, right? Most of these YouTubers are Americans, so it's strange that they're

promoting stocks for their Northern neighbor, but believe me when I say that's where the sketchiness starts. 30 of the 56 companies on this list are actually all based in Vancouver, in fact pretty close to one another, and a handful even have the same head office

address, and in a few cases even similar directors and managers. Now I'm sure the room's ringing with alarm bells now, but I do want to clarify a couple things cuz I know what you're thinking. Vancouver city with a reputation for money laundering that even has a scheme named

after it's sketchy head office details and directors, it's all starting to sound like a scheme. Uh, but to be clear, we don't have any evidence from the outside here of fraud. These do appear to be genuine ventures based on what's reported. What this is evidence of, 

however, is how tiny and undeveloped these companies really are. You see, the majority of the head office addresses listed for these companies actually belong to law firms and consultancies who help companies go public and in some cases assist with the administration and governance processes

of these companies. Now, as for why Vancouver, it does happen to be a global finance hub, but it also gives these companies access to the Canadian Securities Exchange and the TSX Venture, both of which have much lower listing requirements than many other US exchanges. And we do see the assets and

operations for these companies diversified geographically. Some are based in Canada, others have assets in other places. So what seems to be happening here is these companies are opting to list in Canada, using these firms to essentially outsource a chunk of their corporate responsibilities and

then using Canada's close ties to the United States to ultimately market their shares to American investors, either with their TSX Venture listed shares or US dollar over-the-counter offerings. Which is all seemingly legal, it's just wild, especially again given the close proximity of all these companies. It

really feels like a public listing stock factory operation. But you know what? I'm gathering that we're getting some trust issues with these companies and we really haven't given them a chance here yet. So what sort of businesses do we have here? What are they operating like?

and what sort of financial growth opportunities can we have by investing in them? Well, I can't really say, not because I didn't look into these firms and try to figure out what their finances looked like, but just because there's not much to look at. Not only do

all but four companies have negative earnings, not only do all but three not even have positive operating cash flow, but most of these companies don't have sales. 34 of the 56 companies listed here didn't report any sales over the past 12 months, and all

but four of these companies had multi-million dollar deficits with the median accumulated deficit sitting at roughly $24 million US, representing how much money on the books these companies had lost for their investors. So, we're taking the term Venture pretty literally here with a bunch of companies

indicating in their filings that they're still in the exploratory stage, and in many cases still need to determine the economic feasibility of what they're doing. In other words, a chunk of these businesses are companies that have a chunk of land that may or may not have promising

resource deposits that they're still trying to figure out if they can even economically mine or not. And for some of these companies, despite being so deep in the red and having no revenue, we still see them manage to spend pretty heavily on one key category: promoting their

stock to investors. Take Traction Uranium for example. Since 2021, they spent $7.3 million Canadian dollars on exploration and evaluation expenses and $1.1 million investing in exploration and evaluation assets, so call it roughly $8.4 million that they spent towards developing their

Core Business over that same time period, the company spent a similar amount, $6.7 million on advertising and marketing fees, which might sound like it's referring to marketing for customers, but one, the company has no revenue, so it's not like they're seeing any benefit

there, and two, the company has indicated in its press releases that the spending was to market for investors in fiscal 2023. For example, the company paid the equivalent of 3.5 million Canadian dollars for stock promotion, which is more than it spent that year on

exploration and evaluation. And while this is just one example, for many companies, investor relations and marketing were pretty consistently one of the largest expense items on their income statements. And and here I know what you're thinking, and the conclusion everyone's jumping to, this is a pump and

dump, especially given that one of the other big expense items for a bunch of these companies is share-based compensation, meaning that directors and managers are being paid a chunk of their salary in shares of the stock, which does give them a pretty clear incentive to

try and push the stock price higher, but to be clear, we don't have any evidence of insiders specifically selling their stocks around these video campaign dates. Uh, managers and directors who work in the company do have to report their trading activity publicly. I didn't find

any examples on the publicly available databases of insiders trading around these video sponsorships. What we do have, however, are examples of the companies themselves benefiting from these campaigns by issuing new shares after creators have helped to boost the stock price. Take Poot Technologies for example.

on April 21st they paid Creator ticker symbol U 20 $2,500 to cover their stock. The sponsorship is never disclosed in the video itself but rather only with a vague sponsorship tag and a further disclaimer in the description. Now before

this integration, the stock had closed at $144 Canadian a share, but one week after this video was posted the company announced that they had secured two separate private placements for $10 million each at a price of around $3 a share. Meaning that over the span of just

one week, the company was able to more than double its valuation for this capital raise. All seemingly thanks to one $22,000 YouTube sponsorship. Not a bad fee to pay by the way. That same company three weeks prior had disclosed in its annual filings that it didn't expect to

have enough money to cover its obligations over the next 12 months and that there was quote substantial doubt about the company's ability to continue as a going concern. So you can see why seemingly these companies are willing to pay so much to these YouTubers for these

sponsorships. In some cases, it's literally keeping them alive. You can see that just over the last year, most of these companies have raised money through share issuances and I know in this case we do see that investors still manage to earn a return even with

this sketchy activity, but that's definitely not the norm. 81% of these promotions, every four of five stock mentions from this list, would have lost investors money with the average return from when the video was posted for the entire sample sitting at 34% and the

average loss if you pick one of the 81% of losers is 52.4% so yes maybe for some of these companies the money is just what they need to finally develop to start their business and become profitable but for others it really does feel like

investors are being taken for a ride and really oversold on the promise while some of these companies are presented as if they're brand new startups a good chunk of them have actually been around for decades with a number having gone through multiple name changes even in

some cases completely pivoting what their business is this company used to be focused on uranium now they're gold this used to be a life sciences company now they're mining I guess and yet based on these sponsored videos you think these are brand new Enterprises about to

skyrocket so you really have to ask yourself with these companies if these Ventures are indeed on the cusp of a big Discovery or innovation or just using these YouTubers and investors to stay alive oh and before you make that judgment there is one more thing we have

to talk about another group we've only briefly touched on that throws another conflict into the mix the third party marketing agencies themselves as mentioned the majority of these campaigns are carried out by just a handful of marketing companies for example gold standard media and its list

of affiliates that itself not surprising most YouTube sponsorships are actually negotiated through these sort of middlemen but what is notable is that in some cases these agencies have actually themselves participated in share issuances for these companies or have

otherwise been paid in restricted stock units or stock options for the businesses they're carrying out these campaigns for and because these agencies aren't typically classified as insiders we don't get to see their trading activity from the outside or whether they've taken advantage of their own

campaigns to sell their shares but guess what we don't have to be all that imaginative about their strategy because look at this disclosure from Gold Standard Media about what they do with the shares they're paid quote we routinely sell the securities before

during and after the dissemination of the publication what maybe there's something I'm missing here but this sounds like a basic admission to pump and dump creators to influence their audience to to effectively buy a stock and then selling to the market that doesn't sound right

now we have seen instances of of regulators requiring further disclosures around these campaigns so maybe behind the scenes there's more regulatory scrutiny or reporting that we just don't see from the outside and yes these compensated shares and options do typically face initial lock-up period

so that they aren't flipped onto the market immediately but some of these sponsored videos have been paid for and posted after this initial lock-up period so if that's not evidence that viewers on YouTube face a mountain of conflicts of interest when they take the paid for

stock picks of YouTubers online I don't know what is now I do want to highlight that not every company on this list is doing the same degree of sketchy activity we're highlighting a handful of examples and looking at the aggregate level data but there are some

examples here of businesses that have revenue and Tech are even profitable but the point is is that when you group the stocks that we see being promoted on YouTube here we see a lot of shaky businesses and you can debate whether it's within their rights to advertise on

YouTube and you know campaign to to raise capital but just in my opinion it's a shame this is how we're seeing that kind of activity being done yes companies should be able to try and raise money for their Ventures but doing so by having influencers throw their

weight seemingly blindly behind a stock without any real scrutiny of the position and advertising it to what we can only assume are mostly amateur investors at times not even caring to mention in the video that they were paid for this stock mention and when you throw in the sketchy middleman marketing

activity it just sounds like a recipe for losing viewers money and that seems to be the track record and yes we do often see people emphasize the risk of these positions that they are in fact not investment professionals and you should not trade based on what they say but come on like we we know what the

goal behind these sponsorships is right you wouldn't be paid tens of thousands of dollars unless the company expected to recuperate that somehow which leads us to the takeaway we all probably knew by now right which is not to trade off the stock picks that someone tells you

online especially when they're paid to to talk about it anyway that's a video and I will leave a link to the spreadsheet I've put together in the description down below maybe even add some uh videos to it but probably not I'm tired this was way more than I

bargained for I'm going to switch back to reviewing TikToks or something but hopefully it sheds a light on the situation and emphasizes you've got to be critical when it comes to investment content online anyway thanks for joining me today and

The Sketchy Companies Paying YouTubers to Promote Their Stock

Investing and personal finance educational videos with a hint of economics, posted regularly.

I'm a CFA and CFP professional working as an analyst for an investment management company in Ottawa. I'm a huge finance nerd and am passionate about the field - I think people lack the resources they need to make educated financial decisions, and hopefully this channel helps with that!

For collaboration/other inquiries: richard@theplainbagel.com

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DISCLAIMER:
The videos on this channel are for education purposes only and do not constitute financial advice. Richard Coffin does not provide recommendations on The Plain Bagel - those looking for investment advice should seek out a registered professional. Richard is not responsible for investment actions taken by viewers and his content should not be used as a basis for investment trades.

The Sketchy Companies Paying YouTubers to Promote Their Stock

The Sketchy Companies Paying YouTubers to Promote Their Stock

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