By: Jeffrey Cohen, Investment Advisor Representative
US Advanced Computing Infrastructure, Inc.
We identified 12 stock tickers that might have been working towards a short squeeze, or at least be 'in play' stocks with large expected price swings. Here is the list: $VIEW $MULN $INDO $BKSY $AMC $SIGA $BBIG $VRM $SAVA $BRDS $BBAI $MKD
This morning we review the list of stocks that might run today, at least a few of them, and see how they were behaving pre-market. General situation with these stocks:
- Poor fundamental performance
- Financial trouble, possible liquidation risk
Overall context is that the stock market is up from the lows of a week ago. Yesterday it was lower.
The corporate bond market was also weaker yesterday.
We look for movement pre-market as a good indicator.
INDO Indonesia Energy Corporation Limited
They own two blocks in Indonesia. No options (on MarketWatch). Zero borrow (on shortables.com).
SEC EDGAR SEARCH - you can look for INDO and pull up their annual report (foreign registration). This is a long report. One block produces about 5,000 barrels per month (at a cost of ~$60/barrel) and the other is under development.
Looks like a strong candidate for a short squeeze.
$BBIG Vinco Ventures
Traded 350k shares PM
Not many shares traded, price down to $5.28 pre-market (from a recent $10 level).
No economic profit, government contractor.
MKD Molecular Data
Trying to stay above $1.00. This stock can move, has social media support.
AMC AMC Entertainment Holdings Inc. Cl A
This stock trades actively in pre-market. 1.7m shares. Moved up and down $1.00 during pre-market. Volatility play like MARA?
SEC EDGAR SEARCH.
500M+ shares x $13/share = $6.5B market cap.
Loses money, even when all the movie theaters are open.
Make money on food and beverage (75% margin), but lose on the theaters.
They bought stocks in a gold and silver miner.
Negative net worth (-$4.5B tangible net worth, ~$2B if you include intangible assets).
They spend money in their operations every quarter, looks like about 1/3 of a billion per quarter.
Looks like they have to borrow or dilute the stock to stay in business.
Again, actively traded pre-market.
BRDS Bird Global Inc.
Not very active pre-market. Trading at $0.79, and was a SPAC at $10.00 earlier this year.
They are an environmentally friendly company that makes scooters and bicycles, sells them at cost, then makes money when people buy and operate their system. They share revenue, or get a fee when someone rents a scooter or bike due to their software and operating framework. This company loses money, and likely cannot make money for a while. The buyer / client buys the scooters and bikes and operates the system. Stock is down 92.5% from the SPACC price.
Stock is not moving.
VIEW View Inc.
SEC EDGAR SEARCH
Smart building platform, that likely needs significant of capital to complete their product development. Likely should not be a public company, but more of a private equity play.
Earnings release. No 10-Q.
Revenue is great, up to $74M. Cost was $195M, so they lost ~$120M. They expect 2022 revenue at $100M to $110M, which does not seem to be alot.
GOING CONCERN warning in the next SEC filing. Not sure how they survive.
BTW, stock is trading higher today at $1.61 at the time of writing (1014 ET).
VRM Vroom Inc.
Traded 125k shares pre-market. Not moving alot today.
MULN Mullen Automotive.
This is a development stage electric vehicle (EV) manufacturer.
Traded 9.3M shares pre-market, up $0.10 pre-market.
SEC EDGAR SEARCH
This is a very interesting recent 10-Q. This is the focused firm, the EV spinoff.
The revised 10-Q had some corrections, they are not in default on one of their loans.
They have assets, and $55M in shareholder equity.
Profitability: They lost $69M in the last 6 months, cash basis they lost $25M.
They are issuing shares of stock to vendors and employees ($24M + $3M = $27M).
They raised $12M in debt
They sold and raised $40.xM in common stock.
They issued a new preferred class of stock for $64M, which is expect to pay a dividend.
They paid back $15M in debt.
Net-net, if you spend $25M per quarter, you have to raise money constantly. Developmental stage company.
They used $27M in cash for 6 months, and they have ~$40M in working capital. This gives them about 9 months of runway. They think this money will keep them going.
Their debt looks odd to us. Matured notes, promissory notes, real estate notes, and other types of loans. They borrow money from third parties and officers of the company for relatively short periods of time, less than 3 years. Interest rates are up to 28% on the promissory notes. This looks anomalous. They paid down many small loans.
They also have terminated a development relationship with Linghong Bao (not sure of spelling) due to force majeure due to COVID. They have an expensively structured equity issuance agreement with Raymond James. They never paid the $50k cash retainer.
They also lost a lawsuit with IBM and owe them ~$5.6M dollars.
They owe back taxes to the IRS and California Employment Development Corp. The IRS has a lien on effectively all of their assets.
It's like a bad movie, and yet it is up $0.11 PM.
Cannot short it, zero borrow.
Yes, there are options, but the puts price the company as low as $1.25 in 2 days down through $1.05, then down to $0.80, then $0.55 in 2024. $1.50 puts are very expensive, so you likely have to short the stock and 'ride it out.'
SAVA Cassava Sciences Inc.
This is a biotech stock that traded at $1.25, then reached for $100, and is now back to ~$30. They do have current assets (cash) and very few liabilities. They likely can operate for a long time. Company worth $237M in shareholder equity. The market cap is $1.23B, so there is an extra $1B in market cap. Do we know where that comes from? Was there a drug development or progress made? We don't know, and someone would need to dig into it. Is the candidate drug pipeline worth one billion US dollars.
BKSY Black Sky: down this morning
Down $0.25 pre-market. Pre-market 1.1M shares.
SEC EDGAR SEARCH
Analysis of the company. $135M in cash, down from $165M.
Assets are primarily in satellite work and in fixed assets (satellites).
They have shareholder equity of $166M.
Market Cap is $394M.
Revenue went up from $7M to $14M YtY for the quarter. Cost rose to $17M.
However, SGA cost almost tripled from $8M to $24M for the quarter. Very high costs.
They lost $20M in the quarter.
They used up cash.
They paid $10M in salaries in stock.
No financing this quarter, as they did it last year.
Spent down their cash.
They were a SPAC, with 12 satellites in operation. They lose money, and likely have to raise money.
It popped from $1.18 to $3.27, so why did that happen?
Starting a leasing company, captive, despite their exceptionally high cost of debt.
They have a Texas-based car dealer and software to enable car buying and selling.
This stock has liquidity issues.
SIGA SIGA Technologies:
Down this morning
Possible Money Pox cure. Volatile stock.
Fell to $10.79 this morning pre-market. It was a $8 / $9 stock before the rise.
Be careful with these stocks. They are risky. Deck chairs on the Titanic stuff.
Overall market and financial scan:
US Treasury Yields are up
Corporate bonds are down (yields up)
US Equities down
Up at the open. Europe up. Nikkei up. China stocks down.
US Dollar strengthening vs Yen and Euro.
30-year UST up about $0.40 to $139.84
Pre-market trading tends to be more expensive, unless shares are very heavily traded. The spreads tend to be much larger (up to 10% of the share price), and the depth of the top of the book is light. In other words, the best bid / offer is made on 100 shares or less. So, you cannot really trade round lots, and it will be very expensive.
It is tough to trade pre-market. There are people doing this at 4am ET and trading these illiquid, short squeeze names. That is very interesting to us.
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