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TLDR: They ran out of cash and can’t use customer cash as collateral. Brokers that had more collateral were not affected or were not affected to the same degree.
Edit: This is an explanation not a defense. Fuck them. They didn’t explain that they fucked up and basically got margin called. I didn’t use them but if I did I would have changed brokers instantly. The reason this is important is not just because of GME but because it happened to many brokerages and that means there is liquidity stress in the market right now.
Article from the FT:
The crucial role played by clearing houses in financial markets has been thrust into the spotlight after contentious moves by US brokers such as Robinhood and Charles Schwab to restrict retail investors’ bets on stocks at the heart of the Reddit-fuelled trading boom.
Customers reacted angrily on Thursday as brokers moved to stop them opening new positions in certain red-hot stocks, accusing them of unfair treatment or even a Wall Street establishment plot. But the brokers gave a more mundane explanation: the extra volatility in share prices meant they had to hold more capital at the institutions that clear their trades.
What do clearing houses do? These unobtrusive venues normally sit in the background of daily market activity but they can become the centre of attention during periods of volatility when they require more cash — or “margin” — from their members to ensure that deals are honoured as customers expect.
An equities trade that has been executed can take up to two days to be legally settled, creating a risk of it failing if either side of the trade defaults. A clearing house stands between the two sides to manage the risk to the market if that happens.
Each day members of the clearing house, which range from small brokers like Robinhood to big Wall Street banks such as JPMorgan and Citigroup, are required to put up margin as insurance for their trades.
The amount is calculated by the clearing house and is based on the amount of trading carried out by each member, as well as the volatility of the individual securities traded. Margin is generally collected at the start of the trading day, although there can be intraday calls in frenzied periods, in an attempt to protect the wider market from sudden trade failures.
The clearing member often has limited time to make up the shortfall and the margin typically has to be an asset that is highly liquid, such as cash, US government bonds or shares. In the middle of the market volatility last March, one US bank was required to find $9.6bn of margin for derivatives trades within an hour.
How do brokers such as Robinhood fit into this? In common with rivals such as Schwab and ETrade, Robinhood clears its own trades and is a member of the main US equities clearing house, run by DTCC.
While self-clearing saves on the fees that would otherwise go to another clearing broker, it also means Robinhood takes on the risk that an executed trade does not settle, and needs to have more cash on hand to cover shortfalls. It also faces higher costs if the clearing house raises margin requirements in volatile periods to protect against a member default.
“The extreme volatility is a big factor behind this,” said Andy Nybo, managing director at Burton-Taylor International Consulting. “They need to make sure they are able to meet cash requirements, whether it is for clearing or to investors that are owed money due to trading activity.”
As Robinhood said in a blog post on Thursday, the requirements “can be substantial in the current environment.” It declined to comment further.
Between Wednesday and Thursday, the margin call from DTCC across the US equities market rose from $26bn to $33.5bn, the clearing house confirmed.
DTCC said the frenzied trading in shares such as GameStop and AMC Entertainment “generated substantial risk exposures at firms that clear these trades . . . particularly if the clearing member or its clients are predominantly on one side of the market.”
How did brokers respond? Safety mechanisms built into the market’s infrastructure across Wall Street led to periodic halts in trading activity on Thursday. In order to ensure they had enough money to cover margin and capital requirements, Robinhood and others such as Schwab and TD Ameritrade raised margin for trading on some of the names at the heart of the volatility, which required more cash be set aside after each trade.
This limited its margin needs from escalating further. By allowing users to close positions, it was still permitting trades that would reduce its immediate need for cash.
Robinhood also raised the margin requirements for customers that had not paid for the total value of their trading up front, having cut its margin requirements in December in an attempt to drive more trading activity. That meant some customers suddenly needed to come up with cash to cover trades.
Behind the scenes, Robinhood moved to raise a fresh $1bn in capital from its existing investors, which it announced ahead of trading on Friday. The company said the fundraising was a “strong sign of confidence from investors that will help us continue to further serve our customers”.
Anthony Denier, chief executive of Webull, another company that was forced to restrict trading in some shares, said in an interview with Yahoo Finance that its clearing firm “simply could not afford” the cost of entering into new trades.
“This has nothing to do with a decision or some sort of closed, cigar smoke filled room of Wall Street firms getting together to the dismay of the retail trader,” he said.
————————- Simpler Explanation from Comments ————————
RH and other similar execution firms have to post collateral with the DTCC every time a position is opened. This collateral is to protect the DTCC in the event of the market moving against the position between the time of execution and the time the trade settles (T+2) AND the execution firm failing to settle the trade by being unable to come up with the cash (in the case of a purchase) or the shares (in the case of a sale).
When a share is particularly volatile, the DTCC will up the collateral requirements it imposes on both buyer and seller. When the trade does finally settle the collateral is returned.
RH and other execution firms are prohibited from using client funds for this purpose, which must remain in a segregated account until settlement is finalised. Even if RH decline to allow margin trading on certain volatile stocks, insisting that buyers stump up the full purchase price, this money cannot be used for the 2 day period when RH has to post collateral. If RH executed a sell order during this period, that would reduce DTCC's risk and allow it to return collateral to RH rather than ask for more. This collateral could be re-used by RH, allowing it to make another purchase on behalf of a client. This is why RH could accept sell orders nut not buy orders periodically. Once it had executed enough sell orders, which freed up collateral, it could then offer to accept buy orders, until the collateral ran out again. This is why the blocks on buy orders were periodic - they hit their collateral limit, so stopped accepting buy orders. They executed sell orders which freed up collateral (and collateral was returned as trades settled), allowing them to offer buy orders agin, until the collateral limit was hit again, when they had to once again suspend buy orders. etc etc
And ran out, it did. RH's business model is based on a steady stream of small orders on both the buy sand sell side. If it is executing both buys and sells consistently over time, as far as DTCC is concerned it has very little risk to RH so doesn't need to ask for much collateral to be posted. Hence RH had never planned for a situation where it would be asked to post large quantities of collateral (potentially $billions).
So, it ran out of collateral that it would need to post for buy orders, but sell orders would free up collateral. It arranged a convertible bond issue with existing shareholders that raised $500m immediately, and hopefully another $500m in a few days and it drew down on a loan facility it had with its banks. But still not enough.
The issue RH (and others experienced) is the ridiculously long time it still takes to settle trades (it could be more or less immediate) and the rules that prevent it using client funds as collateral (if settlement was immediate, the client funds wouldn't remain in the segregated account, but would be used immediately to settle the trade).
But it is what it is. If RH wants to execute trades it has to be able to put up the collateral. If it doesn't have the collateral, it can't execute trades (at least the trades that require collateral). But the wider market remained open. Anyone could buy or sell shares at all times. They just needed to put up the collateral themselves for the 2 day settlement period, or find someone who would do so on their behalf.
Edit: 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀

Oh and uh short burn of the century comin soon. Flamethrowers should arrive just in time.

-Elon Musk
Oh Elon, sorry to steal your thunder. But GME will make TSLA vol look like TLT. Jeff haunting your every accomplishment yet again.
I’m back with the final warning bell. The next time I post in 2021 will be to recap the squeeze’s results and post gain porn along with u/Deep_Fucking_Value, u/SIR_JACK_A_LOT, u/Tomatotowers, and more. This is the last stop before the moon mission.
It’s currently not too late. But after Q3 earnings on Dec 8th, it will be. And of course, as always, not financial advice. Just for bragging rights and entertainment. Here goes:
Here’s a comprehensive GME overview for all new and returning WSB-monkeys. Sit down and grab some tea. This is a long one unlike the previous posts.
GME Overview:
The GME story can be broken up into 2 main theses. The first is a deep value play which has credibility all on its own. The second is an infinity short squeeze like we’ve never seen before in history, which has credibility all on its own. When combining the two, you get the trade of a lifetime.
In all my (albeit limited) days, I have never EVER seen a trade set up like this before. I’ve pored over every source of historical finance material I can get my hands on, and still have nothing to reference to. IMO, this will look more like the 2008-MBS bet, or the Ackman 2020-COVID “Hell is coming” bet, than TSLA, OSTK, KBIO, or VW.
Just a fucking face-ripping, out-of-nowhere, legendary-HOF-ticker bet that will bankrupt some funds and get people fired - and of course, with no community other than WSB’s name next to it in the history books (and if I could pencil in our lovely GME discord hosted by u/BadElf21 and u/RoaringKitty’s YT stream).
Let’s begin.
Act 1 - The Set Up:
Q: Why is GME so heavily shorted in the first place? Why are we betting the long? Aren’t they going bankrupt ala Blockbuster? If not, are we just trading this short term like a HTZ/CCL meme stonk?
A: NO. This is a fundamentally solid deep value play at its core.
First let’s go back a few years. We must give the shorts due credit in order to understand where we are now. GME has been profitably shorted since 2013 when the market correctly bet on the digitization of video games and spread of mobile gaming. Some data here:

• GME sales have plunged from $9.5 billion in fiscal year 2011 to $6.4 billion in fiscal year 2019.
  
• GME Annual EBITDA has dropped from $839 million in fiscal year 2011 (before the last console cycle) to only $111 million in fiscal year 2019.
  
• Net income has fallen off a cliff from $339 million in fiscal year 2011 to a staggering loss of $470 million in fiscal year 2019.
  
• In the two most recent quarters alone, GME lost another $277 million.
  

The shorts are betting on $0.
However, in the last 12 months, GME has shown that their terminal velocity does not lead to bankruptcy. GME has a strong balance sheet. Cash on hand is worth over $12 a share. Net cash is worth over $5 a share and is FCF positive (nixing the bankruptcy thesis). They also paid off $125M in debt last month just to show Moody’s they are healthy due to their incoming console cycle FCF (which may lead to possible bond upgrade, enticing more institutional investors).
So give the shorts credit. They had a legitimate case until the last 12 months, when George Sherman (CEO), Reggie Fils-Aime (ex-Nintendo, current GME board member), and others have been conducting a phenomenally well executed turnaround.
That explains why we currently have ~70M shares short out of ~65M shares outstanding - but they’re all now caught on the wrong side of the trade.
In case the severity of the short interest hasn’t hit you yet, there is a bigger market for shorting GME than the business of GME itself. This is not even taking into account the long holders (Senvest, Ryan Cohen, Burry, Donald Foss, Sherman, Hestia/Permit) which takes ~25M shares out of circulation. So short interest in reality could be around 180%+ of true float.
A true head-scratcher.
And a worthy opponent.
But they’re wrong.
Act 2 - Avengers, Assemble:
Q: Why am I so sure GME is prime to blow? Isn’t this just another meme stonk hunch driven by WSB and Michael Burry hype? How can a few online gamblers and a few activist investors turn a dying business into a trade of a lifetime?
Couldn’t the shorts be right? Also, hasn’t it blown already?
A: NO AGAIN.
Let me show you the ridiculous Avengers team we have. By Avengers team, I mean all the bullish cases:
1) Ryan Cohen
Iron Man of the bunch, some call him the Dog-Man.
This guy is a crazy entrepreneur. He took on Bezos with a pet food company (CHWY) and won. Let me repeat - he beat Jeff Amazon without AWS subsidizing his loss leaders.
In other words, he built Markk I (CHWY) in a tiny cave with scraps all by himself with his dad, and now that he has billions, he wants to build nanotech Markk 50 (GME). Read up on this guy. He’s as crazy and as smart as they come.
He also wrote a scathing letter to GME leadership, but if you read between the lines, he’s not addressing the existing board, who had only been there temporarily. He’s setting this letter up in order to potentially offer a takeover bid (rumor mill - unconfirmed).
Either way, GME leadership needs to address this letter in the Q3 earnings call on Dec 8th - which means they need to either post a good quarter, provide good guidance, or add color to existing developments.
Otherwise George Sherman (Cpt America)’s ass is out the door and Cohen takes over as the leader of the Avengers through a vote or buyout. Either of which requires shares to be recalled.
One more thing to note about RC. There has been no 13D/A filling since his initial purchases. Which means he is STILL IN. He has not sold a single share.
2) GME Leadership and activist investors - Guardians of the Galaxy, Dr. Very Strange Burry, and the old Captain trying to fit in with the youngsters:
Dr. Very Strange Burry - AKA Big Short Man. Supreme numbers aspie who might have a screw loose but is unmatched at spotting contrarian trades. *Edit 2: BTW for those asking about his holdings drop. He's trimming to stay under 5%, but still has a large position:

• Q1: 3,000,000 shares worth $10,500,000
  
• Q2: 2,750,000 shares worth $11,935,000
  
• Q3: 1,703,400 shares worth $17,375,000
  

Hestia/Permit/Senvest - Contrarian, activist investors.
Cpt George Sherman - Boomer CEO who knows what he’s doing.
Reggie Fils-Aime - Beloved ex-Nintendo President.
3) Bond repurchase
GME just bought back $125M of debt maturing in 2021. Who cares? Yes - normally this is a nothing burger even for a micro-cap, but if the shorts are betting on $0 - this is clear evidence against that bet.
Secondly, rumor mill has it that this debt repurchase plus positive Q3 earnings/guidance will allow Moody’s to upgrade their 2023 debt to A or maybe higher.
This is HUGE because it allows institutional investors to long GME without further restrictions. In other words, they may not be allowed to long companies with B- debt. Once this is upgraded, more buyers are allowed to come in.
Very underplayed story here.
4) TA - When the stars and crayons align. Here’s an excerpt from our resident astrologist u/JayAreW:

Ignoring the short squeeze element of GME and just looking at chart action, there are two elements that are important to keep track of. The cup and handle pattern and $15.80.
While my trading style is 90% technical analysis, there are certain elements which I shy away from – mainly chart patterns. However, it is important to at least recognize the obvious ones because if you see it, chances are others see it too. The main pattern I keep an eye out for are the massive cup and handle patterns. This is an example from Pring figure 1.
The buy signal is traditionally a breakout above the handle, and a good estimate for price target is the distance from the base of the cup to the handle, added to the breakout point. A recent example of this is $JMIA (daily - figure 2). Notice not one, but two failures to break the top of the handle and the subsequent parabolic run. Compare $JMIA with $GME and you see almost the same pattern (daily – figure 3). The traditional buy signal would be a breach above the red line (~$15.80). The difference between $JMIA and $GME is that $JMIA was far more condensed; the pattern played out over a period of a few months where $GME’s cup and handle started in late 2019. Playing this pattern exclusively, I would expect a price target of roughly $27, stretched out over a period of weeks/months and not as explosive as it’s African counterpart (assuming a squeeze doesn't happen between now and then). Typically, any chart pattern calls for a retest of the breakout point, so don’t be surprised if $GME retraces to $15.80 and look for a bounce there as confirmation that the breakout is on. The other important element is the $15.80 price. Not only is it the breakout point for the cup and handle pattern, but it coincides to a price point which I believe was a major short-selling entry point (fig 4). Notice the nearly 20% gap down on 33 million of volume. This type of action doesn’t just happen with selling alone and I believe massive short positions were opened on that day.
This $15.80 then represents a breaking even point for those shorts if they have not closed their positions (and we have no real reason to believe they have). Breaking even is a huge psychological barrier for people when a trade isn’t going their way and often times represents an exit point for crowded positions. Most of the shorts were already underwater - above $15.80 and that water begins to boil. I believe this position is becoming borderline untenable for existing short positions and is a crowded and disastrous trade. So to recap, $15.80 not only serves as an important chart pattern breakout point, but the proverbial “line in the sand” for existing short positions.

JeffAmazon here again: Note Jay and I don’t agree on a few major points, but are nevertheless both seeing bullish action to come very very soon.
5) Product Mix
GameStop is expanding their product mix to include monitors, PC parts, and more. GME is no longer a Disc-Drive only store (which is fine itself), but an all-things-tech e-commerce growth start up. Or you can at least bet that’s the narrative.
GIVE ME THAT F-ING CHWY SALES MULTIPLE.
6) Three signs of a bubble: leverage, lack of liquidity, and consensus.
This is an inverse bubble - it will rise as quickly as other bubbles drop. KBIO and VW are often quoted as short squeeze examples. Those are wrong comparisons. The only similarity is the fact that shorts were involved.
Instead, think of any other market bubble. It’s simply about leverage, lack of liquidity, and consensus. We have all 3 in GME. Everyone thinks GME will go like BlockBuster to $0 and is using leverage to short (by definition and current SI).
So instead, think of Burry’s 2008 MBS trade, Ackman’s 2020 COVID trade, PTJ’s Black Monday Trade, or Chanos’ Enron trade.
Same thing, different direction. Will go up as fast as the others went down.
And oh boy do we lack liquidity. Crowded party, one exit.
7) Phenomenal numbers due to current console cycle.
$GME bull Rod Alzmann (Uberkikz on Stocktwits) has great breakdowns on Q4 EPS/order count due to console cycle. He tracks orders by order number among a slew of other information here.
Check out his models. In short, we expect over $5 EPS in Q4 base case. Which is bananas.
8) MSFT Partnership gross margin
GME is getting free money from Satya Nadella.
Conservative estimate $180M, 100% margin for 2 years.
9) January and April option OI
OI in option calls for Jan and April are almost 4X that of Decembers. Is GME going to exercise the ITM calls for a squeeze? Why are they so insanely large? Who are these buyers? WTF are they doing?
No clue. But something is about to go down.
Note put call skew isn’t that low, so no infinity gamma squeeze yet, but it will come as GME obtains meme status.
10) Most importantly, YOU.
CNBC and other misled, egoistic mass media companies and institutional investors continue, time and time again, to look down upon the new generation of traders and laugh at WSB.
Tell me, which one of them has read all of Moody’s credit reports on GME? Which one of them live streams collaborative GME DD 20+ hours a week for 6+ months straight? Which one of them tracks order flows by the f-ing second based on skimmed CC data? Who scours GameStop to see how leadership is treating their employees and customers at a testimonial level? Do they even know about the bond repurchase?
They don’t know jack s-.
Act 3 - The Trade
What more evidence do you want? Time for action.
First, the PT. u/ronoron summed it up well:

A 3 billion market cap (not even 0.5x of their revenues) would already leave GME at $46/share.Going back to their 2013 peak at around 6 billion market cap would leave them at almost $100/share already, not the $56 peak/share. The algos trading still can't appreciate the fact that GME halved its number of outstanding shares a while ago.
For comparison. Bestbuy is trading at almost ~0.7x of revenues with lower gross margins. Nordstrom is almost at 0.4x of revenues despite the bigger liability their department stores are having through corona (never mind their uglier balance sheet). GME is still hovering just above 0.2x revenues because stinky shorts overestimated how bad corona would be for GME (e.g. delayed console cycle, digital consoles becoming widely popular).”

PT can easily be over $100. The JeffAmazon target is $420 which gives them about ~$25B market cap at a P/S ratio of 5, maybe 4 with console cycle revenue. That wouldn’t even be considered an euphoric price with today’s growth stocks. For comparison, NVDA is 22, TSLA is 20, and CHWY is 5.
Timing: This all hinges on Dec 8 earnings. If GME misses (it historically has), Cohen will use this opportunity to attack leadership and take over as CEO. Therefore, GME leadership needs to provide a great earnings report or else Sherman will lose his job.
Here’s my responsible trade (do whatever you want): All in calls and shares now. If IV and $GME is sky-high before earnings, sell half to secure profit. If GME misses and tanks, bet your bottom dollar a takeover bid will be announced shortly.
In all honesty, I'm going to probably hold everything through earnings WSB style.
My positions: 1/15/21 $30Cs, shares
(I would buy April $30Cs too, but I'm all tapped out of cash).
Shorts and longs both have their cases. All the cards are on the table. Which side are you on?
If I missed anything, comment and I will update above. I’m aiming to make this the final stop for all high-level GME DD.
*Edit 1: Educate yourself right now on IV crush (in short, we expect a lot of vol now, so option prices are high. After earnings, expected vol normally decreases, so your option prices will normally drop). GME is the king of IV crush after earnings. If you're playing FDs, prepare to get destroyed like always. Safer bets are LEAPs or FDs after earnings.
*Edit 2: All these beat earnings recently: SNE, MSFT, BBY, BBBY, NTDOY, ATVI, TTWO, JWN, M, KSS

RoyalRoad
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Galactic Union HQ
"Emergency Session 18 of the Galactic Union, for the record," Secretary General Amanda Wilson said as she looked solemnly around at the hundreds of creatures in the chamber. At first, the Galactic Union headquarters were located in New York City, sharing spaces with Earth's United Nations. Then, as many other planets joined it, the UN General Assembly Hall became too small.
A new, larger facility was built at Galactic Peace Island, formerly known as Navy Island, a previously uninhabited island on the Niagara between the US and Canada. The new assembly chamber was large enough for every planet to have one permanent seat. Though some would choose to participate in its proceedings virtually, every one of them had visited its spacious halls. The structure itself represented their sacred and collective agreement to resolve their differences together, to face big challenges together, and to guard the interests of all sentience.
This was where galactic slavery was banned. This was where the first interspecies anti-piracy military ship was commissioned. This was where the ambassador of Ribb had come to humbly beg to be allowed to rejoin the galactic community.
For humans, its location and the extreme technological requirements needed to quickly construct the large hall also served as a convenient reminder to the galaxy of the importance of the species that hosted and built it.
"We have received a special petition regarding the issue of sovereignty over a member planet. I yield my time to their representative, joining us via virtual FTL comms," Amanda continued, pointing at the massive viewscreen above her.
The screen cleared, and a large parrot like face appeared with intricate red and black paint adorning its features.
"Hello Union members, my name is Mollikutta. I am the former Governor of Zakabara Second, and I am here to represent the interests of my people," she said calmly but loudly. There was a hubbub in the assembly hall. Zakabara already had a representative! Eyes began drifting towards the stunned Popptaw at the front of the chamber.
"My people of Second split off from Zakabara Prime many thousands of years ago. We have developed a distinct culture, and distinct interests. Our people no longer wish to accept the jurisdiction and administration of our planet from Prime. We would like to ask the Galactic Union to grant us sovereignty over our planet, our resources, and our space."
A loud squawk broke through the shocked chamber. It was Popptaw.
"This is ridiculous! Zakabara Second is and has been a colony of Zakabara for all of our history! I am the true representative for all of our people, all of our species, and I demand that this pretender be ignored by this chamber from here on out!"
The older species were nodding or agreeing silently. After all, Zakabara was not the only species that had a colony or two. Some younger species were looking to develop their own, and their ambassadors were now suddenly worried about whether they'd retain control over them.
Mollikutta was undeterred and continued, "unlike the representative from Zakabara Prime, I was chosen to lead our people with a majority voice vote last night."
It was not easy convincing the crowd to let her stay on with a promise of facilitating independence, with her being the symbol of the Primers on their planet for months.
The flashy entry of the humans in their helicopter at the palace grounds did the trick. Mark promised the mob elections and everything. Humans had a lot of credibility in the galaxy, with their cultural and economic exports.
At this point, there was more whispering and even some gasps in the chamber. They were all familiar with the concept of electoralism; that was how Earth and the GU conducted business, but few other species practiced it internally.
Mollikutta continued, "my people deserve the right to determine the future of our destiny, not to be treated as second class citizens by an oppressive regime from a faraway planet that does not understand our people or our problems!"
The undecided chamber looked to the great powers of the galaxy to see what they had to say.
Amanda spoke up simply, "the people of Earth stand with the people of Second."
Seeing this, Gubarak, the ambassador of Gakrek quickly followed, "Gaks stand with the people of Second."
"The Zeepils of Zeep-zep support the Seconders' right to self-determination."
Finally, an electronic tally showed an overwhelming majority of support for the independence of the people of Zakabara Second, with many older species choosing to abstain instead of casting their lot with Prime.
A subsequent vote gave the Galactic Union the powers to oversee the transition.
As Popptaw stormed angrily out of the chamber, Mollikutta wasn't sure which she found more beautiful: knowing that her people had a brighter future ahead of them, or watching the middle finger that the galaxy had just shown their other oppressors on Prime.
Construction Site 1, Gophor Spaceport
Grayin's heart sank as she saw Rey and Enrico walk over, hand in hand. She had hoped that it would take them longer to figure out what she was doing here and to start asking questions, but the growing pile of material and chopped wood frame in the lot she'd chosen wasn't easy to ignore.
After all, they were easily visible from their neighboring restaurant. And nobody liked competition.
"Hello Rey, hello Enrico" she said timidly, not wanting to start a confrontation this early in the business.
"Good morning, Grayin," Rey greeted politely, "and N'har. How are things going? Looks like you guys are building some kind of a permanent structure here. Does this have to do with the spaceport?"
From the familiar look on her face, Grayin knew the jig was up. She couldn't lie, so she tried confidence. "We're building a new restaurant building here. It'll be a two-story one, just like yours, except we'll also have a front patio. Like one I've seen on a magazine from Earth."
Rey smiled broadly and said, "that's very nice. Good luck with that! And don't go anywhere, we'll be right back in a bit."
Ah, shucks! They're gonna go get that security guard that they hang around. We should have thought of that, she thought. Maybe if we hired a couple of them, they wouldn't be messing with us.
About an hour later, to her surprise, Rey and Enrico came back not with Grob, but with a plastic folder with a stack of papers held in it.
"These are the contact information for the construction contractors we had on Earth for the more advanced issues we had when we were building our restaurant," Rey said. Handing her the folder, she added "and we've got our blueprints in there in case you need inspiration, as well as some interior design ideas. And let us know when you need help with water, electricity, and waste management."
"Huh?" Grayin was dumbfounded.
"You said you're constructing a new building here, right?" Enrico asked affably.
"Yes. But why are you helping us?" she asked suspiciously. Surely, they couldn't be naive enough to not recognize the obvious site of a future competitor, right?
"Oh, we're not worried about the competition if that's what you're thinking," Enrico smiled. Then he added, "besides, N'har here helped us out a bunch when we were building our business." He went over and patted the stunned N'har on the shoulders. "It's about time we returned the favor."
Grayin was not sure if she'd gone crazy, or if it were just these two humans. Perhaps it was both.
They were not crazy.
Having gone to Hamburger University, Rey was familiar with the clustering effect. Enrico, who had been to a street lined with restaurants, also intuitively understood its existence. Hell, even the food vendors at the spaceport market knew this subconsciously.
Businesses tend to cluster. For a long time, economists ignored this tendency because economists were generally not businesspeople. In the 1980s, as the field of business strategy really began to hit its stride, some of them started to take notice and study the effects of clusters.
Why do businesses open up next to each other even though they'd face the stiffest competition there? As it turns out, the reason mostly has to do with economies of scale.
When you ship something, like say napkins, to a hundred restaurants on a hundred different streets, it is costly. Far costlier than shipping napkins to a hundred restaurants on a single street. Apply that to every consumable good or maintenance need of every restaurant, and what ends up happening is that the cost of doing business in a cluster turns out to be much lower than outside. Sure, there may be strong competition, but clusters also increase foot traffic, which increases the overall pool of customers.
This also happens on the labor side. That's why so many IT workers live in the Silicon Valley, why so many prospective actors and actresses live in Hollywood, and why so many jewelers live in Antwerp. In the even longer run, successful clusters make successful cities, and successful cities rake in profits for its businesses.
In the case of Gophor, Rey and Enrico could not wait for the spaceport to develop a food court, with an even cheaper supply chain for imported goods from Earth. Additionally, the only logical move for these new buildings later on would be to hook up their utilities to their infrastructure. That would not only decrease their own cost but possibly allow them to earn a profit off that early investment.
And it was certainly going to happen sooner or later, so why not maintain a good relationship with the folks who were about to maintain a large workforce and potential customers in the area?
They offered the working Gaks some free ice cream (luckily, the ice cream machine was not broken that day), and went back to work.
Four Months Later
Grayin designated her new buildings Site 1, Site 2, and Site 3. They lined up side-by-side next to the next to the existing McDonald's building. Because many of the construction Gaks who were on her projects also worked with Rey, they were familiar with many of the human invented building techniques that were required.
They could employ more workers with their lower pay, and after a short four months, the exterior for Site 1 was mostly completed. After a risky operation that shut down McDonald's itself for a weekend, they also managed to hook their building onto Rey's "utility company".
After they celebrated the building's completion, the first thing they did was to ask Rey and Enrico whether they had an idea who on Earth would be interested in their new building. For reasons she and N'har still could not understand, the humans had been genuinely helpful and seemed utterly honest about their intentions to help her succeed.
"Hmmm," Rey thought out loud when they asked, "there are a few restaurants that could really round out this spaceport. I think your best bet for the most money would be some kind of a luxury or fine dining establishment for traders."
"Yeah, when we started, there were barely enough traders to make us profitable on them alone," Enrico completed her thought. Then he explained, "we got lucky that our business is cheap enough for locals. Now most of our business is with Gaks. But with how many bigger ships are coming in with larger crews, I think you could definitely sustain a restaurant that charged higher prices for less volume."
Grayin had seen human commercials for fine dining restaurants. Big empty spaces between tables, fixed courses, and very fancy service. She wasn't sure that it would be the right business model for Gophor, even with the increase in foot traffic. And she knew next to nothing about starting a restaurant business. But she didn't have to run it. She just had to rent it to someone who would.
"Okay," Grayin decided, then asked, "so who would you suggest we contact for someone who would be interested?"
Rey thought about it for a while, but she realized she didn't know. Her contacts really didn't extend much beyond the company she'd work for her entire life. She replied honestly, "I don't know. You could contact Izzy, who we got to handle our rental deal, and ask her if she could give you a recommendation. That's what I'd do."
After getting Isabella's contact information, Grayin and N'har thanked them and started strategizing the call.
Chicago, Earth
"It's another alien trying to rent us property on line three, Izzy," her secretary said to her calmly, as if this was something he did every week.
In a way, it was. Thousands of planets had seen what happened on Gakrek with Rey's franchise. If they were not innovative, at least they could copy. Isabella had to reject many good offworld deals that just didn't have the right infrastructure or didn't make business sense, especially on the smaller spaceports.
She did pretty well for herself too. New corner office. New secretary. New frequent flier card for the recently opened Galactic Express chartered flight company, for when she needed to inspect prospective renters or sellers.
"From where?" she asked smoothly. She had one of those galactic maps projected onto her office wall, with flags on some of her acquisitions. Some school aged kids are learning galactic geography now, but a textbook couldn't teach you which planets had the best economic conditions and on which ones the bribes were cheaper. No, that's what Wikipedia was for.
"It appears to be Gakrek," her secretary replied, "Gophor Spaceport."
Isabella frowned. That's where Rey's franchise was. She wasn't sure there were enough local customers there to support two franchises, and if it did, expanding the spaceport one would probably be the smarter move. She picked up the phone. "Hello, this is Isabella at Franchise Realty Corporation, how may I help you today?"
"Hello Isabella, my name is Grayin. I am from Gophor, on Gakrek. I am a friend of Rey, and I am trying to rent out my property. She said you might be able to recommend someone we could talk to," came her translated voice through the phone.
"Sure," Isabella said, looking up contacts on her tablet. It would be nice to do Rey a favor here. After all, Rey had kickstarted her own offworld real estate career. "What kind of business are you looking for?"
"Oh, it's very similar to Rey's building. We have an additional patio out front with space for outside seating, but other than that, it's pretty much the same. She even let us use her blueprints. We're hoping to find a fine dining business willing to take it on," Grayin replied, mirroring what the humans told her earlier.
"I see," Isabella replied, still searching but suddenly paying a lot more attention to this conversation. She could add two and two together. If this was a completed building just like their existing franchise and this was a friend of Rey's, the business opportunities here were… "Just out of curiosity, how much are you looking to charge for rent?"
Caught slightly off guard, Grayin answered honestly, "we thought we could charge 120,000 credits a month to a big chain, a little more than Rey's because we have more space."
Holy smokes, Isabella thought, another unbelievably great deal. Gophor was just the gift that kept on giving. Normally, her managers wouldn't approve a deal renting another piece of real estate right next to one of their franchises for fear of cannibalizing their own business, but commercial real estate was their bread-and-butter moneymaker. Who cares what fine dining restaurant the folks upstairs would eventually decide to sublet this out to? They wouldn't turn down a free win like this one.
"In that case, I think I might actually be interested in your space," Isabella said, putting down her tablet. "When are you free to do a walkthrough?"
Site 1, Gophor Spaceport
Grayin and N'har watched warily as the spaceport manager entered the front of their newly built construction. It was Garber. Grayin knew exactly what he was there for.
"Welcome to our new building, Garber," she greeted him at the door with a neutral tone, "how can we help you?"
"Ah, Grayin. It's nice to see you," Garber said in a grating snivel, "you look well. I was sad to see you leave our space traffic control tower."
You probably just missed skimming off my salary, Grayin fumed, but kept that part to herself.
He continued, "as you know very well, we have a tradition of maintaining our spaceport here on the donations of our merchants. I'm here to assess a suitable amount for your new store."
"How much do you have in mind?" N'har asked.
Garber looked over as if he'd just noticed N'har's presence, and stroked his snout thoughtfully. He knew he wildly undercharged the humans in the other store. He would not make the same mistake here.
Garber didn't know how much Rey's franchise was actually taking in income, but he thought a ten times increase would be a fairly safe bet. "I think we can start at five hundred fifty credits a month," he sniffed, "that seems reasonable to me."
Both Grayin and N'har managed to keep their composure at this incredibly low figure that represented less than 0.5% of the deal they were going to sign with Isabella later.
N'har glanced to his left, where he noticed Grayin was already taking out her wallet. He gave her a slight shake of his head and sent her a telepathic "no" with his eyes. He would rather Garber not come back with a higher "donation" request every time they built a new building here.
N'har pretended to haggle with Garber, "that seems like a lot of money, Garber. I hear Rey pays much less than that. And we're going to build several more buildings here in the future."
Garber chewed on that thought for a while. After all, he was a reasonable and logical Gak. If what they were saying is true, there will be plenty more credits to extract from them in the future.
"Hmm, in that case, I can give you a discount. Five hundred credits a month," Garber said generously, then added, "but you have to donate that same amount for every new building you put on my spaceport. That's my final offer. We all want your business to be successful."
N'har almost had to stop Grayin from throwing her GC card at Garber.
Constellar Contracting started as a mercenary company on Earth, increasingly taking over the combat roles in humanity's numerous small wars. Due to limited oversight on their operations, they were able to aggressively expand during the early 21st century.
Unfortunately for them, peace came to Earth. It wasn't full utopian world peace, but with economic booms happening on every corner of the globe and weather patterns stabilizing with humanity's fix for climate change, there was less motivation for planetary conflict.
So Constellar turned to the stars. Even in the great galactic Pax Hominum brought on by Earth's economic expansions, there were plenty of opportunities out there for a corporation offering premium security solutions.
After all, there were plenty of conflicts and business to go around in a galaxy of thousands of planets. Olgix was merely one of them.
Territorial Space, Zakabara Second
"Space Lord, we have an incoming communication for you!"
Canouah, the great Space Lord of Zakabara, looked at his subordinate with surprise. His underlings were getting very good at their tasks and normally did not need micromanaging to enforce this months-long blockade. Annoyed, he said, "very well, open it."
"This is Commandant Marie Laurent of the French Space Force, representing the Galactic Union Peacekeeping Force. We are here to enforce our mandate under explicit invitation from the government of Zakabara Second, to ensure that their legal territorial space remains clear of hostile ships. And to facilitate the resumption of trade to the planet. Please stand down your ships and vacate this area within twenty four hours to ensure a peaceful transition of power. Thank you for your cooperation."
Then the human connection cut out without waiting for a reply.
"Someone get me planetary command!"
"How many ships do they have?" Popptaw asked from the viewscreen. Clearly, fighting her way out of this situation was in her instinct.
"Unknown. We could only find the source of the one ship that brought the message, but once they ended their transmission, they sped into a debris field and vanished among the trash," cursed Canouah. He had heard about how Earth ships could disappear like a worm in the mud, but hadn't truly believed it until he saw with his own two eyes. "We can't fight an enemy we do not see, with weapons we can't match, and numbers we don't know."
"So we just give up? We spend all that time and resources building a space fleet for you, and they mean absolutely nothing just because Earth sends maybe one ship?!" Popptaw asked furiously.
"No, we can move back to Prime and protect our home from the humans for when they invade us," Canouah said sadly, "but we can't engage them offensively in deep space around Second. It will just be a waste of ships, and as far as we know, they can build many more of them than we can. We should pull our ships back to defend home."
"No!" Popptaw screeched. "You won't take one step backwards from our defense of OUR system! That's an order!"
"What do you want me to do? Just shoot randomly at empty space until we hit something?" the exasperated space Lord asked. Then, looking at the phone, he realized she'd already hung up.
"What do we do, space Lord?" one of his loyal lieutenants asked, looking at him for guidance on the ambiguous and clearly stupid order.
Canouah thought for a while. Then he had an idea, "we'll wait out the twenty-four hour time limit. If we see any of them, we'll shoot at a couple of them and tell Popptaw we tried. Then we pull back. I'm not going to let thousands of my birds die just because she forgot to take her pills this morning."
Gophor Spaceport, Gakrek
"Do you think we should tell them they're pretty much getting fleeced by Izzy?" Enrico asked, looking out their second story window at their neighbors celebrating the deal signing.
"Nah, it's not that bad for them. One hundred twenty is below market value, but they'll still make their startup costs back in less than half a year," his girlfriend replied. "Besides, no need to go over and ruin their party. They'll learn to charge a higher price next time. Just like how Izzy learned to put that new utility clause in offworld deals."
Most of Grayin's family and friends were here to join in on the celebration. N'har's clan was back on Yis'Meh, but they would be sure to celebrate with them later as well.
"Chug! Chug! Chug!" the crowd yelled at N'har as he guzzled down his mug of Earth imported beer. They didn't live on a wealthy planet, but nobody ever accused the Gaks of not knowing how to have fun.
In one quick motion, he quickly drained his cup, and then turned around to plant a big sloppy kiss on the sensitive snout of a surprised Grayin.
The crowd went silent for a second.
Then, unanimously, they roared their approval in a loud cheer.
A beet-red Grayin returned the favor.
Territorial Space, Zakabara Second
"We see a ping again, commander!" Rekala reported. The humans had some strange technology that allowed them to disappear into the background of orbital debris around Second, but from time to time, they would show up on the radar as they maneuvered.
His commander mulled over this latest development and her orders.
"How far are they from us?" she asked.
Frowning at the radar, Rekala replied, "The ship radar thinks it might be about 320 kilometers away, but its signature is weak and that's at the very edge of our detection range."
"Are they within the MAR?" she asked. This was a loan word borrowed from humans. Many of their technology had been public knowledge, and the nerd birds who scoured the Internet for valuable information had found an air-to-air combat tactical guide.
It became standard training material for Zakabaran spacecraft crews. In this case, MAR stood for Minimum Abort Range. It's the range at which the target would no longer be able to avoid missiles fired from the spacecraft by firing their thrusters.
"No, commander, way out. They'll have over half a minute to respond if we fire now," Rekala replied.
His commander contemplated the information. Their standing orders were to fire warning shots at the humans, but not to destroy them. She doubted that was even possible in the first place.
"Alright, let's load up our missile and fire it at the signature. Let's see what they do."
At the very least, this should be a training experience for the crew. Like most of the Zakabaran fleet, they'd only fired a missile once before, and they had to retrieve and top up the fuel in it after the exercise. Some crews had not even been allowed to train with the system at all.
"I have a lock, commander," Rekala said. He didn't want to start an interplanetary war today. But he wasn't going to disobey orders.
"Fire," she said with more certainty. He depressed the trigger.
An indigenous copy of an old human missile slid out of the cargo bay.
And then, nothing happened. It just sat there.
"What the hell?" Rekala exclaimed, "it worked last time!"
When air-to-air missiles were invented on Earth, they encountered many issues. Early missiles were generally unreliable.
One of those problem missiles was the American-made AIM-4 Falcon. The Falcon had bad combat performance. It was designed to shoot down enemy bombers rather than fighters. It ended up doing neither. The American planes that could only carry missiles, specifically the Falcon, were often outclassed in dogfights by Soviet made planes over Vietnam. It achieved few combat kills.
The biggest problem with early experimental Falcons was that it was completely enclosed in a tube before deployment, so it could only lock-on after launch. This meant that early tests of the Falcon involved firing the missile at where you see the enemy planes, and then hoping that the seeker on the Falcon would also see and track the target on the way.
This was the model that the Zakabarans copied. However, the engineers on Prime were not stupid. They knew this was an issue from the start. They solved this problem on their copied missile; it had a radio that allowed it to communicate targets with the ship's radar before it fired. The lock-on could be done before firing.
The second biggest problem with Falcon was that the seeker was slow because its coolant took a long time to cool. It would take many precious seconds to lock onto enemy planes. The engineers on Prime disregarded this problem. This made sense because ships would have plenty of time to see the enemy in space before they were in range. Combat in space happened much more slowly than in an atmosphere.
Unfortunately for Rekala and his crew, the coolant in the radar seeker was consumed as it tracked a target. After they fired their missile in the training exercise, they retrieved it and topped off the fuel. They did not refill the liquid nitrogen for the seeker.
When the missile deployed, its radar turned towards what the ship told it was an ugly human target… and saw absolutely nothing.
"Alright, let's get out of here before the humans see us!"
"They're moving away from us now," the sensor operator reported to Lt Col Riku.
"Hmm… I wonder if they even saw us."
University of Zakabara Prime
"So they can only be fired once?!" Canouah shouted at the lead engineer angrily.
"Well… if you want to use it again, you need to refill the coolant as well," she told him.
"Why weren't we made aware of this?!"
"You never asked! We didn't realize that you were going to fire them multiple times! And oh yeah, you may need to manually reset the onboard computer."
"What?!" Canouah asked, confused. "Why the computer?"
The engineer fidgeted uncomfortably and explained, "there were some bad memory leaks in the guidance program, so we just doubled the onboard memory and figured that it was a problem that would solve itself when they hit their targets and exploded."
That… was simultaneously the most brilliant and idiotic thing he'd ever heard.
Canouah shot her a withering glare, and then he picked up his radio to his lieutenant. "Yeah, pull back our ships to the line the humans drew. All our ships. We need time to refit and rearm them."
"If we start a fight out there now, we'll do no better than the frogheads."
This marks the end of the Gakrek arc, but their impact will still be seen in subsequent chapters.
The missile memory leak is a reference to a commonly known engineer meme/story. Here it is in its entirety:
I was once working with a customer who was producing on-board software for a missile. In my analysis of the code, I pointed out that they had a number of problems with storage leaks. Imagine my surprise when the customers chief software engineer said "Of course it leaks". He went on to point out that they had calculated the amount of memory the application would leak in the total possible flight time for the missile and then doubled that number. They added this much additional memory to the hardware to "support" the leaks. Since the missile will explode when it hits it's target or at the end of it's flight, the ultimate in garbage collection is performed without programmer intervention.
RoyalRoad
Index
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I have finally taken some time to analyze several hot EV SPACs, I wanted to focus on FIII, GIK, NGA, ACTC and XL Fleet this time since those 5 are kind of similar. That’s why I left out Canoo, Arrival and Lucid. I am not a financial advisor and do your own research before investing. I have read many reports which have brought me money and I just wanted to return something to the community. Feel free to disagree and share your thoughts. Big wall of text ahead, you have been warned!
So let’s begin:
FIII/ Electric last mile
First one on the menu is FIII, merging with Electric Last which is basically a new US entity formed by a Chinese company called Sokon founded in 2020. Sokon is apparently big in China where they have sold 30k electric vans on Asian market so they just want to do a copy paste and do the same in US. Sokon is in the US market since 2016. through owning a EV company called Seres.
The good
- They have 100k capacity Indiana powerplant (kept 430 employees) which was acquired by Seres previously, IMO this is big and provides a great platform to deliver good numbers
- Previous experience in building vans in China, all they have to do is copy paste
- They claim to have 30k signed preorders
The bad
- No product has been delivered yet, 0 revenue so far, US entity founded just prior the deal, final purchase of the preorders are contingent upon satisfaction of customer requirement
- Only one Minivan offering planned in near future
The shady
- Sokon is not new to the US markets and their older company Seres (since 2016) has absolutely awful reviews on Glassdoor, only 16% of employees approve of the CEO, Seres had big plans to deliver SUVs to the market but those plans have been unsuccessful so far, I know Seres is not ELS but it tells about their company culture
Conclusion: If they make it happen they could be big, my biggest concern is that they have been very unsuccessful with their previous venture, IMO the reason they decided to form a new entity and not to merge through already existing Seres company is because they knew people would find bad reviews and they wanted to rebrand themselves. However, if their company culture in the USA had big problems and employees who are in general extremely unhappy with management, what would make it different this time? What I have to add is that their CEO will be a previous Workhorse CEO and he might create a different working environment.
Short term swing: yes, I can see it getting to 17/18 mostly because nobody is going to dig deep enough to see their previous failures. However, I prefer to pass it and to invest my money in others.
Long term hold: definitely sell before merger if you are in, buy again if their plant starts actually delivering good vans, I am very skeptical of their business. I would bet against their projections considering everything I found out from their Seres employees.
GIK/Lightning eMotors
Here we have a market leader in Class 3-7 vehicles electrification, they are already having 120 vehicles on the road. They are offering commercial ZEVs (both battery and fuel cells) and Charging solutions.
The Good
- 1500 already ordered vehicles from key customers, 20 new customers and 10 repeat orders which means they are doing quality work
- Tons of strategic partnerships in place, Already received purchase orders to fulfill 100% of 2020E and 2021E revenue
- Electric repower will be the way to go for a lot of businesses, eg. If you already have a Bus fleet, would you go to Proterra, order one and wait for two years or would you pay 50% less to GIK and electrify your bus in 6 months?
- Insanely low starting valuation at 0.6b
The Bad
- Out of all EV spacs they got only 225 mil from GIK and PIPE which isn’t much and might influence their expansion potential
Conclusion: I love GIK, they are legit, they have vehicles on the road, customers are happy, they have scheduled orders until the end of the year. Big question is how they are going to be successful in scaling the business. Current share price of 14.3$ gives the company valuation of 1.1b which is a steal. I am in it, I expect it to run up to 20$, depending on the run I will decide how much I will sell, might hold some after merger.
ACTC/Proterra
We waited and waited and this was one of the craziest market reactions, I believe the price went to 18 in 30 minutes, however is it worth the hype?
Proterra claims to have 50%+ electric bus market share and has already delivered 1000+ vehicles which makes it very legit. They serve powertrains, buses and charging solutions. Also, in comparison to FIII deal here 86% of employees approve of the CEO
The good
- Already delivered 1k vehicles with the biggest revenue of all EV Spacs sitting at 193mm in 2020. (FIII has 0, GIK 9, XL 21, NGA 29)
- $750MM+ of Orders and Backlog
- Close ties to Biden, might make big government deals easy
- 278mm from ACTC + 415mm from PIPE (be aware of the post merger dump) gives them the most funds to make it happen
The Bad
- IMO them being only focused on Buses slows growth potential, they aren’t active in any other EV category and do not plan to be, this can also be good in a way they will not try to do to many things at once which is a risk for some other companies
- Their competition is actually quite big, several employees have pointed out in their reviews that it will not be an easy market in future at all
The Shady
- Their Investor presentation (while being the most beautiful one) screams insecurity when they talk about competition which is a big red flag for me. They compared themselves with Arrival, Nikola, Romeo and even Canoo?! Its like comparing apples to oranges. Why haven’t they mentioned Lion Electric which also has proven products on the road? No mention of BYD or NFI-New Flyer Industries comparisons which also has EV buses. EG. NYC bought both Proterra and NFI buses but decided to buy again only from NFI. I am no expert but if they are claiming to have the best buses they shouldn’t be afraid to mention competition and how they are better. I have found their buses are supposed to have better specs than BYD but no data on NFI.
EDIT: Few thought from u/kvncls who thinks I had a too negative outlook and didnt agree with some of my points, I find his insight valuable:

• Most of their profits in the next 5 years are NOT coming from selling buses. Their main thing is providing EV powertrains and batteries to other commercial OEMs, primarily Daimler. Plus, they’re not only building buses. They’re building trucks. They’re building batteries. They’re building fully-realized powertrains. They’re building EV charging stations for fleets of buses/trucks.
• They also have a major investor in Daimler, who also happens to be their biggest customer. Daimler’s got $50B in revenue in 2020 and ~520k vehicles sold. How is this not mentioned at all? Proterra is building out batteries and EV powertrains for them at a scale HYLN could only dream of. -Arrival, Nikola, Romeo, and Canoo are ALL competitors. Why? Because they all have products related to Proterra. • Arrival builds transit buses/trucks. 0 revenue. All promises. • Nikola builds Class-8 trucks. 0 revenue. All promises • Romeo builds batteries. 11M revenue. They have product. • Canoo builds buses/vans/trucks. 0 revenue. All promises. • You missed this, but they also compared their selves to Hyliion which has 0 revenue, all promises. • You missed this, but they also compared their selves to Chargepoint. Why? Because Proterra builds EV charging stations for fleets of buses/trucks. Proterra literally does all of those things and has bigger revenues than all of them combined.

My response: What I mean when I said they are only focused on Buses (I agree i should have explained it better, English is not my native language) is that they are only building buses (while others are involved in building their own trucks/vans, Proterra is providing powertrains to OEMs), I meant that if they had their own van/truck their growth potential would be bigger. Regarding their competitors: they literally put a slide saying “Other mobility Technology Players: PowerPoint and Prototypes” - this is not true, they have competitors thar have real products and revenue but they decided to put the companies they can easily bash. Why arent Lion, BYD or NFI group there? Those are real companies with real products and revenue. Those companise should be listed on page 13 and 14 and not Canoo. You list Cannoo, Nikola and Arrival if you want to look better and hide your real competitors. Thats what I meant when I said they didn't mention their true competitors (only Lion a bit later). I do agree that Daimler partnership is a big one, someone also mentioned it here. I will edit my post to add your thoughts, thanks for participating. End of EDIT.
Conclusion: At current share price of 23$ the company is valued at 5.5 billion. NFI Group is the largest bus manufacturer in USA with annual revenue of 2.9 billion; they have currently around 300 EV buses on the road but plan to have way more. NFI group is being valued at 1.9 billion. Make of that what you want. I am no EV bus expert to make good conclusions who has the best ones. Am I in Prottera? Oh yes I am and I will buy more warrants, market loves Proterra, nobody is going to think about their competition and challenges short term; once Biden says EV Buses on inauguration it will shoot up. Will I hold through merger? No.
XL FLeet
XL Fleet the market leader in fleet electrification solutions, with proven, proprietary technology and electrification systems and solutions that work across a wide range of vehicle classes and types, they have already 3000 vehicles on the road.
The good
- Over 200 fleet customers with 3,000+ systems deployed, 130+ million customer driven miles
- Already having established production (6k per year capacity) they can scale to 100,000+ units annually
- Big demand from business who have good fleets where is makes no financial sense to buy new EV vehicles
The Bad
- No EV solution yet only hybrid, expected in to have one in 2023, being two years behind their competition if a big minus
In general, XL Fleet is sitting at 2.8b valuation which I do consider a buy at 22$. We have also that Citron report with the PT of 60$ which is a bit too much IMO but I can see them growing their business with their hybrid offer and after that who knows, it all depends on their EV solution. I am not in it just because I believe there are better plays currently.
NGA/Lion Electric
I left this one for the end and IMO this is the best company to invest in. They are focused on medium and heavy duty EVs, they have 300 vehicles on the road and their Quebec facility can produce 2500 vehicles per year. On the wings of Amazon I believe they will be big.
The Good
- 100% built in the house vehicles, 7 vehicles already available today, 4 trucks, 3 buses
- Amazon partnership – 2500 vehicles on schedule + option to buy 20% of the company
- Opening high volume production facility in the USA, CEO said it will be producing 20k vehicles per year, announcement could be any day soon
The Bad
- Only negative I can see that it has already gone up a lot, also 300 vehicles on the road after 12 years aren’t that much, having in mind their production facility with 2.5k vehicles potential
Conclusion: So many great things here, proven products, partnership with the best company to have as a partner – Amazon, new factory and a legit CEO to lead this. Think about Nikola – no product, just a truck prototype - its trading at 7.7 billlion. Lion Electric - even at the price of 31$ is valued at 4.9 billion. I can see it doubling until the end of the year. Even though we had the Amazon and Cramer pump there is still the new factory announcement and probably Biden talk which will be a big push for all EV.
///
My personal strategy: I am already in GIK, ACTC and NGA, I will skip FIII and XL Fleet for now. I am buying more GIK warrants today, I believe that play has the best value right now short term. I will buy more ACTC warrants hoping for a pullback. Merger date might be far away which might cause the stock to bleed but I do want to have a stronger position before the Biden speech. NGA has run up a lot and we will probably have profit taking soon, might be smart to wait a bit. If you are thinking long term then get NGA warrants even with today’s prices. Warrants are 12.5$ which means you value the company at just 3.2b. IMO warrants in all three SPACs are a better buy than commons.
I believe we will have a big EV boost post Biden inauguration. He wants to go EV with all the buses, first ones will be School Buses which will be great for Proterra and Lion, the demand is so big there is enough for everyone.

NEW INFO 5 Results from share redemption are posted. Less than .2% redeemed. Very bullish as investors are showing extreme confidence in the future of PLBY.
https://finance.yahoo.com/news/playboy-mountain-crest-acquisition-corp-120000721.html
NEW INFO 4 Definitive Agreement to purchase 100% of Lovers brand stores announced 2/1.
https://www.streetinsider.com/Corporate+News/Playboy+%28MCAC%29+Confirms+Deal+to+Acquire+Lovers/17892359.html
NEW INFO 3 I bought more on the dip today. 5081 total. Price rose AH to $12.38 (2.15%)
NEW INFO 2 Here is the full webinar.
https://icrinc.zoom.us/rec/play/9GWKdmOYumjWfZuufW3QXpe_FW_g--qeNbg6PnTjTMbnNTgLmCbWjeRFpQga1iPc-elpGap8dnDv8Zww.yD7DjUwuPmapeEdP?continueMode=true&tk=lEYc4F_FkKlgsmCIs6w0gtGHT2kbgVGbUju3cIRBSjk.DQIAAAAV8NK49xZWdldRM2xNSFNQcTBmcE00UzM3bXh3AAAAAAAAAAAAAAAAAAAAAAAAAAAA&uuid=WN_GKWqbHkeSyuWetJmLFkj4g&_x_zm_rtaid=kR45-uuqRE-L65AxLjpbQw.1611967079119.2c054e3d3f8d8e63339273d9175939ed&_x_zm_rhtaid=866
NEW INFO 1 Live merger webinar with PLBY and MCAC on Friday January 29, 2021 at 12:00 NOON EST link below
https://mcacquisition.com/investor-relations/press-release-details/2021/Playboy-Enterprises-Inc.-and-Mountain-Crest-Acquisition-Corp-Participate-in-SPACInsider-ICR-Webinar-on-January-29th-at-12pm-ET/default.aspx
Playboy going public: Porn, Gambling, and Cannabis
!!!WARNING READING AHEAD!!! TL;DR at the end. It will take some time to sort through all the links and read/watch everything, but you should.
In the next couple weeks, Mountain Crest Acquisition Corp is taking Playboy public. The existing ticker MCAC will become PLBY. Special purpose acquisition companies have taken private companies public in recent months with great success. I believe this will be no exception. Notably, Playboy is profitable and has skyrocketing revenue going into a transformational growth phase.
Porn - First and foremost, let's talk about porn. I know what you guys are thinking. “Porno mags are dead. Why would I want to invest in something like that? I can get porn for free online.” Guess what? You are absolutely right. And that’s exactly why Playboy doesn’t do that anymore. That’s right, they eliminated their print division. And yet they somehow STILL make money from porn that people (see: boomers) pay for on their website through PlayboyTV, Playboy Plus, and iPlayboy. Here’s the thing: Playboy has international, multi-generational name recognition from porn. They have content available in 180 countries. It will be the only publicly traded adult entertainment (porn) company. But that is not where this company is going. It will help support them along the way. You can see every Playboy magazine through iPlayboy if you’re interested. NSFW links below:
https://www.playboy.com/
https://www.playboytv.com/
https://www.playboyplus.com/
https://www.iplayboy.com/
Gambling - Some of you might recognize the Playboy brand from gambling trips to places like Las Vegas, Atlantic City, Cancun, London or Macau. They’ve been in the gambling biz for decades through their casinos, clubs, and licensed gaming products. They see the writing on the wall. COVID is accelerating the transition to digital, application based GAMBLING. That’s right. What we are doing on Robinhood with risky options is gambling, and the only reason regulators might give a shit anymore is because we are making too much money. There may be some restrictions put in place, but gambling from your phone on your couch is not going anywhere. More and more states are allowing things like Draftkings, poker, state ‘lottery” apps, hell - even political betting. Michigan and Virginia just ok’d gambling apps. They won’t be the last. This is all from your couch and any 18 year old with a cracked iphone can access it. Wouldn’t it be cool if Playboy was going to do something like that? They’re already working on it. As per CEO Ben Kohn who we will get to later, “...the company’s casino-style digital gaming products with Scientific Games and Microgaming continue to see significant global growth.” Honestly, I stopped researching Scientific Games' sports betting segment when I saw the word ‘omni-channel’. That told me all I needed to know about it’s success.
“Our SG Sports™ platform is an enhanced, omni-channel solution for online, self-service and retail fixed odds sports betting – from soccer to tennis, basketball, football, baseball, hockey, motor sports, racing and more.”
https://www.scientificgames.com/
https://www.microgaming.co.uk/
“This latter segment has become increasingly enticing for Playboy, and it said last week that it is considering new tie-ups that could include gaming operators like PointsBet and 888Holdings.”
https://calvinayre.com/2020/10/05/business/playboys-gaming-ops-could-get-a-boost-from-spac-purchase/
As per their SEC filing:
“Significant consumer engagement and spend with Playboy-branded gaming properties around the world, including with leading partners such as Microgaming, Scientific Games, and Caesar’s Entertainment, steers our investment in digital gaming, sports betting and other digital offerings to further support our commercial strategy to expand consumer spend with minimal marginal cost, and gain consumer data to inform go-to-market plans across categories.”
https://www.sec.gov/Archives/edgadata/1803914/000110465921005986/tm2034213-12_defm14a.htm#tMDAA1
They are expanding into more areas of gaming/gambling, working with international players in the digital gaming/gambling arena, and a Playboy sportsbook is on the horizon.
https://www.playboy.com/read/the-pleasure-of-playing-with-yourself-mobile-gaming-in-the-covid-era
Cannabis - If you’ve ever read through a Playboy magazine, you know they’ve had a positive relationship with cannabis for many years. As of September 2020, Playboy has made a major shift into the cannabis space. Too good to be true you say? Check their website. Playboy currently sells a range of CBD products. This is a good sign. Federal hemp products, which these most likely are, can be mailed across state lines and most importantly for a company like Playboy, can operate through a traditional banking institution. CBD products are usually the first step towards the cannabis space for large companies. Playboy didn’t make these products themselves meaning they are working with a processor in the cannabis industry. Another good sign for future expansion. What else do they have for sale? Pipes, grinders, ashtrays, rolling trays, joint holders. Hmm. Ok. So it looks like they want to sell some shit. They probably don’t have an active interest in cannabis right? Think again:
https://www.forbes.com/sites/javierhasse/2020/09/24/playboy-gets-serious-about-cannabis-law-reform-advocacy-with-new-partnership-grants/?sh=62f044a65cea
“Taking yet another step into the cannabis space, Playboy will be announcing later on Thursday (September, 2020) that it is launching a cannabis law reform and advocacy campaign in partnership with National Organization for the Reform of Marijuana Laws (NORML), Last Prisoner Project, Marijuana Policy Project, the Veterans Cannabis Project, and the Eaze Momentum Program.”
“According to information procured exclusively, the three-pronged campaign will focus on calling for federal legalization. The program also includes the creation of a mentorship plan, through which the Playboy Foundation will support entrepreneurs from groups that are underrepresented in the industry.” Remember that CEO Kohn from earlier? He wrote this recently:
https://medium.com/naked-open-letters-from-playboy/congress-must-pass-the-more-act-c867c35239ae
Seems like he really wants weed to be legal? Hmm wonder why? The writing's on the wall my friends. Playboy wants into the cannabis industry, they are making steps towards this end, and we have favorable conditions for legislative progress.
Don’t think branding your own cannabis line is profitable or worthwhile? Tell me why these 41 celebrity millionaires and billionaires are dummies. I’ll wait.
https://www.celebstoner.com/news/celebstoner-news/2019/07/12/top-celebrity-cannabis-brands/
Confirmation: I hear you. “This all seems pretty speculative. It would be wildly profitable if they pull this shift off. But how do we really know?” Watch this whole video:
https://finance.yahoo.com/video/playboy-ceo-telling-story-female-154907068.html
Man - this interview just gets my juices flowing. And highlights one of my favorite reasons for this play. They have so many different business avenues from which a catalyst could appear. I think paying attention, holding shares, and options on these staggered announcements over the next year is the way I am going to go about it. "There's definitely been a shift to direct-to-consumer," he (Kohn) said. "About 50 percent of our revenue today is direct-to-consumer, and that will continue to grow going forward.” “Kohn touted Playboy's portfolio of both digital and consumer products, with casino-style gaming, in particular, serving a crucial role under the company's new business model. Playboy also has its sights on the emerging cannabis market, from CBD products to marijuana products geared toward sexual health and pleasure.” "If THC does become legal in the United States, we have developed certain strains to enhance your sex life that we will launch," Kohn said. https://cheddar.com/media/playboy-goes-public-health-gaming-lifestyle-focus Oh? The CEO actually said it? Ok then. “We have developed certain strains…” They’re already working with growers on strains and genetics? Ok. There are several legal cannabis markets for those products right now, international and stateside. I expect Playboy licensed hemp and THC pre-rolls by EOY. Something like this: https://www.etsy.com/listing/842996758/10-playboy-pre-roll-tubes-limited?ga_order=most_relevant&ga_search_type=all&ga_view_type=gallery&ga_search_query=pre+roll+playboy&ref=sr_gallery-1-2&organic_search_click=1 Maintaining cannabis operations can be costly and a regulatory headache. Playboy’s licensing strategy allows them to pick successful, established partners and sidestep traditional barriers to entry. You know what I like about these new markets? They’re expanding. Worldwide. And they are going to be a bigger deal than they already are with or without Playboy. Who thinks weed and gambling are going away? Too many people like that stuff. These are easy markets. And Playboy is early enough to carve out their spot in each. Fuck it, read this too: https://www.forbes.com/sites/jimosman/2020/10/20/playboy-could-be-the-king-of-spacs-here-are-three-picks/?sh=2e13dcaa3e05
Numbers: You want numbers? I got numbers. As per the company’s most recent SEC filing:
“For the year ended December 31, 2019, and the nine months ended September 30, 2020, Playboy’s historical consolidated revenue was $78.1 million and $101.3 million, respectively, historical consolidated net income (loss) was $(23.6) million and $(4.8) million, respectively, and Adjusted EBITDA was $13.1 million and $21.8 million, respectively.”
“In the nine months ended September 30, 2020, Playboy’s Licensing segment contributed $44.2 million in revenue and $31.1 million in net income.”
“In the ninth months ended September 30, 2020, Playboy’s Direct-to-Consumer segment contributed $40.2 million in revenue and net income of $0.1 million.”
“In the nine months ended September 30, 2020, Playboy’s Digital Subscriptions and Content segment contributed $15.4 million in revenue and net income of $7.4 million.”
They are profitable across all three of their current business segments.
“Playboy’s return to the public markets presents a transformed, streamlined and high-growth business. The Company has over $400 million in cash flows contracted through 2029, sexual wellness products available for sale online and in over 10,000 major retail stores in the US, and a growing variety of clothing and branded lifestyle and digital gaming products.”
https://www.sec.gov/Archives/edgadata/1803914/000110465921005986/tm2034213-12_defm14a.htm#tSHCF
Growth: Playboy has massive growth in China and massive growth potential in India. “In China, where Playboy has spent more than 25 years building its business, our licensees have an enormous footprint of nearly 2,500 brick and mortar stores and 1,000 ecommerce stores selling high quality, Playboy-branded men’s casual wear, shoes/footwear, sleepwear, swimwear, formal suits, leather & non-leather goods, sweaters, active wear, and accessories. We have achieved significant growth in China licensing revenues over the past several years in partnership with strong licensees and high-quality manufacturers, and we are planning for increased growth through updates to our men’s fashion lines and expansion into adjacent categories in men’s skincare and grooming, sexual wellness, and women’s fashion, a category where recent launches have been well received.” The men’s market in China is about the same size as the entire population of the United States and European Union combined. Playboy is a leading brand in this market. They are expanding into the women’s market too. Did you know CBD toothpaste is huge in China? China loves CBD products and has hemp fields that dwarf those in the US. If Playboy expands their CBD line China it will be huge. Did you know the gambling money in Macau absolutely puts Las Vegas to shame? Technically, it's illegal on the mainland, but in reality, there is a lot of gambling going on in China. https://www.forbes.com/sites/javierhasse/2020/10/19/magic-johnson-and-uncle-buds-cbd-brand-enter-china-via-tmall-partnership/?sh=271776ca411e “In India, Playboy today has a presence through select apparel licensees and hospitality establishments. Consumer research suggests significant growth opportunities in the territory with Playboy’s brand and categories of focus.” “Playboy Enterprises has announced the expansion of its global consumer products business into India as part of a partnership with Jay Jay Iconic Brands, a leading fashion and lifestyle Company in India.” “The Indian market today is dominated by consumers under the age of 35, who represent more than 65 percent of the country’s total population and are driving India’s significant online shopping growth. The Playboy brand’s core values of playfulness and exploration resonate strongly with the expressed desires of today’s younger millennial consumers. For us, Playboy was the perfect fit.” “The Playboy international portfolio has been flourishing for more than 25 years in several South Asian markets such as China and Japan. In particular, it has strategically targeted the millennial and gen-Z audiences across categories such as apparel, footwear, home textiles, eyewear and watches.” https://www.licenseglobal.com/industry-news/playboy-expands-global-footprint-india It looks like they gave COVID the heisman in terms of net damage sustained: “Although Playboy has not suffered any material adverse consequences to date from the COVID-19 pandemic, the business has been impacted both negatively and positively. The remote working and stay-at-home orders resulted in the closure of the London Playboy Club and retail stores of Playboy’s licensees, decreasing licensing revenues in the second quarter, as well as causing supply chain disruption and less efficient product development thereby slowing the launch of new products. However, these negative impacts were offset by an increase in Yandy’s direct-to-consumer sales, which have benefited in part from overall increases in online retail sales so far during the pandemic.” Looks like the positives are long term (Yandy acquisition) and the negatives are temporary (stay-at-home orders).
https://www.sec.gov/Archives/edgadata/1803914/000110465921006093/tm213766-1_defa14a.htm
This speaks to their ability to maintain a financially solvent company throughout the transition phase to the aforementioned areas. They’d say some fancy shit like “expanded business model to encompass four key revenue streams: Sexual Wellness, Style & Apparel, Gaming & Lifestyle, and Beauty & Grooming.” I hear “we’re just biding our time with these trinkets until those dollar dollar bill y’all markets are fully up and running.” But the truth is these existing revenue streams are profitable, scalable, and rapidly expanding Playboy’s e-commerce segment around the world.
"Even in the face of COVID this year, we've been able to grow EBITDA over 100 percent and revenue over 68 percent, and I expect that to accelerate going into 2021," he said. “Playboy is accelerating its growth in company-owned and branded consumer products in attractive and expanding markets in which it has a proven history of brand affinity and consumer spend.”
Also in the SEC filing, the Time Frame:
“As we detailed in the definitive proxy statement, the SPAC stockholder meeting to vote on the transaction has been set for February 9th, and, subject to stockholder approval and satisfaction of the other closing conditions, we expect to complete the merger and begin trading on NASDAQ under ticker PLBY shortly thereafter,” concluded Kohn.
The Players: Suhail “The Whale” Rizvi (HMFIC), Ben “The Bridge” Kohn (CEO), “lil” Suying Liu & “Big” Dong Liu (Young-gun China gang). I encourage you to look these folks up. The real OG here is Suhail Rizvi. He’s from India originally and Chairman of the Board for the new PLBY company. He was an early investor in Twitter, Square, Facebook and others. His firm, Rizvi Traverse, currently invests in Instacart, Pinterest, Snapchat, Playboy, and SpaceX. Maybe you’ve heard of them. “Rizvi, who owns a sprawling three-home compound in Greenwich, Connecticut, and a 1.65-acre estate in Palm Beach, Florida, near Bill Gates and Michael Bloomberg, moved to Iowa Falls when he was five. His father was a professor of psychology at Iowa. Along with his older brother Ashraf, a hedge fund manager, Rizvi graduated from Wharton business school.” “Suhail Rizvi: the 47-year-old 'unsocial' social media baron: When Twitter goes public in the coming weeks (2013), one of the biggest winners will be a 47-year-old financier who guards his secrecy so zealously that he employs a person to take down his Wikipedia entry and scrub his photos from the internet. In IPO, Twitter seeks to be 'anti-FB'” “Prince Alwaleed bin Talal of Saudi Arabia looks like a big Twitter winner. So do the moneyed clients of Jamie Dimon. But as you’ve-got-to-be-joking wealth washed over Twitter on Thursday — a company that didn’t exist eight years ago was worth $31.7 billion after its first day on the stock market — the non-boldface name of the moment is Suhail R. Rizvi. Mr. Rizvi, 47, runs a private investment company that is the largest outside investor in Twitter with a 15.6 percent stake worth $3.8 billion at the end of trading on Thursday (November, 2013). Using a web of connections in the tech industry and in finance, as well as a hearty dose of good timing, he brought many prominent names in at the ground floor, including the Saudi prince and some of JPMorgan’s wealthiest clients.” https://www.nytimes.com/2013/11/08/technology/at-twitter-working-behind-the-scenes-toward-a-billion-dollar-payday.html Y’all like that Arab money? How about a dude that can call up Saudi Princes and convince them to spend? Funniest shit about I read about him: “Rizvi was able to buy only $100 million in Facebook shortly before its IPO, thus limiting his returns, according to people with knowledge of the matter.” Poor guy :(
He should be fine with the 16 million PLBY shares he's going to have though :)
Shuhail also has experience in the entertainment industry. He’s invested in companies like SESAC, ICM, and Summit Entertainment. He’s got Hollywood connections to blast this stuff post-merger. And he’s at least partially responsible for that whole Twilight thing. I’m team Edward btw.
I really like what Suhail has done so far. He’s lurked in the shadows while Kohn is consolidating the company, trimming the fat, making Playboy profitable, and aiming the ship at modern growing markets.
https://www.reuters.com/article/us-twitter-ipo-rizvi-insight/insight-little-known-hollywood-investor-poised-to-score-with-twitter-ipo-idUSBRE9920VW20131003
Ben “The Bridge” Kohn is an interesting guy. He’s the connection between Rizvi Traverse and Playboy. He’s both CEO of Playboy and was previously Managing Partner at Rizvi Traverse. Ben seems to be the voice of the Playboy-Rizvi partnership, which makes sense with Suhail’s privacy concerns. Kohn said this:
“Today is a very big day for all of us at Playboy and for all our partners globally. I stepped into the CEO role at Playboy in 2017 because I saw the biggest opportunity of my career. Playboy is a brand and platform that could not be replicated today. It has massive global reach, with more than $3B of global consumer spend and products sold in over 180 countries. Our mission – to create a culture where all people can pursue pleasure – is rooted in our 67-year history and creates a clear focus for our business and role we play in people’s lives, providing them with the products, services and experiences that create a lifestyle of pleasure. We are taking this step into the public markets because the committed capital will enable us to accelerate our product development and go-to-market strategies and to more rapidly build our direct to consumer capabilities,” said Ben Kohn, CEO of Playboy.
“Playboy today is a highly profitable commerce business with a total addressable market projected in the trillions of dollars,” Mr. Kohn continued, “We are actively selling into the Sexual Wellness consumer category, projected to be approximately $400 billion in size by 2024, where our recently launched intimacy products have rolled out to more than 10,000 stores at major US retailers in the United States. Combined with our owned & operated ecommerce Sexual Wellness initiatives, the category will contribute more than 40% of our revenue this year. In our Apparel and Beauty categories, our collaborations with high-end fashion brands including Missguided and PacSun are projected to achieve over $50M in retail sales across the US and UK this year, our leading men’s apparel lines in China expanded to nearly 2500 brick and mortar stores and almost 1000 digital stores, and our new men’s and women’s fragrance line recently launched in Europe. In Gaming, our casino-style digital gaming products with Scientific Games and Microgaming continue to see significant global growth. Our product strategy is informed by years of consumer data as we actively expand from a purely licensing model into owning and operating key high-growth product lines focused on driving profitability and consumer lifetime value. We are thrilled about the future of Playboy. Our foundation has been set to drive further growth and margin, and with the committed capital from this transaction and our more than $180M in NOLs, we will take advantage of the opportunity in front of us, building to our goal of $100M of adjusted EBITDA in 2025.”
https://www.businesswire.com/news/home/20201001005404/en/Playboy-to-Become-a-Public-Company
Also, according to their Form 4s, “Big” Dong Liu and “lil” Suying Liu just loaded up with shares last week. These guys are brothers and seem like the Chinese market connection. They are only 32 & 35 years old. I don’t even know what that means, but it's provocative.
https://www.secform4.com/insider-trading/1832415.htm
https://finance.yahoo.com/news/mountain-crest-acquisition-corp-ii-002600994.html
Y’all like that China money?
“Mr. Liu has been the Chief Financial Officer of Dongguan Zhishang Photoelectric Technology Co., Ltd., a regional designer, manufacturer and distributor of LED lights serving commercial customers throughout Southern China since November 2016, at which time he led a syndicate of investments into the firm. Mr. Liu has since overseen the financials of Dongguan Zhishang as well as provided strategic guidance to its board of directors, advising on operational efficiency and cash flow performance. From March 2010 to October 2016, Mr. Liu was the Head of Finance at Feidiao Electrical Group Co., Ltd., a leading Chinese manufacturer of electrical outlets headquartered in Shanghai and with businesses in the greater China region as well as Europe.”
Dr. Suying Liu, Chairman and Chief Executive Officer of Mountain Crest Acquisition Corp., commented, “Playboy is a unique and compelling investment opportunity, with one of the world’s largest and most recognized brands, its proven consumer affinity and spend, and its enormous future growth potential in its four product segments and new and existing geographic regions. I am thrilled to be partnering with Ben and his exceptional team to bring his vision to fruition.”
https://www.businesswire.com/news/home/20201001005404/en/Playboy-to-Become-a-Public-Company
These guys are good. They have a proven track record of success across multiple industries. Connections and money run deep with all of these guys. I don’t think they’re in the game to lose.
I was going to write a couple more paragraphs about why you should have a look at this but really the best thing you can do is read this SEC filing from a couple days ago. It explains the situation in far better detail. Specifically, look to page 137 and read through their strategy. Also, look at their ownership percentages and compensation plans including the stock options and their prices. The financials look great, revenue is up 90% Q3, and it looks like a bright future.
https://www.sec.gov/Archives/edgadata/1803914/000110465921005986/tm2034213-12_defm14a.htm#tSHCF
I’m hesitant to attach this because his position seems short term, but I’m going to with a warning because he does hit on some good points (two are below his link) and he’s got a sizable position in this thing (500k+ on margin, I think). I don’t know this guy but he did look at the same publicly available info and make roughly the same prediction, albeit without the in depth gambling or cannabis mention. You can also search reddit for ‘MCAC’ and very few relevant results come up and none of them even come close to really looking at this thing.
https://docs.google.com/document/d/1gOvAd6lebs452hFlWWbxVjQ3VMsjGBkbJeXRwDwIJfM/edit?usp=sharing
“Also, before you people start making claims that Playboy is a “boomer” company, STOP RIGHT THERE. This is not a good argument. Simply put. The only thing that matters is Playboy’s name recognition, not their archaic business model which doesn’t even exist anymore as they have completely repurposed their business.”
“Imagine not buying $MCAC at a 400M valuation lol. Streetwear department is worth 1B alone imo.”
Considering the ridiculous Chinese growth as a lifestyle brand, he’s not wrong.
Current Cultural Significance and Meme Value: A year ago I wouldn’t have included this section but the events from the last several weeks (even going back to tsla) have proven that a company’s ability to meme and/or gain social network popularity can have an effect. Tik-tok, Snapchat, Twitch, Reddit, Youtube, Facebook, Twitter. They all have Playboy stuff on them. Kids in middle and highschool know what Playboy is but will likely never see or touch one of the magazines in person. They’ll have a Playboy hoodie though. Crazy huh? A lot like GME, PLBY would hugely benefit from meme-value stock interest to drive engagement towards their new business model while also building strategic coffers. This interest may not directly and/or significantly move the stock price but can generate significant interest from larger players who will.
Bull Case: The year is 2025. Playboy is now the world leader pleasure brand. They began by offering Playboy licensed gaming products, including gambling products, direct to consumers through existing names. By 2022, demand has skyrocketed and Playboy has designed and released their own gambling platforms. In 2025, they are also a leading cannabis brand in the United States and Canada with proprietary strains and products geared towards sexual wellness. Cannabis was legalized in the US in 2023 when President Biden got glaucoma but had success with cannabis treatment. He personally pushes for cannabis legalization as he steps out of office after his first term. Playboy has also grown their brand in China and India to multi-billion per year markets. The stock goes up from 11ish to 100ish and everyone makes big gains buying somewhere along the way.
Bear Case: The United States does a complete 180 on marijuana and gambling. President Biden overdoses on marijuana in the Lincoln bedroom when his FDs go tits up and he loses a ton of money in his sports book app after the Fighting Blue Hens narrowly lose the National Championship to Bama. Playboy is unable to expand their cannabis and gambling brands but still does well with their worldwide lifestyle brand. They gain and lose some interest in China and India but the markets are too large to ignore them completely. The stock goes up from 11ish to 13ish and everyone makes 15-20% gains.
TL;DR: Successful technology/e-commerce investment firm took over Playboy to turn it into a porn, online gambling/gaming, sports book, cannabis company, worldwide lifestyle brand that promotes sexual wellness, vetern access, women-ownership, minority-ownership, and “pleasure for all”. Does a successful online team reinventing an antiquated physical copy giant sound familiar? No options yet, shares only for now. $11.38 per share at time of writing. My guess? $20 by the end of February. $50 by EOY. This is not financial advice. I am not qualified to give financial advice. I’m just sayin’ I would personally use a Playboy sports book app while smoking a Playboy strain specific joint and it would be cool if they did that. Do your own research. You’d probably want to start here:
WARNING - POTENTIALLY NSFW - SEXY MODELS AHEAD - no actual nudity though
https://s26.q4cdn.com/895475556/files/doc_presentations/Playboy-Craig-Hallum-Conference-Investor-Presentation-11_17_20-compressed.pdf
Or here:
https://www.mcacquisition.com/investor-relations/default.aspx
Jimmy Chill: “Get into any SPAC at $10 or $11 and you are going to make money.”
STL;DR: Buy MCAC. MCAC > PLBY couple weeks. Rocketship. Moon.
Position: 5000 shares. I will buy short, medium, and long-dated calls once available.

Welcome to the simplified version of the Phase I concept of the Deep Value Network! Please note that this is a working document to introduce the topic for newcomers, and we will be releasing a more in-depth White Paper in the near future.
For the purposes of this intro, I am using the stock market as an example because it's what got many of us interested in the project in the first place, but Deep Value Network is going to be much, much bigger than that.
When it comes down to it, the stock market runs on information. High quality and timely information means you can make good decisions about which stocks to buy or sell, and when is the best time to do it. Traditionally, access to this kind of information has been made very expensive or is a closely guarded secret because it's worth a lot of money to hedge funds and other financiers. For example, one of the "gold standard" tools for getting access to this information - called a Bloomberg terminal - is currently priced around $25,000 per year, per user. This means that a normal person is always at a disadvantage unless they happen to have enough money to pay for this information. In some cases, this system locks them out entirely and makes them not want to invest in the stock market because they can't afford to lose any of their hard-earned savings.
Deep Value Network will change that. It will allow normal people like us to share and trade information - that is generated within the community - directly in a decentralised, person-to-person (p2p or peer-to-peer) manner.
It will also allow people to create affordable tools (such as financial dashboards) for you and I to understand and interpret the information generated within our network, in order to make better and more profitable decisions. In short, you won't need access to a Bloomberg terminal or other high-priced data, because the community will generate and share its own! Additionally, because the Deep Value Network won't rely on big companies for hosting or technology, it is censor-proof and can't be taken down or taken over as we saw with Wall Street Bets this month. Access to the network itself will be free of charge for everyone - then you can decide which tools or information is of value to you.
Again, sharing community-generated stock market information is only just one example use case! There are many additional exciting features in the works (such as compatibility with 3D interfaces) that could completely change the way we interact and share information across all sectors and it will only expand from there. This is NOT going to be a network that is just for coders and quants, and we're looking forward to sharing more use cases as well as seeing the ideas and ventures community members will come up with themselves!
Why it works for creators of the data/tools:
Those doing original research or creating the tools will have a large group of customers, meaning they can share it at an affordable price but still monetise their hard work without losing out! As the network grows, so will the types of things that can be traded from people of all backgrounds and professions - we will be encouraging as many people to become creators as possible.
Why it works for the rest of us:
We then get access to information, tools and eventually products that are usually out of our price range, and by purchasing in larger numbers keep the price affordable. We then have a fighting chance - both in the world of investment and beyond - as well as creating a circular community-based economy!
One of the main initial goals of Deep Value Network is to put trading on the Stock Market within the people's reach, without having to rely on big corporations for data or tech, nor a central authority who can shut us down the moment we start making money like we saw with Gamestop. However it’s not an elite hub where only coders and quants can succeed. It’s not just a virtual replacement for the existing unfair financial system. DVN is a level playing field, powered by people on a P2P network. As we grow, the value and opportunity of DVN will be limited only by how big you can dream as well as demand for what you contribute to the network.
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p.s. Appreciate any questions being asked, and we will absolutely reply to them in short order. As you can imagine, it's a busy time for Steve et. al.

Disclaimer
I have no financial position in Tesla at this point in time and no interest in initiating one within the next month.
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Introduction

There seems to be a strong sentiment among some that Tesla is vastly overvalued, and that the current stock price is completely unrooted in reality. I understand the viewpoint, but don't really share the belief. That's not particularly surprising as I consider myself a Tesla optimist. I decided to present in brief the case for Tesla's valuation as I understand it.
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Overvalued?

Tesla's current market capitalisation appears to be grossly overvalued, especially when compared to their peers in the automotive sector as these charts so clearly illustrate.
In fact, the charts actually understate things as Tesla's market cap currently seats at around $464 billion. You could add another Daimler to the US and EU listed companies and they would still have a lower market capitalisation than Tesla.
This really is the case for Tesla being overvalued: it's automotive revenues is many times it's current market capitalisation. Per MarketWatch, Tesla's trailing PE is 978.44, so it's not as if Tesla is especially profitable either.
On a fundamentals basis, Tesla appears to be grossly overvalued.
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Growth

The above chart doesn't necessarily indicate that Tesla's current market capitalisation is an extremely speculative bubble that could burst soon, but more that Tesla is not valued based on its current financial situation. Tesla is valued as an extreme growth company, and it's growth over the past five years bears this out.
Revenue

Year	Revenue (USD millions)	Growth (%)
2008	15	-
2009	112	646.67
2010	117	4.46
2011	204	74.36%
2012	413	102.45
2013	2,013	387.41
2014	3,198	58.87
2015	4,046	26.52
2016	7,000	73.01
2017	11,759	67.99
2018	21,461	82.51
2019	24,578	14.52

Source (Macro Trends)
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To contextualise this, here's Tesla's trailing CAGR:

Time span	CAGR (%)
5 years	50.36%
7 years	79.27%
10 years	71.45%

Over the last decade, Tesla has demonstrated formidable growth. There's reason to believe that they can continue to show impressive growth (albeit lowered going forward).
The first two quarters of 2020 were battered by a pandemic (Tesla factories faced lockdowns due to the pandemic), and as a result are somewhat of an exception. There were no lockdowns during Q3.
Looking at Tesla's Q3 results, we see that the formidable growth story continues;

	Q3 2019	Q3 2020	Growth (%)
Vehicle Deliveries	97,186	139,593	44
Automotive Revenues (USD millions)	5,353	7,611	42
Storage Deployed (MW)	477	759	59
Solar Deployed	43	57	33
Energy Revenue	402	579	44
Total Revenue (USD millions)	6,303	8,771	39

Source (Tesla Investor Relations)
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Going Forward
Wall Street seems to expect the growth story to continue. Per Market Insider, here are the consensus analyst estimates for the next five years:

Year	Revenue (USD Millions)	Growth (%)
2020	30,626	24.61
2021	44,937	46.73
2022	55,963	24.54
2023	79,620	42.27
2024	102,526	28.77

Source (Markets Insider)
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I personally think that analyst consensus estimates are significantly underestimating Tesla's growth. In particular their figures for 2020 seem off by $2 billion or more. Analyst estimates for Q3 2020 were off by $495 million, and the estimate of $9,884M for Q4 seems off by around $1,500M (assuming Tesla meets the 180K delivery target) without accounting for the recognition of any deferred revenue. Tesla had $1,258M in deferred revenue at the end of Q3.
This may seem optimistic, but you're welcome to hold me to do this on January 28th 2021.
Despite their (potential) underestimation of Tesla, analysts expect a 5 year CAGR in 2024 of 33%. Tesla is expected to continue to show formidable growth to the end of the decade.
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Expansion
Tesla would execute on this formidable growth story through capital expenditure. They will build numerous service centres and gigafactories. The goal is to have giga factories on all 6 economic continents (with some continents having several factories) in order to lower the expenses involved in distributing the cars and to streamline logistics. Currently, Tesla is building two new gigafactories in Berlin and Austin and is currently expanding Giga Shanghai.
An inherent assumption is that the market has the demand to absorb all this extra supply. Many states have committed to phasing out ICE vehicles.
Source (Wikipedia)
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Around 13 states have committed to phasing out ICE vehicles on or before 2030. Over the coming decade, the EV total addressable market is projected to grow to 27 million by 2030 (at a CAGR of 21%). This again seems a bit too conservative. EV sales were down in the first half of 2020 (due to the pandemic), but in July sales grew 77% YoY. Some states have also pulled forward their timelines for phasing out fossil fuels since the forecast was initially made.
Tesla would face stiff competition going forward, but the total addressable market would grow fast enough to absorb all of Tesla's growth in supply if they can successfully market their vehicles. The risk here is that Tesla would fail to execute not that the total addressable market isn't large enough.
As an optimist, I'm fine betting on Tesla's ability to execute.
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Access to Capital
To fund the massive expansion expected of them, Tesla would need to spend a lot on capital expenditure. Fortunately, access to capital is not a problem for Tesla.

• Tesla's cash on hand at the end of Q3 2020 was $14.5 billion.
  • Per their 10Q filing this is already sufficient to fund their capex needs up to 2023.
• Free cash flow for the quarter was $1,395M.
• Giving their current market capitalisation ($464 billion) and the mandatory demand from index funds on their inclusion ($60 billion), Tesla has an opportunity to raise $10 - $20 billion in a new capital raise.
  • A $20 billion raise would give them enough cash on hand at the end of 2020 to finance their expansion plans for several years going forward.
• Free cash flow is expected to rise going forward:
  • In Q3 there was a 234% increase QoQ and a 276% increase YoY.
  • Tesla has been seeing increased efficiency of capital expenditures.

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Margins

Another component of the Tesla bull case is that in addition to hyper growth in revenues, Tesla's profit margins would also rise significantly over the next decade. This is readily apparent if we look at Tesla's past four quarters.
Source (Tesla Investor Relations)
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Automotive gross margins have steadily risen from 22.8% a year ago to 25.4% last quarter and seem set to continue their upwards trajectory. Total gross margins have risen from 18.9% to 23.5%. There are good reasons to expect the rise to continue and maybe even accelerate going forward:

• Manufacturing Efficiencies
• Network Services

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Manufacturing Efficiencies
As Tesla continues to ramp up production and innovate, they will be able to drive down the manufacturing cost of their vehicles, benefit even further from economies of scale (both in their production and their supply lines as EV demand heats up globally). Tesla's capital expenditure will become even more efficient; they will be able to squeeze out more manufacturing capacity, from the same amount of capital expenditures.
Tesla's rise in capex efficiency is apparent when you compare their capex expenditure in 2020 (construction of Giga Berlin, Giga Texas, Fremont Model Y ramp, and expansion of Giga Shanghai) to capex expenditure in 2017 (Fremont Model 3 ramp).
Source (Hypercharts)
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Despite the lower capex in 2020, Tesla is building a lot more cars.
Source (Statista)
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In addition to the aforementioned favourable trends, there are concrete reasons to expect Tesla to perform very well on the capex efficiency front over the next decade. At Tesla's battery day, Tesla laid out a roadmap to drastic increases in efficiency.
Source (Tesla Investor Relations)
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Tesla is forecasting a 69%!!! increase in capex efficiency in the coming years.
Furthermore, the cost of batteries is forecast to fall by as much as 56%. Batteries are a significant component of the total cost, and the reduction in the cost of batteries would further improve Tesla's margins.
Aside from batteries, and capex efficiency, Tesla should also be able to drive down the cost of manufacturing other components of their electric cars due to Wright's Law.
While Tesla would pass on some of these cost savings to the consumer, they wouldn't pass on all of them. This is evidenced by Tesla's improved margins in 2020 despite several price cuts.
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Network Services
Tesla's network services are included with their automotive revenues, but represent a novel high margin business that isn't part of the traditional automotive playbook. Using Tesla's fleet as the platform, Tesla can sell software products, subscriptions and other services to their customers. The recurring revenue of subscriptions in particular is a cause for optimism (especially given the potential high margins).
Tesla's existing products:

• Software
  • Full Self Driving: $10,000
  • Enhanced Autopilot: $4,000
    • This isn't currently available was previously an option
  • Acceleration Boosts
    • Model 3: $2,000
    • Model Y: $2,000
• Subscriptions
  • Premium Connectivity: $10/month
  • Full Self Driving: ???
    • Reportedly coming soon
• Miscellaneous
  • Supercharging

Tesla has only a few such products now, but they would likely develop more such products in time. Morgan Stanley analyst Adam Jonas referred to this as "the internet of cars".
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Beyond Traditional Automotive Revenues

It's a common statement among Tesla bulls that Tesla is not just an automaker. In my experience sceptics tend to be annoyed by this and (rightly) point out that the supermajority of Tesla's revenue comes from traditional automotive endeavours (selling their cars). While this is true now, it's not necessarily the case 10 years from now, and there's reason to believe that traditional automotive activities may no longer constitute a majority of Tesla's revenue, and may represent an even smaller portion of Tesla's profits.
I'll cover some other businesses of Tesla's that are poised to grow over the next 10 years:

• The aforementioned Network Services
• Energy
• Ridesharing
• Insurance

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Energy
Tesla's energy business is poised to benefit substantially from the shift towards renewable power sources. In particular, Tesla's battery storage businesses stands a lot to gain. Per the Financial Times, total energy storage capacity would grow rapidly over the coming decade to over 700 Gwh by 2030.
Source (Financial Times)
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The total addressable market is once again large enough to soak up hyper growth from Tesla over the next decade. Musk himself has stated that he expects Tesla's energy business to be as large as their automotive business long term (a reminder that Tesla's targeted end state is 20 million cars per year).
A refresher on Tesla Energy's available products:

• Solar
  • Tesla solar panels: $1.49/watt (after incentives)
  • Solar Roof
• Battery Storage
  • Power Wall (residential)
  • Power Pack (commercial)
  • Mega Pack (utility scale)

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Ridesharing
If Tesla can sufficiently advance their autonomy technology, they may finally be able to launch their autonomous ridesharing network. While Tesla's autonomy technology is currently not yet up to par for this application, their ongoing beta has been rapidly improving with weekly updates. The beta testers have been reporting significant improvements in capability since it was rolled out a month ago.
The bet is that Tesla would be able to reach superhuman driving capability before 2025. Their location agnostic approach would let them scale up operations much more quickly than geofenced competitors (e.g. Waymo).
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Insurance
Tesla collates extensive data regarding vehicle usage and the driving patterns of their customers. Combined with their driver assist software, Tesla should be in a privileged position regarding risk assessments for Tesla customers. Using their abundant available data, Tesla may be able to prepare the most compelling insurance package for a sizable fraction of Tesla drivers.
Tesla insurance may also have a synergistic relationship with Tesla's warranty processing and service centres. Tesla insurance customers may be offered discounts on service that wouldn't be available to customers of other insurance providers.
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Expectations

For public accountability purposes, I'll register my Tesla expectations for this year, next year and 2025. I'm not a financial analyst or otherwise particularly financially savvy, so I'll keep it pretty simple. I'll report my 25% - 75% confidence interval on the following metrics:

• Vehicle deliveries
• Total revenue

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	25%	75%
2020 Deliveries	480,000	520,000
2020 Revenue (USD millions)	30,000	36,000
2021 Deliveries	800,000	1,200,000
2021 Revenue (USD millions)	48,000	78,000
2025 Deliveries	3,000,000	5,000,000
2025 Revenue (USD millions)	135,000	350,000

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The growing variation in the interquartile range is a representation of my growing uncertainty about the business.
I have neither a price target for $TSLA nor concrete expectations for its stock price (I've said in public before that $TSLA might go to $200 before going to $600).
I simply believe that Tesla will demonstrate hyper growth over the next decade and have a > 10 year investment horizon, so I would be comfortable investing in $TSLA using dollar cost averaging.
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Closing Remarks

Many are dubious regarding Tesla's ability to deliver on the formidable vision outlined above. There are certainly numerous risks that may challenge Tesla's ability to deliver on hyper growth. However, as mentioned above, the main challenge to the hypergrowth narrative is execution risks. Fundamentally, it's a question of if Tesla can execute on the vision presented above. Giving their formidable track record so far (and the comparatively less than impressive records of the sceptics), I'm willing to bet that they can.
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Additional Disclosure
While I have no financial position in $TSLA, I'm sort of an anomalous case. I only became interested in investing a couple of months ago, and I decided to defer any investments I would make until January 2021 to mitigate exposure to political risks. If I did have a portfolio, I'd expect $TSLA would feature in it (probably at around a 10% initial weighting).

For those who missed it... Here is what happened this week.

1. The week started with a big push into GameStop. GameStop is a company that by most accounts is/was struggling to build a profitable financial model. Their 52 Week low was $2.57 per share. Giving them a Market Cap of roughly $200 Million.
2. Melvin Capital, a Multi-Billion Dollar hedge fund has shorted the company (bet the stock will go down). In fact, somehow Melvin Capital has managed to allegedly short roughly 140% of the shares, borrowing more shares than are actually in existence. Side note: when you buy a stock, you can only lose the money you invested. However, when you short a stock your losses are theoretically infinite.
3. The extreme short position by Melvin Capital created a potential buying opportunity which was identified months ago by Reddit user DeepFuckingValue. If you can buy enough stock and options of a highly shorted company, the short seller (Melvin Capital) is forced to take losses. They may also need to rebuy shares to settle margin calls which can cause the stock to go up even more.
4. Over the past few months DeepFuckingValue's positions in GameStop have become something of legend, as the price went from his initial purchase price of around $5 per share, to opening the week at around $90 per share. Along the way both retail and institutional investors have gotten behind DFV and the short squeeze.
5. One famous investor who invested big behind DFV is the legend Michael Burry who you may know from The Big Short. He put a large buy position on and is rumored to have made well over $300 million.
6. By Tuesday night the stock is up HUGE closing the day around $145 per share
7. We enter what is known as a Gamma Squeeze this is a cascading effect that occurs when prices move up quickly against short sellers. Quick Analogy: If a short squeeze is fast like a Corvette, a Gamma Squeeze is fast like a Tesla in Plaid mode with a Space X Rocket booster strapped to it (we will get to Elon later).
8. Wednesday morning: "We Like The Stock". Stock moves to over $300 per share and closes the day over $350
9. The band of retail investors, Robinhood traders, and heavy hitters grows huge on the buy side. Elon Musk steps up, for those who don't know Elon, in addition to being the richest man in the world he also is likely not a huge fan of Melvin Capital as he went to battle with them when they tried to short sell Tesla
10. Melvin Capital's losses are reaching a point of potentially financially breaking their entire fund, allegedly, Citadel steps in to lend a few billion to help bail out Melvin Capital.
11. A Battle Cry is let out "We can Stay retarded longer than they can stay solvent"
12. Thursday morning GameStop opens up to an insane upswing and hits over $450+ per share. DeepFuckingValue is man of lore as his initial $50k investment is now worth over $50m
13. Here is where things get dark...
14. At this point in time Robinhood and a few other brokerage houses stop allowing traders to buy GameStop. Betraying their own user base. They only allow you to hold or sell. Allegedly from many reports, Citadel who helped bail out Melvin Capital is actually one of the biggest customers of Robinhood. To better understand how this might have happened, Robinhood operates as a platform that allows traders trade commission free, but part of the business model is to then sells the data of how retail traders are trading to large institutional players like Citadel. In other words, if you are using the product for free you are the product and your data is being sold.
15. According to Justin Kan "Citadel reloaded their shorts before they told Robinhood to stop trading GME"
16. GameStop Shares drop from $450+ per share to $130 per share in a matter of minutes as many traders literally are only able to sell.
17. The list of big players supporting GameStop erupts. Names include: AOC, Dave Portnoy, Mark Cuban, Elon Musk, and Chamath Palihapitiya all who are outraged by the events. Many call for the founders of Robinhood to face potential jail time.
18. WallStBets Reddit channel explodes to over 6 million users.
19. Shares climb back slightly on Thursday to end the day just under $200 a share
20. Friday opens with a big step up, Opening around $345. Robinhood allows some highly limited purchases of GameStop. Despite limitations, the share price holds closing the week at around $325 per share.
21. GameStop is now a $22 Billion company
22. DeepFuckingValue is on the front page of The Wall St. Journal.

Until Next Time... Can't Stop, Won't Stop, GameStop

I believe AST Space Mobile ($NPA) could have one of the largest TAM’s (they list it as $1 trillion in their presentation) by acting as the first and only space-based cellular broadband network that will bring connection to all cellular devices anywhere around the world. It’s a speculative bet, but if they can meet their long term objectives I can see this company 100x+ over time. The first phase is to help the 51% of the world that doesn’t have connection (think poor parts of Africa or parts of Japan where their lead investor Rakuten is investing many millions into AST).
AST already has enough cash to make this phase happen (close to $550M) and has over 1,000 patents for the technology that works with any existing cell phone (key differentiating point). Most of the funding is coming from lead investors (Rakuten, AT&T, Vodaphone, Samsung, American Tower). This is an extremely impressive investor list, which makes me think there is something special here. These type of companies don’t just throw this kind of money around without extensive due diligence and conviction. These strategic investors are in for another $230 million at the $10 offering price so not far off from the current price. They also have a 12 month lockup period (longer than normal), which shows some confidence.
The next phase would be global rollout where they plan to partner with current carriers. The plan is when you go somewhere that doesn’t have connection it will push the option automatically to connect to AST Space Mobile. They are already in agreement with Vodaphone and AT&T among others to push this out in the future. This would work literally anywhere on sea/plane or tough to reach parts of the USA/world. They would have a revenue share with the carriers. There is really no marketing costs or any additional work for AST to push this out and essentially reach every single person (seems like an amazing model). I know even living in Boston, MA I can’t get a reliable connection on the train everyday to work so I would happily pay for this service.
One of the more valuable use cases is during emergencies (like the other week in Tennessee) where everyone loses connection through traditional cellular towers. People would still get connection in these cases through Space Mobile and this seems like a must have feature that carriers will need to offer.
According to the AST CEO and Rakuten CTO the initial testing has been successful, but 2021 will be another year of testing before the first phase is launched. They will need about another $1 billion plus in capex for the global rollout phase. There’s a chance they could get substantial free US governmental funding one day or from other sources (see article below). Even if they don’t it will be real easy to get these funds if the first phase is a success. They are also showing their EBITDA margins to be around 95% so they should be pumping out incredible amounts of cash after a few years if phase 1 is a success. It appears these low-orbit satellites will cost little to maintain and operate once in place based on Management’s projections. https://www.prnewswire.com/news-releases/the-us-senate-promotes-private-sector-development-of-next-generation-satellite-based-technology-to-deliver-broadband-connectivity-to-the-unconnected-301176838.html?s=03 The CTO of Rakuten also discusses the partnership with AST at the link below:
https://www.youtube.com/watch?v=c4MQxMQuy-c
This user “Spactori” on Stocktwitts seems to know the company very well so I have been reading his posts and asking various questions. He pointed out that AST also owns NanoAvionics https://nanoavionics.com/ (not clear if they own over 51% or 100%), which he thinks is valued between $500M to $1B, making the value for AST even more intriguing. The enterprise value at the $10 offering for AST is approximately $1.4 billion (net of cash). If the company can meet their long term objectives it will be massive - they are projecting $16.3 billion of EBITDA in 2030 (even if they can meet their phase 1 objectives it should be very successful where they project EBITDA of $1B in 2024 and $2.6B in 2025). You can imagine if you throw a 10x-30x multiple on the 2030 figures at that time ($160 billion - $500 billion market cap) compared to the $1.4B enterprise value at the offering price.
Obviously they still need to prove that they can execute and get to a global rollout and many things could go wrong during this timeframe. The current competition is very specialized since you need to purchase heavy industrial equipment and specialized phones that costs thousands of dollars to connect to satellites. Only special use cases are using this now it seems. It also seems AST is more mainstream than Starlink from SpaceX, which also needs special equipment to operate and doesn’t work with cellular devices.
There were discussions that Verizon and T-mobile were complaining early on to various parties and agencies about AST since they were scared of this technology and trying to block competition, but it seems they will have no choice but to join the AST system or else they will lose customers (along with any other carrier). American Tower ($100B market cap) investing and partnering in AST is essentially a hedge since their entire business could be disrupted from this.
I also like how the CEO seems credible and already successful having exited a prior satellite business for a large sum of money. He is clearly a serial entrepreneur. In the below interview he seems to be confident and is not pumping this or over hyping like some other CEO’s of other pre-revenue companies or SPACS.
https://www.youtube.com/watch?v=54rsQvW9otk&feature=emb_logo
I would expect alot of volatility in the stock. It doesn’t seem like the word is really out on AST and despite having many risks the opportunity seems too massive to pass up (not too mention the Company can do a lot of good for the world helping poor nations get connection and during emergency disasters when normal cellular towers can’t be reached)
Let me know what you think.
Note: this is not advice and can’t be relied upon. Please do your own due diligence. I have a starter position. See investor presentation for $NPA below https://www.npa-corp.com/wp-content/uploads/2020/12/AST_SpaceMobile_Investor_Presentation_Public_12-15-20.pdf

What IndianStreetBets stands for:

To all the newcomers, welcome!
Understandably the IndianStreetBets sub has received a fair bit of attention due to the Times of India and Economic Times articles following the happenings of GME.
What has transpired since is that beginners have missed the forest for the trees. We've been inundated with a bunch of low-quality posts calling on users to funnel their money into stock X, calls/polls for pumping/dumping certain scripts and so on.
None of this will help you make money. As outlined here by Nithin Kamath.
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The following is how Retail Traders beat the fund managers at their own game and made off with millions:
They figured out that more shares of GME were sold short than there were in existence. 140% shares sold short than the company ever issued. Along with this bit of information, there was DD done into GME's changes in management particularly with regards to Fils-Aime (CEO of Nintendo) and Ryan Cohen (who eventually bought 12.9% of the company). The analysis was done on their background and how both aimed to modernise GME. Coupled with the aforementioned qualitative analysis was research on the recent sector surge caused by the console cycle launches of the PlayStation and the new Xbox late in 2020 which caused customers to flock and actually line up around GME stores. Add to this the fact that people were made aware of short squeezes and gamma squeezes and how short sellers would cover up their positions.
What some novices are failing to realise is that this is at the heart of the entire fiasco. The fact that GME had the run it did was due to accurate fundamental analysis and high-quality DD. People pay attention to the final product without realising the layers of work that went into it.
This is what makes money. Painstaking effort and research. Always has. Always will. This is where the real money lies.

An appeal to all members of our community:

To the beginners, please use the search function and the IndianStreetBets Wiki before asking a question. On both the subreddit and Discord. In all likelihood, your query has in all likelihood been extensively covered in the past. If your query hasnt been answered, use the Daily Discussion Thread.
To the longtime members, please try to guide the newbies as best you can. You might have to tell multiple people about the right flair and the appropriate Discord channel. Do be patient. We will not be

New Guidelines:

• Use the Daily discussion thread so as not to miss out on high-quality posts which can otherwise be inundated with spam.
• As of right now, we're overrun with "Thoughts on Company X" posts followed by some statistics taken from a website. If you have a position and want an opinion, always state your analysis first. This will help other users to finetune your research and actually be productive.
• Please downvote posts which ask for advice on a company with minimal or no DD alongside it. Or simply calls for users to pump/dump it.
• Your account age should be at least 4 hours and must have 20 combined karma points to post a submission.

Use the upvote downvote votes wisely and promote high-quality posts which deserve attention.
​
We've had fantastic posts being lost in the noise including:

• Current and Projected NPA Analysis
• A summary of "The Intelligent Investor"
• Trading Strategy DD on the correlation between HDFC and HDFC Bank

These are the types of users who should be rewarded and appreciated. Upvote these posts and try to emulate the same.
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Final notes:
What the GME ordeal showcased, perhaps for the very first time, is that retail traders can be a force in their own right.
We can utlitize our larger numbers to gather and compile information and figures far faster than we can individually.

Strength in numbers.

When backed by proper analytics and research, we can make money and truly be more than the sum of our parts.
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IndianStreetBets is and continues to be a free spirited subreddit where traders and investors can come together to discuss all aspects of the financial markets while adding fun to an otherwise relatively drab subject.
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Wishing you all the best.