Investing in the stock market - Discussion

[TGokou]

On 5/13/2020 at 12:23 PM, NucksPatsFan said:

Mergers always have to be voted on by the shareholders.

 

There's always that chance, no matter how small, that the vote could be not in favour. 

 

But given who runs VTIQ and who they're rumoured to merge with, it's a pretty much certainty. 

So I just looked into this and I'm not even sure if most of you have even looked into this. Correct me if I'm wrong in my assumptions.

 

This is basically a reverse merger with Nikola taking over control of the public company VTIQ. VTIQ currently has approximately 30 million shares with ~300M cash on hand. In essence this stock should be worth $10. Nikola plans on doing a stock offering for 525M at $10 a share which would imply 52.5M shares that will be added to the share count. In addition Nikola has said they will have a value of 3.3B after the merger which implies a total of 330M total shares outstanding. Based on the merger, VTIQ shareholders will only own 9% of the total company after dilution which is a $10 share price. Somehow I'm skeptical that after the merger the stock price will still be at $25-30 a share unless they can get private offering buyers to buy in at 25$-30 a share. That would imply a valuation of over 9B for a company that has an average of 2B in annual 'potential' revenue spread out over 5 years and that is assuming they don't have any operational hiccups which will be impossible in Covid environment. Not saying it can't happen but seems like the easy money is already priced in. 

[TGokou]

On 5/13/2020 at 10:30 AM, Duodenum said:

Plus the market cap of VTIQ is currently 950 mill and the transaction has nikola pegged at 3.3 billion. This stock is still gonna go up. 

Yah no I'm pretty sure that's not how it works...

[CBH1926]

8 hours ago, TGokou said:

So I just looked into this and I'm not even sure if most of you have even looked into this. Correct me if I'm wrong in my assumptions.

 

This is basically a reverse merger with Nikola taking over control of the public company VTIQ. VTIQ currently has approximately 30 million shares with ~300M cash on hand. In essence this stock should be worth $10. Nikola plans on doing a stock offering for 525M at $10 a share which would imply 52.5M shares that will be added to the share count. In addition Nikola has said they will have a value of 3.3B after the merger which implies a total of 330M total shares outstanding. Based on the merger, VTIQ shareholders will only own 9% of the total company after dilution which is a $10 share price. Somehow I'm skeptical that after the merger the stock price will still be at $25-30 a share unless they can get private offering buyers to buy in at 25$-30 a share. That would imply a valuation of over 9B for a company that has an average of 2B in annual 'potential' revenue spread out over 5 years and that is assuming they don't have any operational hiccups which will be impossible in Covid environment. Not saying it can't happen but seems like the easy money is already priced in. 

The time to buy was under $10, once it hit 30 or so you sell and laugh all the way to the bank.

I am tired of IPO’s trading at values based on the potential with no or low revenue.

Hyped up stocks by the internet “experts” like Adaptive, Lyft, Slack, Space etc.

 

[KoreanHockeyFan]

9 hours ago, TGokou said:

So I just looked into this and I'm not even sure if most of you have even looked into this. Correct me if I'm wrong in my assumptions.

 

This is basically a reverse merger with Nikola taking over control of the public company VTIQ. VTIQ currently has approximately 30 million shares with ~300M cash on hand. In essence this stock should be worth $10. Nikola plans on doing a stock offering for 525M at $10 a share which would imply 52.5M shares that will be added to the share count. In addition Nikola has said they will have a value of 3.3B after the merger which implies a total of 330M total shares outstanding. Based on the merger, VTIQ shareholders will only own 9% of the total company after dilution which is a $10 share price. Somehow I'm skeptical that after the merger the stock price will still be at $25-30 a share unless they can get private offering buyers to buy in at 25$-30 a share. That would imply a valuation of over 9B for a company that has an average of 2B in annual 'potential' revenue spread out over 5 years and that is assuming they don't have any operational hiccups which will be impossible in Covid environment. Not saying it can't happen but seems like the easy money is already priced in. 

This is what I was weary of. It is a merger after all, not like NKLA is going to bring in additional shares. VTIQ shares are going to be diluted. 

 

 

[Warhippy]

20 minutes ago, KoreanHockeyFan said:

This is what I was weary of. It is a merger after all, not like NKLA is going to bring in additional shares. VTIQ shares are going to be diluted. 

 

 

Looking bad today because Tesla announced it also was creating a new low cost high power battery.

 

But an announcement is not a tangible product

[CBH1926]

dbl post

Edited May 15, 2020 by CBH1926

[Tortorella's Rant]

That VTIQ you guys bought into sure $&!# the bed and quick. 

[Warhippy]

2 minutes ago, Tortorella's Rant said:

That VTIQ you guys bought into sure $&!# the bed and quick. 

I never made it in.  

 

It's a long term hold now.  Unless what Tesla announced is just garbage of course

[CBH1926]

10 minutes ago, Warhippy said:

I never made it in.  

 

It's a long term hold now.  Unless what Tesla announced is just garbage of course

This thing was valued 11b the other day, based on potential.

Classic pump and dump.

[Warhippy]

37 minutes ago, CBH1926 said:

This thing was valued 11b the other day, based on potential.

Classic pump and dump.

It happens.  But, Tesla announced after the stock started jumping vs Tesla's tanking that they also were working on an uber cheap battery for the same purposes.  But that battery was being developed and researched out of China with an aim to be the end all be all in chinese markets.  Whether or not any of that rings true, any potential kick to the legs of VTIQ/NKLA will do this.  You're very right the stock did look hyper inflated but a $30 average isn't out of the question leading up to the merger.  People looooove speculation because it makes them money for little to no work

 

According to the report, sourced to "people familiar with the plans," Tesla's batteries were developed jointly with Chinese battery giant Contemporary Amperex Technology, commonly known as CATL. Tesla plans to introduce the batteries in sedans made for the Chinese market, per the report, but they will presumably come to the U.S. market in time.

 

Now what

It takes a leap or two from the Reuters report to understand why this might have triggered a sell-off of VectoIQ's shares. Recall that Tesla has shown its own electric heavy truck, the Semi, and recently said that it will begin "limited production" sometime next year. 

So what does this mean for VectoIQ and Nikola? On the one hand, these new batteries could make Tesla a formidable rival to Nikola, though probably not for a couple of years. On the other hand, Tesla CEO Elon Musk last year promised us a million robo-taxis by the end of 2020, and that doesn't seem to be happening. 

VectoIQ investors and Nikola fans should certainly watch Tesla's battery revelations with interest, but until Tesla shows us that this is all real, it's too early to worry. 

[Warhippy]

SRNE announced today that they have effectively zeroed in on a treatment for the coronavirus.

 

It's almost up 220% at its height since this morning alone

 

Sorrento Therapeutics  (SRNE) - Get Report shares as much as doubled as the biopharma company said it was zeroing in on a potential breakthrough drug to treat the coronavirus.

The San Diego biopharma said in a statement that in laboratory research, a new treatment provides "100%  inhibition" of SARS-CoV-2.

Sorrento contends it has found a particularly effective antibody after screening out billions of candidates. 

"Among the antibodies showing neutralizing activity, one antibody stood out for its ability to completely block SARS-CoV-2 infection of healthy cells in the experiments," the company said in a statement. 

"STI-1499 completely neutralized the virus infectivity at a very low antibody dose, making it a prime candidate for further testing and development. Initial biochemical and biophysical analyses also indicate STI-1499 is a potentially strong antibody drug candidate."

Edited May 15, 2020 by Warhippy

[Sp3nny]

11 hours ago, TGokou said:

So I just looked into this and I'm not even sure if most of you have even looked into this. Correct me if I'm wrong in my assumptions.

 

This is basically a reverse merger with Nikola taking over control of the public company VTIQ. VTIQ currently has approximately 30 million shares with ~300M cash on hand. In essence this stock should be worth $10. Nikola plans on doing a stock offering for 525M at $10 a share which would imply 52.5M shares that will be added to the share count. In addition Nikola has said they will have a value of 3.3B after the merger which implies a total of 330M total shares outstanding. Based on the merger, VTIQ shareholders will only own 9% of the total company after dilution which is a $10 share price. Somehow I'm skeptical that after the merger the stock price will still be at $25-30 a share unless they can get private offering buyers to buy in at 25$-30 a share. That would imply a valuation of over 9B for a company that has an average of 2B in annual 'potential' revenue spread out over 5 years and that is assuming they don't have any operational hiccups which will be impossible in Covid environment. Not saying it can't happen but seems like the easy money is already priced in. 

Maybe I'm not understanding, but why is that implied? Because their 525M offering is priced @ $10, so we assume existing NKLA shares are priced @ $10?

[TGokou]

6 minutes ago, Sp3nny said:

Maybe I'm not understanding, but why is that implied? Because their 525M offering is priced @ $10, so we assume existing NKLA shares are priced @ $10?

If the 525M raised is based on a $10 share place then Nikola is implying their own shares are worth $10 each. This also implies VTIQ shares are also priced at $10 each. Also with a total market capitalizations of 3.3B it would imply that Nikola shareholders plan on retaining over 80% of the company with the other constituting VTIQ shareholders and the other being the institutional shareholders that buy in at $10. 

 

I could be totally off base on this as this is the first time I've ever seen anything like this being done and I just don't understand the ownership structure.

[Warhippy]

6 minutes ago, TGokou said:

If the 525M raised is based on a $10 share place then Nikola is implying their own shares are worth $10 each. This also implies VTIQ shares are also priced at $10 each. Also with a total market capitalizations of 3.3B it would imply that Nikola shareholders plan on retaining over 80% of the company with the other constituting VTIQ shareholders and the other being the institutional shareholders that buy in at $10. 

 

I could be totally off base on this as this is the first time I've ever seen anything like this being done and I just don't understand the ownership structure.

Nope, your math adds up.  There's obviously variables but if it's a 1 and done deal than you're about right.

 

But, people LOOOVE speculation because they make $$ off of it.  Look at Tilray prior to legalization.  Canopy, Aurora and hundreds of other choice listings over the years that had massive multi week highs then dropped like stones to level numbers.  Investors invest in possibilities not realities these days

[Lancaster]

1 minute ago, Warhippy said:

Nope, your math adds up.  There's obviously variables but if it's a 1 and done deal than you're about right.

 

But, people LOOOVE speculation because they make $$ off of it.  Look at Tilray prior to legalization.  Canopy, Aurora and hundreds of other choice listings over the years that had massive multi week highs then dropped like stones to level numbers.  Investors invest in possibilities not realities these days

I guess you can say, the investors.... got stoned.....

 

[Warhippy]

13 minutes ago, Lancaster said:

I guess you can say, the investors.... got stoned.....

 

HA, anyone involved in Tilray prior to mid october that year made an absolute gob smacking fortune so I am sure they were  

Edited May 15, 2020 by Warhippy

[Sp3nny]

26 minutes ago, TGokou said:

If the 525M raised is based on a $10 share place then Nikola is implying their own shares are worth $10 each. This also implies VTIQ shares are also priced at $10 each. Also with a total market capitalizations of 3.3B it would imply that Nikola shareholders plan on retaining over 80% of the company with the other constituting VTIQ shareholders and the other being the institutional shareholders that buy in at $10. 

 

I could be totally off base on this as this is the first time I've ever seen anything like this being done and I just don't understand the ownership structure.

Ya that makes sense to me, just wanted to make sure I was following correctly. Thanks for your insight.

[nuckin_futz]

On 5/11/2020 at 9:38 PM, AV's Coin said:

Nuckin Futz

 

Sorry for the late response. This has to be one of the best replies I have ever seen on CDC

 

Thanks for the information. I have been digesting some of it and have started watching some youtube videos on the subject. Its a whole new area I never knew much about.

 

Thanks!

No problem AV. Hope it helped.

 

 

[nuckin_futz]

2 hours ago, Tortorella's Rant said:

That VTIQ you guys bought into sure $&!# the bed and quick. 

Had a bad feeling in the pit of my stomach when I saw 11 people in this thread at 1 time a few days ago.

[Warhippy]

4 minutes ago, nuckin_futz said:

Had a bad feeling in the pit of my stomach when I saw 11 people in this thread at 1 time a few days ago.

I had a buy in price, I missed it.  Kinda not feeling bad right now.  If I was one of those people that got in pre $20 I'd feel ok, but anyone hanging in long term is now in long term or losing.

 

I always have firm buy in numbers and exit numbers.

 

SRNE, I actually bought in at $5.48 a share, sold at $7.75 as I thought a 20% return was fine.  It's levelled out since at about $6.75.  I made my $$ off of that and feel ok.

 

Always know your margins I guess eh or plan your exit strategy.  Like being at a party you don't want to attend, know your exits