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RIME: The Reverse Split Wreck That Won r/pennystocks

Retail investors on r/pennystocks piled into RIME (Algorhythm Holdings) on February 27, with five posts and 58 upvotes zeroing in on the company's 1:200 reverse split, $23M in revenue against $23M in losses, and a 6,811% debt-to-equity ratio. The discussion—led by a viral DD post—painted the stock as a case study in value destruction rather than a turnaround story.

  1. RIME's 1:200 reverse split in February 2025 turned a $50,000 pre-split stake into $640 six months later, a 98.7% decline.

  2. Revenue fell to $23.5M from $32.6M year-over-year, while the company burned $23M annually on an AI logistics division that grew ARR to just $9.7M.

  3. Redditors flagged a debt-to-equity ratio of 6,811%, toxic financing at 9% interest, and a management team with a seven-year track record of reverse splits and -99% returns.

On February 27,

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$RIME became the second-most-discussed ticker on r/pennystocks by score, drawing five posts, 16 comments, and 58 upvotes. The conversation centered on a single question: "Is RIME the most obvious scam on the market?"

The Reverse Split Reality

The most upvoted post on r/pennystocks—a detailed DD with 86 upvotes—walked through

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$RIME's February 2025 1:200 reverse split. The math: a shareholder who owned 200 shares at $0.50 pre-split ended up with one share worth $1.28 six months later, a 98.7% loss. The post called it "a physics experiment in value annihilation."

Redditors pointed to the company's

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$RIMESemiCab logistics division, which grew annualized recurring revenue from $2.4M to $9.7M—but at a cost of $23M in annual spending. Meanwhile, the karaoke division (Singing Machine) dropped 28% year-over-year, and total revenue fell to $23.5M from $32.6M.

Financial Red Flags

A separate post highlighted

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$RIME's debt-to-equity ratio of 6,811%—"checked three times, not a glitch," the author wrote. The company recently borrowed $10M at 9% interest with 34% locked as collateral, a structure one Redditor compared to "payday lender territory."

Another technical analysis post noted that

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$RIME was "entering a risky phase" after a news-driven run, with volume spiking near highs but follow-through momentum weakening. The author warned that "if buyers are exhausted, that move is usually down."

The Broader Picture

The r/pennystocks subreddit, which averaged 0.56 sentiment across 39 posts on the day, hosted a collective bear case. No Redditor offered a bull thesis that didn't rely on the stock being "cheap" or a potential acquisition. The consensus:

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$RIME is a "reverse-split wealth transfer" wrapped in AI buzzwords.

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