BLBX Merger Target Forms Supply Chain Partnership, Core Financial Risks Unchanged

What happened

Blackboxstocks' merger target, REalloys, announced a strategic partnership with Mission Critical Materials to establish the first U.S. mine-waste-to-magnet supply chain, targeting defense agency needs. This move aligns with the pending REalloys merger, which would reverse takeover BLBX and dilute current shareholders to approximately 7.3% ownership. Despite the optimistic spin, BLBX's filings reveal persistent losses, negative free cash flow, and going-concern warnings, with only $93k in cash as of September 2025. The stock has soared 260% over the past year on speculative merger hopes, contradicting a DCF-implied intrinsic value below zero. This partnership does not address BLBX's fundamental issues, such as declining subscribers, competitive pressures, or the severe dilution from the merger.

Implication

The REalloys partnership may bolster the merger's narrative but fails to improve BLBX's core operational weaknesses, including shrinking revenue and subscriber erosion. Current shareholders face extreme dilution, with their stake reduced to about 7.3% post-merger, limiting any potential upside from the new venture. BLBX's stock surge is driven by speculative sentiment, not fundamentals, creating a high risk of a sharp correction if merger expectations falter. Without a turnaround in the legacy business or more favorable merger terms, the company remains vulnerable to liquidity crises and further shareholder dilution. Therefore, new capital should be avoided, and existing investors should consider exiting given the unattractive risk/reward profile highlighted in the DeepValue report.

Thesis delta

The DeepValue report's STRONG SELL thesis is unchanged, as the REalloys partnership does not mitigate BLBX's financial distress, going-concern risks, or the dilutive impact of the merger. This development merely adds to the speculative narrative without altering the fundamental bearish outlook, reinforcing that any investment remains highly risky with minimal margin of safety.