One of the reasons for trading Nikola Motors as it went public was because SPACs (companies that take private companies public) have been doing very well lately. A lot of of it is a precedent around potential big plays Bitcoin, FAANG stocks, and Tesla created for young investors. Now that trading has been made so accessible for everybody with Robinhood and other trading apps, money is being poured into the markets of eager investors who want to get rich quick. I am not saying this is a good or bad thing, but this is what's happened over the years. With that being said, SPAC companies are few of the many 'hype' stocks that I think will be attracting lots of investors. So, after NKLA's trade, I want to share some SPACs and acquisitions that I'm looking at and give you my insight on all of them hopefully before the hype.
Today, Uber announced that they have agreed with Postmates in an all-stock transaction according to businesswire. The deal is worth over $2.6 billion giving Uber a greater market share. Uber will also get a stronger foothold in Los Angeles and Miami from this transaction to expand their business in major cities that were previously dominated by Postmates.
Taking a look at their financials, they are still on the road to profitability, and this deal will probably set Uber back while the company makes a $2.6 billion dollar purchase.
Uber's revenue each year since 2016 has been rising significantly due to the popular service that this company provides. But as the company grows bigger, so do their expenses. Although revenue continues to climb, net income and operating income are still negative. Operating income has improved by +$3 billion since last June, but this acquisition will most likely add to the expenses in Q3 earnings.
PE ratio last quarter was -$7.74 and is still negative now going off last quarter's earnings. Typically, a negative PE is not a great sign for a company even though you want PE to be low.
Comparing Uber to another competitor like Lyft, Uber appears to be in the driver's seat. Lyft's operating income is actually getting less and less profitable over the years. Uber's total revenues are almost 4X the size of Lyft, and now with Uber's announcement, their market share is going to be even bigger with this acquisition, creating more room for buyers in the market. And as the pandemic started, Uber Eats continued to operate fully. Most of their revenue came from Uber Eats once take-out became a norm in the US.
Opes Acquisition Corp. announced last week that they will merge with the privately-owned BurgerFi restaurant business and take it public under the ticker BFI. This is a relatively small acquisition of $100 million but big news for BurgerFi. With 130 locations around the US, sales covered over $145 million according to Restaurant Business. But they expect a decline in sales this year as restaurants closed for some time. However, by 2021, BurgerFi plans to have 55 new locations ready after they receive $40 million in cash to start more ventures.
On their income statement, Opes reported a significantly higher operating loss in income in 2019. However, if you look at the net income from 2018 and 2019, they have come out profitable at the end of the year. See how total revenue and expenses tie in to coming up with an operating income or loss. Notice how Opes makes no revenue. That's generally typical for SPACs as they work in generating income from their acquisitions. But with such high expenses in 2019 of over $840,000, Opes was still able to come up with a little over $1.1 million in net income.
Here is OPES on the daily chart. The passed four days have been rough on this stock. Overall sentiment for the stock price is overvalued as it drops 6.4% by the closing bell. RSI is just under 50, and I plan on watching the prices this week to see where the direction is headed. The article mentioned above also states that at some point in Q3, still not announced, OPES expects to officially merge with BurgerFi which will cause a 13X beat in earnings expectations in 2021 of $143 million.
Just by looking at the chart, Opes acquisitions already had their big pop in price from previous announcements in June. I'm not really looking to profit off the hype in this play, rather I'm looking at long term growth aspects that this merger will create for the popular franchise. The stock still seems overvalued for what it's worth, but the future for this restaurant business seems promising. The whole idea of trading SPACs is all about the hype, and it looks like the hype has already happened. BurgerFi is also not as an attractive deal as the Nikola Motors merger last month; let's be honest, restaurants are just not as sexy as the idea of electric cars.
Both companies discussed today show promise, and I'm excited to see how they perform in the future. I'm still on the lookout for more important mergers and acquisitions and will hopefully write about them soon.
Thanks for reading! If you are interested in joining our trading community, we have chat rooms, trade alerts from our top traders, and educational content. You can join using the link below, and get a discount on your membership.
Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.
AI- Generated Trading Setups
AI-generated bullish/bearish bias setups on forex currencies, gold, & indices.
Today's economic figures came out in US and Canada. GDP came in higher than expected in Canada while the price of goods purchased by consumers was lower than last month. Here are some pullback ideas for USD and CAD from GDP and PCE numbers. EdgeFinder Analysis NAS100 is a bullish reading on the EdgeFinder still. […]
This week has brought more inflation data with it regarding the USD's PCE and PMI numbers. Powell is also set to speak this Friday about monetary policy going forward. The RBNZ will also release their latest interest rate news tomorrow with expectations of an unchanged rate at 5.5%. EdgeFinder Analysis GBPUSD is a bullish bias […]
This week is a big PMI week for Europe, UK and US. Additional inflationary metrics will add to the overall sentiment of these countries' monetary policies going forward. Here are some setups for the coming week on these currencies. EdgeFinder Analysis GBPCAD is now a +7 on the EdgeFinder as we wait for CPI news […]
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
There is a significant degree of risk involved in trading securities. With respect to foreign exchange trading, there is considerable risk exposure, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.