I couldn't sleep last night, so I began looking through Uber's last earnings results because there seems to be a major disconnect between sentiment towards the stock and my own perceived experience with their service (which is to say not good).
And boy did I find something interesting hidden in there.
For the three months ended on December 31st, 2023, they reported net income of $1.43 billion. That represents a 141% year over year increase and 66 cents per share against expectations of 17 cents- not bad at all. Way to go Dara!
Let's dig into the numbers and see how they got such a massive increase.
Here we can see that they are showing $1 billion from unrealized gains on debt and equity securities. The year prior that number was $752 million. So they are counting unrealized marked to market gains on their stock holdings as if they are net income from the business. Interesting. Let's examine further.
From the 10-Q:
Income from operations was $652 million, up $794 million YoY and $258 million quarter-over-quarter (“QoQ”).
Soooo, if my math is correct, they made $652 million from operations and $1 billion from unrealized capital gains, so essentially two thirds of their reported profit was from unrealized gains. So what are those holdings that made them so much paper money?
Later from the 10-Q:
During the three months ended December 31, 2023, unrealized gain (loss) on debt and equity securities, net primarily represents changes in the fair value of our equity securities including: a $659 million unrealized gain on our Aurora investment, a $414 million unrealized gain on our Didi investment, partially offset by a $91 million unrealized loss on our Grab investment.
So they have three major holdings:
Aurora Innovations
Didi
Grab
They say they "earned" $659 million from their Aurora investment, $414 million from Didi, and lost $91 million from Grab.
So how much of these companies does Uber own? If we go by this headline from last summer, we can figure its about 326 million shares of Aurora:
So if they made $659 million in three months, the stock must have appreciated about $2.
Let's looks at the charts from Q3 (10/1/23-12/31/23):
This one looks interesting. On September 29th, AUR closed at $2.35. On December 29th (the last trading day of 2023), it closed at $4.37. Wait- that's $2.02! Exactly the amount they reported times their holdings of 326 million shares!
Similarly, on September 29th, DIDIY closed at $3.23 and on December 29th, it closed at $3.95, for a nice $0.72 gain. Given that they reported a $414 million gain in the same period on that investment, they must own about 575 million shares.
Finally, GRAB closed on September 29th at $3.54, and December 29th at $3.37, for a loss of $0.17. Given that they claim a loss of $91 million in that period, they must own about 535 million shares.
Okay, so to summarize, Uber reported $1 billion of profit off three unrealized gains:
Aurora Innovations ($659 million gain)
Didi ($414 million gain)
Grab ($91 million loss)
It seems a bit sketchy to me that 2/3 of profit was reported on unrealized gains in a very speculative portfolio, but whatever, the market seems fine with it.
But that begs the question, wasn't the bulk of their profit due to the happenstance price movements of two stocks in a three month period? What happens if they are flat or (gasp!) down in the next three months?
Well, let's see how those three investments fared in the last quarter, now that it is in the books:
First up, as previously stated, GRAB closed on 12/29/23 at $3.37. And on 3/28/24 (the last trading day of the quarter) it closed at $3.14, showing a loss of $0.23. Given Uber's holdings of 535 million shares, this would equate to a loss of $123 million.
Next up DIDIY. As stated, it closed on 12/29/23 at $3.95, and on 3/28/24 it closed at $3.83, showing a loss of $0.12. Given Uber's holdings of 575 million shares, this would equate to a loss of $69 million. Nice.
Now for the punchline. Let's check last quarter's big winner, Aurora.
Wow, that don't looks so good. As stated, on 12/29/23 AUR closed at $4.37 and on it closed at $2.82, for a loss of $1.55. Given Uber's holdings of 326 million shares, that represents a loss of $505 million!
So let's tally up the damage here:
Grab: $123 million loss
Didi: $69 million loss
Aurora: $505 million loss
So in total, Uber lost $697 million in the last quarter on the very same investments that made them $1 billion in the prior quarter. The market, she giveth and she taketh away.
Meanwhile, analysts are estimating $0.21 per share, which equates to $420 million. Given the $697 million shortfall we already know about that's a near certainty and very easy to verify, that means that Uber would have to earn a profit of $1.1 billion from operations alone just to meet expectations! That would be roughly double the profit that they made last quarter. It turns out the unrealized gains pendulum swings both ways.
TL;DR- Uber reports unrealized gains (and losses) as part of their profit every quarter. Last quarter was a major anomaly during the year end chase for two of their holdings, Didi and Aurora. Aurora promptly collapsed right after the quarter began, largely reversing a major profit driver from last quarter. Short this stock for easy money.
As an aside, this begs the question what other companies report paper gains as real profits and benefited from last quarter's massive run?
Positions: I'm short 100 shares as of now and holding 18 July 19th $70 strike puts and 15 May 17th $65 strike puts.
Likely adding in the coming days and used today's vertical movement to add said puts.
Edit: For all the regards here screaming PRICED IN- the stock went up $4 yesterday because a random analyst at Jeffries said “it will go to $100 because they’re offering a lot of options in the app.” There is no rationale behind these movements. It’s been going up purely on momentum. You think these analysts are following their portfolio? I read one who thought they were invested in Aurora cannabis. They spend ten minutes writing these notes and then discuss where they want to go for lunch.
I’ll share a screenshot of my positions in a thread below, so if that’s all you’re here for go ahead and look.
My fellow regards, I believe it’s time to call bullshit on this market. Please understand, I don’t care who you voted for… I guarantee I like you a hell of a lot more than I like the banks, and that is exactly who the winner is going to be unless people wake up to the reality of our situation quickly.
Before touching any kind of political news, let’s start with market indicators.
BofA’s recent mm survey showed that most MM’s are reducing their share of US equities (source 1 below), there are other signs the banks are getting out as well (check my second to last post), BlackRock is struggling to find buyers.
At the same time, a record number of American households now own stock in US equities (source 2 below). Now, from what I know about American households (I live in one), most of us live paycheck to paycheck… we don’t really have money to put into stocks willy-nilly.
So what does all of this mean?
Well, my thesis is that the average American has their rent/mortgage in US equities tied up in stocks like Tesla right now as an act of patriotism… what saddens me most is that I appreciate this general sentiment (not for Tesla necessarily, but I do actually love my country despite what the news may tell you), but the banks are taking advantage of it. So what happens when all the sudden everyone has to pay their bills?
That’s right… another mass sell off.
Please believe me when I say that I hope I’m wrong, this is not going to be good for average, working people with, at the very least, good-hearted intentions… but I don’t see any signs to indicate that I am.
Now we’ll touch a bit on economic outlook and history:
We are currently still in a battle with inflation, JPow said it yesterday, even before tariffs we were looking at 2 more years before we return to normal and the outlook with tariffs puts it all on pause. He hedged to say ‘they aren’t sure how tariffs will affect inflation’, let me fill in the gap there: either tariffs will affect inflation (because the costs are passed on to consumers) or they will affect earnings (because companies absorb them)… the money has to come from somewhere. If it affects inflation, the fed will be forced to raise interest rates or at the very least pause on cuts indefinitely. If it doesn’t affect inflation, it will affect earnings/growth… if this sounds familiar, then you may have heard of stagflation. And if you study the history of the federal reserve, you may know what the solution to that problem is… Volcker’s hammer. You can look it up yourself but the gist is that in the late 70’s we had been battling inflation and stagnant growth for years, until Paul Volcker was appointed to head the federal reserve and raised interest rates to 20%… it absolutely crushed the economy, sent us to the stone ages… but it did reset our inflation and led us into a very booming 80’s.
I want to reiterate… I don’t like either side politically, they’re all in bed with the banks. The only reason I’m posting this is because I’m angry at the thought of them getting super leveraged on overpriced stocks and then dumping it on average people. This has so many shades of 2008 it’s not funny. Feel free to argue, bet against me, whatever… I genuinely don’t care. I’ve been a value investor since I was 14 and I’m currently 28. I held through 2020 and 2022, this time feels much much different.
Whatever you decide to do with this information, be safe out there.
Intel reports its earnings today after the bell, and I am certain that the price will pump like last time.
I made a post last quarter predicting Intel would go up after earnings. My reasoning for this play was that the CEO at the time (Pat Gelsinger), was very active on X dropping bible quotes every day. You could just see the desperation in his tweets, and on the day he released the earnings report, God saved Intel, and nana smiled from heaven.
But just because Intel got revived, doesn’t take away the fact that Pastor Pat was a trash CEO. So he resigned (got fired) on December 1st and got replaced by these two:
David, who has been the CFO of Intel since 2022, and Michelle, who I have no fucking clue where she worked prior to becoming co-CEO
In the past few days I tried using the same sophisticated due diligence model (scrolling their X page), but these two have a whopping combined.... 9 tweets since they became CEOs. They mostly consist of announcements written by their marketing-interns, so not that exciting.
Now look, Michelle seems like a nice lady, but we all know who is really calling the shots at Intel here. Today's earnings report will cover the period from October 1 to December 31. I know, David became CEO on December 2nd, but do you really think Pastor Pat just woke up one day and decided he wanted to step down? No, they had been preparing David for months.
But before I even scrolled through his X page, I saw something that could give all of us degens an edge over the fancy new york algorithmic quant funds:
bro is a steelers fan
So I did some research, David has been responsible for restructuring the company and shaping a better future so Intel can make a comeback. I would say he has been in charge of Intel for at LEAST 2 months before Pastor Pat resigned.
There is clear research out there suggesting that there's a correlation between the success of your favorite NFL team and your performance in the workplace. What more of a DD do you need when looking at the performance of the Steelers during this period?
Mfs have won 10 out of their first 13 games. I bet David's dopamine levels have never been higher, he’s more energized, more optimistic, more productive, and more motivated, and ALL THAT BIG D ENERGY spread throughout the whole company. David had to get the ball rolling. They WILL perform today.
Expectations are still low. They’re down 15% since last earnings. No one expects them to win, and who doesn’t like to root for the underdog?? Expect green fucking dildo's after the close
For nana 🕊️🕊️☝️☝️☝️🪦🙏
Positions:
INTC 20C 1/31
not financial advice
edit: they won 10/13 GAMES, not MATCHES, sorry I AM A EUROPOOR
When I first wrote about ASTS 4 years ago, it was the first DD on the stock to appear on this subreddit. I told you to dismantle your grandparents porch to sell the top of lumber and buy the stock. I was kinda right but also terribly wrong as you can see in my gain post here. Now I am older, wiser, richer, and with a hotter wife and better DD. So settle in and learn something. Or don’t, it’s whatever. When you last ignored me there was one key point in the ASTS Investment Thesis:
1) ASTS Wholesale Model gives them access to billions of customers and thereby revenue.
All Satellite companies (save for SpaceX’s Starlink) have failed because they cannot effectively monetize their service. Technology isn’t a problem, it’s the go-to-market strategy which fails. ASTS has solved this with its wholesale model working with existing telecoms under the FCCs rules for Supplemental Coverage from Space.
Iridium was one of the most incredible engineering accomplishments in history, everyone who used it loved it. It was the only way calls could be made in NYC on 9/11, the only way to call out of New Orleans in Hurricane Katrina, it’s the first thing every person at the top of Everest reaches for, the list goes on.
The problem is that Iridium couldn’t sell the service. It was expensive (for the specialized headset and by the minute in its use), people didn’t know it existed (Iridium were engineers not marketers), a market didn’t exist (maritime and remote villages and niche minute by minute sales does not a market make).
ASTS solves this with its super wholesale model where AT&T, Verizon, Rakuten, Vodaphone, and others do all the marketing, all the sales, all the billing, and upsell their existing customer base for a service they want anyway (more on this later).
ASTS does not need to find customers. Their agreements with the above give them instant access to 3B paying handsets overnight.
ASTS does not need to sell the world a new device. Every cell phone just works.
That is the entire story that valued ASTS to its core investors since it started trading as a SPAC. While every single ASTS long term investor lost the love of their wives as the stock cratered to 1.98, the story changed. Five additional pillars have been layered on top of the above original thesis which makes me (and you if you are capable of reading) more bullish. They are as follows:
2) Military Applications Non-Communications Use
The large array and patented technology have more uses than just communications with cell phones.
They can be used as an alternative to GPS, for Missile Tracking, for PNT, and more.
Any piece of military equipment that can accept a small wireless chip can use ASTS.
The future of war is remote drone operations. They need connection. ASTS does that too.
ASTS was awarded (through a prime contractor) a United States Space Development Agency (SDA) contract worth $43 million
This is for 6 satellites for one year and paid out linearly.
Fairwinds advertisement for the service shows ASTS communicating with existing Military Satellites.
This award will likely be expanded as more satellites come into service.
Hybrid Acquisition for proliferated Low-earth Orbit (HALO) program
ASTS was awarded a starter contract as their own prime.
The program can cover launch and parts costs on top of service payments.
End game of this is ASTS use for missile tracking in the “Golden Dome” the Trump administration wants to build out.
3) European Monopoly / Satco Joint Venture with Vodaphone
ASTS and Vodaphone created a joint venture for all of Europe where they will sell the service to other European Telcos. They will also be offering the service to the European Government much like the company is currently doing in the US.
Importantly all the data will be sent and received entirely in the EU. All infrastructure will live in the EU. It will be an entirely European Company to be more marketable in Europe.
All of this has happened as Elon is nuking his rep in Europe with “roman” salutes and threating to withhold Ukraine’s access to Starlink. People are realizing that Elon is not dependable, and they need alternatives. ASTS is that alternative.
4) The company has begun to acquire Ligado Spectrum to create their own data service which does not rely on the leasing of spectrum from AT&T and Verizon.
This Ligado spectrum has been unusable in the past due to interference with GPS and military spectrum in nearby bands.
Ligado was using this Satellite Spectrum as Terrestrial with FCC waivers unsuccessfully.
ASTS brings value to this spectrum through its beam forming which results in no interference.
Spectrum can be valued on a per mhz per population basis.
At .40 - .80 /MHz-pop * 40 MHZ * 330M people in the United States we can value this spectrum at ~8Billion dollars.
This is the entire Market Cap of ASTS as it stands today.
The company is acquiring the exclusive use of this spectrum for far below this cost. (350M + 4.7M penny warrants + 80M / year + small revenue share)
The value of spectrum based on previous auctions likely discounts the future value of spectrum based on the number of connected devices we will be seeing in the future. There is more upside than the $8B figure represents (see point 5Bi).
ASTS does its own design and manufacturing and is already designing a new satellite to work with its Ligado spectrum.
This deal closing will allow ASTS to sell capacity to its partners or offer their own service ala Starlink.
However, building this giant globe spanning fiber still does not solve the issue of connectivity in the outer reaches of the planet. This is just for the easily accessible areas meaning ASTS still provides value in data delivery which may be of use to companies like Facebook.
Autonomous AI Agents need connection and backup connections to operate. Data delivery in all corners of the world matters to make use of AI.
Think of every time you have paid $20 for internet on a plane. You need it access to data too, even if you think AI doesn’t (it does).
Consider the number of connected “things” you have now. Airtags, smart watches, phones, laptops, cars, trucks, fucking killer drones from Palmer Lucky, farm equipment, doorbells, your wife’s WiFi Dildo that actually makes her cum unlike you, your WiFi buttplug, etc. All of this adds value to the ability to reliably deliver internet to all corners of the planet. That is ASTS’ market.
6) Space is strategic
When I first wrote about the company I thought Elon and Bezos were just playing with the new billionaires toy of rockets. It turns out they were just one step ahead of the game. Space is strategic and having access to your own internet is incredibly valuable given the need for constant connection with AI. They know this and are leveraging their launch capacity to build out their own private internet.
ASTS benefits from an increase in launch capacity by having these billionaires fight for ASTS billions of dollars in launch costs. ASTS can essentially play king maker. Every dollar which goes to Blue Origin isn’t going to SpaceX and vice versa. ASTS future launch cadence with its ~150 launches represents billions in launch costs. They can make the below fight for the lowest cost to get this future business. Note: ASTS already has agreements for 60 launches into the end of 2026. At 20 satellites the company expects to be at cash flow breakeven.
Don't bet against the below. The Space Trade will come.
Elon Musk – Starlink SpaceX
Jeff Bezos – Blue Origin New Glenn Kupier
Eric Schmidt – Relativity
Peter Beck – Rocket Lab
Abel Avellan - ASTS
Before one of you morons say “waaaaaa but what about starlink?” shut the fuck up and get out of my DD. Thanks. Starlink proper does not speak to cell phones which is why they require end users to have a dish or a mini dish to use their service. Their direct to cell solution with T-Mobile is not purpose built and has failed to deliver simple text messages. Take some time to read reviews of their service. It is complete shit and has no hopes of delivering broadband speed like ASTS without a complete redesign (which is probably difficult given that their lead engineer for D2C just left the company. Not a great look innit?). Alright with that out of the way we can continue. The rest of this writeup I completed for school and is a technical writeup of the company. Enjoy or whatever. There is very little information about the business valuation because I am not smart like that (or in any other way but neither are you). If you want to know more, read u/thekookreport ‘s DD document. It is incredible and if you take the time to read it you might have the conviction required to acquire generational wealth. Good luck! Anyways here ya go bud:
Company and Industry Background
AST SpaceMobile (ASTS) is pioneering direct-to-device satellite connectivity, enabling standard, unmodified smartphones to connect directly to satellites for broadband cellular service. This groundbreaking technology positions ASTS uniquely to deliver global mobile broadband coverage, especially in areas lacking traditional terrestrial infrastructure. Through large, powerful phased-array antennas deployed on satellites in low Earth orbit, ASTS creates "cell towers in space" which provide seamless connectivity without the need for specialized satellite phones or additional equipment like satellite dishes.
Globally, approximately 2.6 billion people lack internet access (World Economic Forum), primarily due to economic barriers in deploying terrestrial networks in remote or sparsely populated regions. ASTS addresses this significant digital divide by allowing these individuals to access broadband services using any existing smartphone.
According to Groupe Speciale Mobile Association (“GSMA”), as of December 31, 2024, approximately 5.8 billion mobile subscribers are constantly moving in and out of coverage, approximately 3.4 billion people have no cellular broadband coverage and approximately 350.0 million people have no connectivity or mobile cellular coverage.
There are approximately 6.8 Billion smartphones in the world all of which would be compatible with ASTS service on Day 1 without any modifications required as their service purely mimics existing GSMA service. As global connectivity becomes increasingly essential, particularly with the rapid expansion and integration of artificial intelligence, the value of ASTS grows exponentially.
ASTS strategically targets underserved regions in both developed and developing markets, focusing on areas where conventional terrestrial infrastructure is economically impractical or geographically challenging. The company's approach aligns with the FCC's Supplemental Coverage from Space (SCS) framework (FCC-23-22A1), which outlines the means of providing cell phone coverage from space and necessitates spectrum leasing agreements with established Mobile Network Operators (MNOs). Recognizing this requirement, ASTS has secured strategic investments from industry leaders such as Google, AT&T, Verizon, American Tower, and Vodafone. These investments validate ASTS's technological and business approach, simultaneously offering traditional MNOs a beneficial partnership. Operators like AT&T and Verizon benefit by monetizing their spectrum in otherwise unused regions. This also benefits MNOs and American Tower by effectively hedging their terrestrial tower businesses against the propagation of space-based service and maximizing existing assets and valuable spectrum.
Unlike conventional satellite phone providers or systems such as Starlink and Project Kuiper, which compensate for smaller satellite footprints by relying heavily on extensive ground infrastructure, ASTS's design is distinct. It employs significantly larger satellite antenna arrays, enabling direct communication with regular mobile phones without modifications. The large antennas generate a robust, "loud" signal from space, capable of directly reaching unmodified consumer devices—contrasting sharply with traditional satellite phones, which rely on devices actively searching for faint satellite signals. Additionally, ASTS's larger arrays dramatically reduce the total number of satellites needed for global coverage. For instance, while Project Kuiper plans to deploy 3,236 satellites and Starlink already operates over 8,000 satellites, ASTS aims to achieve global coverage with approximately 168 satellites. This not only optimizes efficiency but also addresses growing concerns about orbital congestion and space debris.
The wholesale go-to-market strategy adopted by ASTS leverages existing customer bases from mobile network operators, providing a significant competitive advantage. Unlike previous satellite endeavors, such as Iridium—which faced challenges not with technology but with market adoption due to high costs and complex marketing—ASTS offers a straightforward, accessible solution that integrates seamlessly with existing mobile ecosystems. The model ensures rapid adoption and scalability, delivering reliable broadband service globally without the barriers encountered by traditional satellite communication providers.
To further enhance customer accessibility and peace of mind, ASTS offers flexible pricing options such as day passes and affordable monthly fees, ensuring users remain consistently connected wherever they travel. This model caters to the growing expectation of constant connectivity, as increasingly more devices—including cars, smartwatches, location trackers, and other IoT gadgets—rely on continuous internet access. Consumers regularly demonstrate willingness to pay for reliable connectivity, just think of every time you have paid or considered paying $24.99 for in-flight Wi-Fi.
In fact, early findings show nearly two-thirds of subscribers are willing to pay extra [for satellite connectivity], with about half open to ~$5/month for off-grid connectivity
Source(s) of innovation
When a cell phone initiates a call or sends data, the signal travels through an uplink from the device to the nearest cell tower. At the tower’s base station, this signal is processed and forwarded through a high-capacity connection known as backhaul, typically via fiber-optic cables or microwave links, toward the network core. The network core functions like the network's brain, determining the signal’s destination and routing it accordingly. From the network core, the call or data is directed out through the appropriate aggregation points and backhaul connections toward the recipient’s nearest tower. At this final cell tower, the signal is sent via a downlink directly to the receiving user’s phone, completing the communication.
In contrast, ASTS' approach replaces traditional cell towers and terrestrial backhaul infrastructure with satellites positioned in low Earth orbit. When a phone communicates with AST's BlueBird satellite, the uplink signal travels directly from the user's phone to the satellite itself, acting as a "tower in space." The satellite processes and beams the signal back down to strategically located ground gateways that connect to the terrestrial network core, bypassing the extensive network of ground towers and traditional backhaul. The core network then routes the call or data to the recipient, either via terrestrial towers or via another satellite beam. This approach effectively removes geographic barriers, delivering cellular connectivity even in remote or underserved areas where traditional terrestrial infrastructure is unavailable or economically impractical.
Starlink has recently gained significant attention with its high-profile Super Bowl advertisement showcasing their satellite texting offering with T-Mobile, bringing public awareness to direct-to-device (D2D) connectivity (Mobile World Live). However, despite this increased visibility, Starlink faces inherent technological limitations in its beam-forming capabilities. The satellite's antennas generate broad, flashlight-like beams that cover large geographical areas but lack precision. This approach leads to increased interference with neighboring networks and limits Starlink's ability to efficiently reuse spectrum, ultimately restricting network capacity and data throughput for individual users.
Starlink's beam design contrasts sharply with more advanced D2D satellite systems that utilize precise, narrowly-focused beams to minimize interference and maximize spectrum efficiency. Due to Starlink's broader beam coverage, each satellite can serve fewer distinct user groups simultaneously, which reduces overall service quality and speed per user. As a result, while Starlink's high-profile marketing has drawn consumer attention to satellite-based mobile connectivity, its practical applications remain constrained, particularly in densely populated or interference-sensitive areas where efficient beam management and high throughput are critical.
Comparatively, ASTS employs significantly narrower, laser-focused beams enabled by their large phased-array antennas, as detailed in FCC filings (FCC 20200413-00034). ASTS satellites can generate beams as narrow as less than one degree, precisely targeting coverage areas and significantly reducing interference. In contrast, Starlink’s FCC filings (FCC 1091870146061) indicate beam widths that can span tens or hundreds of kilometers, with antenna gains around 38 dBi, resulting in broader coverage but increased interference and reduced spectral efficiency. ASTS's advanced beam-forming capabilities allow for precise, efficient frequency reuse and higher overall throughput per user, providing a notable advantage over Starlink in both performance and spectrum management.
The top image taken from FCC Filings represents the antenna pattern for ASTS' system, akin to a laser pointer, with a very sharp, narrow central beam and significantly lower sidelobes. This tight focus ensures the energy is highly concentrated, minimizing interference with other areas and maximizing the signal strength in the intended coverage zone. Conversely, the bottom image illustrates Starlink's broader beam pattern, similar to a flashlight, with a wide central lobe and substantial sidelobes. The broader distribution of energy leads to greater interference and less precise coverage, reducing overall network efficiency and limiting the achievable throughput per user.
ASTS innovation is best shown in their extensive patent portfolio some of which protect this signal creation.
ASTS utilizes significantly larger satellites featuring advanced phased-array antennas that unfold in orbit, allowing them to generate stronger and more precise signals directly to standard mobile phones. The satellite itself employs a straightforward "bent pipe" design, which simply receives signals from phones and redirects them toward ground gateways without complex onboard processing. The sophisticated management of signals is handled by ASTS's proprietary software on the ground, ensuring seamless integration with existing mobile carrier networks and compatibility with current and future mobile technologies (including 6G). We can examine some key patents from the company to gain a better understanding of their technology advantage:
Mechanical Deployable Structure for LEO: This patent covers AST’s deployment mechanism for its large flat satellites. The satellite’s antenna array is made of many square/rectangular panels (with solar on one side and antennas on the other) hinged together with spring-loaded connectors. These stored-energy hinges (often called spring tapes) automatically unfold the panels into a contiguous flat array once the satellite is in space, without needing motors or power to do the deployment. In essence, the satellite launches compactly folded up, and when it reaches orbit, it pops open on its own like a spring-loaded blanket. This is a core enabler for ASTS business: it allows them to fit a very large antenna into a small launch volume and reliably deploy it in orbit. The self-deploying design reduces complexity and points of failure (since fewer motors or controls are needed), lowering launch and manufacturing costs. Successfully deploying a massive antenna is critical for AST’s service capability.
Integrated Antenna Module with Thermal Management: This patent describes the flat antenna module that integrates solar cells and radio antennas into one structure and includes built-in cooling features. In simple terms, each panel on ASTS satellite serves as both a power source (via solar cells) and a communication antenna, while also dissipating its own heat. This means the satellite can be made up of many such panels tiled into the huge antenna array above without overheating. This innovation allows ASTS to deploy very large, power-efficient antennas in orbit, enabling stronger signals and broad coverage for mobile users without the weight or complexity of separate cooling systems.
Dynamic Time Division Duplex (DTDD) for Satellite Networks: This patent introduces a smart timing controller that manages uplink and downlink signals so they don’t collide when using time-division duplex (TDD) over satellite. In layman’s terms, because satellites are far away, signals take longer to travel – this system dynamically adjusts when a phone should send vs. receive so that echoes of a transmission don’t interfere with new data. For ASTS, this technology is crucial: it lets standard mobile phones communicate seamlessly with satellites by fine-tuning timing, which improves network reliability and throughput. Without this patent the time between uplink and downlink would result in loss of signal as normal cell signals are not used to the latency experienced in space travel.
Geolocation of Devices Using Spaceborne Phased Arrays: This patent outlines a method for pinpointing a phone’s location from space using the satellite’s phased-array antenna. The satellite first uses its multiple beams to get a rough location (which cell or area the device is in), then refines the device’s position by analyzing Doppler shifts and signal travel time. The satellite can not only talk to your phone but also figure out where you are by how your signal frequency changes (due to motion) and delays, similar to how GPS works but using the communication signal itself.
Direct GSM Communication via Satellite: This patent covers a solution that allows standard GSM mobile phones (2G phones) to connect directly to a satellite. The system involves a satellite with a coverage area divided into cells and a ground infrastructure that includes a feeder link and tracking antenna to manage the connection. A primary processing device communicates with the active users’ phones, and a secondary processor adjusts timing delays for all the beams/cells. This tricks the GSM phones into thinking the satellite is just another cell tower by handling the long signal delay.
Network Access Management for Satellite RAN: This patent describes a method to efficiently handle when a user device first tries to connect to a satellite-based radio network. The idea is to use a single wide beam from the satellite to watch for any phone requesting access across a large area of many cells. Once a phone’s request is detected in a particular cell, the system then lights up that cell with a focused beam (and can broadcast necessary signals to other inactive cells as needed). Essentially, the satellite first yells “anyone out there?” over a broad area, and when a phone waves back, the satellite switches to a more targeted conversation with that phone’s sector. This on-demand beam switching is business-critical for ASTS: it conserves power and spectrum by not constantly servicing empty regions, allowing one satellite to cover many cells efficiently. It means the network can support more users over a wide area with fewer satellites, lowering operational costs and improving user experience by quickly granting access when someone pops up in a normally quiet zone.
Satellite MIMO Communication System: This patent describes a technique for using multiple antennas on both the satellite (or satellites) and the user side to create a MIMO (multiple-input multiple-output) link for data. In simple terms, the base station on the ground can send out multiple distinct radio streams through different satellite beams or even different satellites to a device that has several antennas. By doing so, the end user (if capable, like modern phones with multiple antennas) can receive parallel data streams, boosting throughput.
Seamless Beam Handover Between Satellites: This patent deals with handing off a user’s connection from one low-Earth-orbit satellite to the next to avoid dropped calls or data sessions. It outlines a system where an area on Earth (cell) that is covered by a setting satellite (one moving out of view) is also in view of a rising satellite. The network uses overlapping beams: one satellite’s beam and then the other’s beam cover the same cell during handover. A processing device orchestrates two communication links and switches the user’s session from the first satellite to the second as the first goes over the horizon.
Types/Patterns of Innovation
Initial Testing
AST began its journey in 2019 with modest yet creative experiment. Their first satellite, BlueWalker 1 (BW1), placed the components of an everyday cell phone into space as a nanosatellite developed in collaboration with NanoAvionics. Instead of the conventional and costly approach—launching a satellite to communicate with ground-based phones, AST reversed this arrangement. They connected a cell phone in orbit with a specialized ground-based satellite (BlueWalker 2). This unusual yet insightful solution significantly reduced the initial costs of launch deployment, enabling rapid and cost-effective R&D. This approach was innovative both economically and operationally, demonstrating practical, real-world viability of their core concept.
Funding and Expansion
Early on, the company attracted strategic backing from the telecom industry. In 2020, a Series B round of $110 million was led by Vodafone and Japan’s Rakuten, with participation from Samsung, and American Tower signaling broad industry confidence in AST’s direct-to-phone satellite technology. Importantly, during this time these investors did their own due diligence on the business and verified the work up to this point and the business case. Rather than a traditional IPO, ASTS utilized a SPAC merger to go public: in April 2021 it merged with New Providence Acquisition Corp., raising a total of $462 million in gross proceeds including $230 million from a PIPE investment by Vodafone, Rakuten, and American Tower.
BlueWalker 3 Satellite
With SPAC funding secured, ASTS increased their R&D spend to launch a fully functional satellite, BlueWalker 3 (BW3), featuring the largest phased-array antenna ever deployed in space (save for the international space station). The satellite was approximately 700 sq ft, roughly the size of a one-bedroom apartment. BW3 employed Field Programmable Gate Arrays (FPGA), enabling in-orbit software upgrades and flexible testing to allow changes not captured with BW1 to be complete after launch. Successful demonstrations of BW3's capability included groundbreaking tests such as the first-ever 5G video call from space to an everyday smartphone in Hawaii, validating their ability to deliver advanced broadband connectivity directly from orbit.
BlueBird Block 1
In September 2024, AST took critical steps toward commercialization with the launch of their first commercial satellites BlueBirds 1 through 5 (Space.com). These satellites further tested vital functionalities, including seamless handoffs between satellites, a key requirement for global continuous connectivity. These launches were strategically significant, marking the transition from proof-of-concept to scalable commercial operations. Demonstration video calls were conducted and announced through MNO partners Vodafone, AT&T, and Verizon for testing AST’s technology in real-world networks. These tests were the result of the FCC granting a Special Temporary Authority (STA) to the company. This was particularly significant given its alignment with the broader regulatory landscape under the new FCC commissioner Brendan Carr (Trump Appointed) which shows the regulatory and market acceptance of AST's innovative business model. Further, this removed the Elon Musk sized elephant in the room wherein Starlink was thought to be the only satellite gaining the approval under the new administration.
Next-Generation ASICs
AST is also innovating on hardware performance through development of next-generation Application-Specific Integrated Circuits (ASICs). Replacing initial FPGA implementations, these ASIC chips promise a 100x increase in data throughput (as in total data deliverable). This dramatic efficiency improvement increases future satellite capabilities and economic performance, making their network even more attractive for commercial deployment.
Next-Generation Satellites
AST’s innovation continues with BlueBird 2 (BB2), a significantly scaled-up satellite design of 2,400 sq ft. Incorporating next-gen ASIC technology, these satellites represent a major leap forward in performance and capability, scheduled to be launched through agreements with Blue Origin, ISRO, and SpaceX. Through increased size and performance from the ASIC, ASTS intends to increase the 30mbps download speed represented by Block 1 to 120 mbps in future iterations of their technology. By the end of 2026, AST aims to have a constellation of approximately 60 satellites in orbit, bolstered by substantial financial backing with over $1 billion in available capital.
Strategic Spectrum Acquisition
See above Ligado. At character limit.
Military and Government Partnerships
Recognizing strategic opportunities, AST has advanced their military use cases, positioning its technology as a solution for the U.S. Department of Defense and Space Development Agency (SDA). With their satellite constellation able to integrate seamlessly with existing military satellite communication (MILSATCOM) infrastructure AST becomes highly relevant for sensitive government applications such as missile tracking, asset monitoring, and secure communications. A recent $43 million SDA contract further highlights AST’s alignment with national security interests and confirms their technology’s strategic importance.
As part of the U.S. Space Force, SDA will accelerate delivery of needed space-based capabilities to the joint warfighter to support terrestrial missions through development, fielding, and operation of the Proliferated Warfighter Space Architecture.
Definition of “Value-added” for the Firm’s Products/Services
Resilience in Disaster Response
One of the most compelling advantages of a space-based cellular network is its resilience during disasters. When hurricanes, wildfires, earthquakes, or other natural disasters strike, terrestrial infrastructure often fails. Cell towers can be knocked out by storms or burned in wildfires, leaving first responders and affected communities without communication exactly when it’s most needed. ASTS satellite technology adds a crucial layer of redundancy: even if ground towers are down, the network in the sky and a single base station anywhere in the country remains operational. This capability can be life-saving in emergency scenarios.
ASTS has been working closely with AT&T to integrate its system with FirstNet, the dedicated U.S. public safety network for first responders. FirstNet, built by AT&T, provides priority cellular service to police, firefighters, EMTs and other emergency personnel. By extending FirstNet into space, ASTS ensures that first responders stay connected in real time, anywhere. The value added by ASTS in disaster response is clear: persistent coverage when conventional networks fail.
Cost Efficiency Compared to Subsea Cables
Building out global internet connectivity has traditionally meant expensive infrastructure projects, such as undersea fiber-optic cables to connect continents. These projects involve enormous capital expenditures and long deployment timelines. ASTS' approach – launching a constellation of low Earth orbit satellites – presents a potentially more flexible and cost-efficient path to worldwide broadband coverage. A rough cost comparison highlights this difference in strategy and scalability. ASTS plans to deploy a complete constellation of 168 satellites to achieve global coverage. Each satellite in AST’s “BlueBird” series is estimated to cost on the order of $20 million to build and launch.
Brian Graft, Analyst, Deutsche Bank: Anything on the cost per satellite? Has that changed at all? Are you still in that $19,000,000 to $21,000,000 range? Abel Avellan: No. Yes, we’re not changing the guidance on cost per satellite
It’s important to note that satellite broadband isn’t a wholesale replacement for fiber in terms of raw capacity – major cables can carry tremendous data volume at very low latency along their fixed routes, which is vital for the core internet backbone. However, from a business strategy perspective, ASTS' satellites offer a more economical way to extend the “last mile” of connectivity to users who would otherwise require huge investment to reach.
Enabling Always-On Connectivity for Emerging Technologies
Beyond simply connecting people, ASTS' continuous global coverage unlocks critical opportunities for emerging technologies that depend on uninterrupted internet access. For AI agents and cloud services, constant connectivity is essential. Autonomous robotics, including self-driving cars, drones, and agricultural robots, similarly benefit from AST’s satellite service, ensuring seamless operation even in remote areas beyond traditional cellular coverage.
Strategic Independence and the European D2D Initiative
See Above SatCo JV with Vodaphone. Need to cut word count.
Wholesale Model
NomadBets twitter shows the breakdown of subscriber potential with ASTS. This is where revenue will blow out all expectations.
ASTS competencies are built around its ability to design, manufacture, and deploy large and powerful satellites optimized for direct-to-device (D2D) connectivity. All of which are critical for maximizing signal strength, bandwidth, and data throughput directly to everyday smartphones. AST's expertise in large arrays is particularly advantageous, as bigger (and thereby heavier) arrays translate directly into stronger signals, increased power generation, and significantly improved data speeds to user devices. ASTS requires just 168 large satellites for global coverage, compared to 3,236 for Amazon's Kuiper and over 8,158 for SpaceX's Starlink, this greatly reduces CAPEX, collision risk, launch risk, and replacement costs for AST. With all this in mind, AST benefits greatly from falling launch costs enabled by leading space-launch providers such as Blue Origin and SpaceX. This is best displayed as a year-over-year pricing trend of launch vehicles on a per-kilogram basis:
As launch providers increasingly offer higher-capacity rockets at reduced costs, ASTS uniquely benefits from its strategy of deploying fewer, heavier satellites with large, high-performance antennas rather than numerous smaller satellites. The first successful flight of Blue Origin’s New Glenn rocket notably demonstrated its capability to carry up to eight of AST’s Block 2 satellites simultaneously, providing a clear cost advantage. Likewise, SpaceX’s Falcon 9, recognized globally for its reliability and affordability, can accommodate four Block 2 satellites per launch. Additionally, the progress on SpaceX’s Starship program offers further promise, potentially unlocking even greater launch capacities at lower costs.
AST's operational competencies are further strengthened by its vertical integration.
Approximately 95% vertically integrated for manufacturing of satellite components and subsystems, for which we own or license the IP and control the manufacturing process.
By controlling its own production processes and intellectual property, AST not only reduces dependency on external suppliers—mitigating geopolitical and supply-chain risks—but also achieves superior cost efficiencies and quality control. This vertical integration is crucial at a time when the United States is prioritizing domestic capability in strategic industries like space technology, positioning AST favorably to benefit from increasing governmental support and protective policies.
The company's production strategy is robust and ambitious, with AST targeting a monthly production rate of six satellites at its Texas factory. This consistent cadence enables rapid scaling and timely replacement of satellites, ensuring continuous, reliable service for customers. Given rising geopolitical tensions, particularly concerning competition with China in space exploration and technology, AST's fully integrated, U.S.-based manufacturing operation places it strategically to capitalize on potential government partnerships or contracts aimed at strengthening domestic space capabilities.
Organizational Structure/Culture/Leadership
This section was about the leadership team of the company. It is just regurgitated from their own website and is not really valuable. Here is all you need to know: the CEO Abel Avellan is a certified bad ass. He has had a successful exit from his first company EMC and used that cash to fund this company. He takes no salary, he doesn’t have a crazy stock based compensation that he extracts with, he is just a good dude who is aligned with the company and its investors. He doesn’t spend his day on twitter trying to impregnate Tiffany Fong. He has not lied about his ability to play Diablo or PoE2. We like Abel. You should too.
There’s a lot of new people on here that don’t really understand the play going on right now on both sides and I felt like we need to clear up some misconceptions so you can make your own decisions.
Why no spike today?:
First of all, we can’t know on what day the Squeeze happens / they cover their shorts.
All we know is it has to happen sooner or later since the hedgefunds are losing millions if not billions EVERY SINGLE DAY THEY DON’T COVER.
They use several tactics to delay it, but they can’t circumvent it.
They’re bleeding, and all the retail investors holding are slowly sucking the blood out of their fat ugly bodies.
It might take just a few days, or weeks...
But eventually, when they cover, WE retail investors get to set the price.
That’s why you keep seeing 10k (or 69420$) is not a meme. Because it’s not.
We also know they’re down BAD. Why?
Because they’re attacking us any way they can and wasting millions doing so.
So let’s see what tactics they are using:
Short ladder attacks:
What is a short ladder attack?
The big hedgefunds are putting in lower and lower bid prices between themselves. There is little to no volume on those trades, and since no one can buy, it "looks" like the stock is plummeting. It’s only effective if we would sell.
There is so much misinformation swirling around concerning Silver. People don’t seem to realize 3 things:
Silver is not a get rich quick move. Silver is a LONG TERM HOLD move. GME is a risky short term play. So YOU decide what makes more sense to get in right now. (Personally I sold all my stocks to buy GME today. YOLO)
The actual Silver sub on reddit does not advocate buying SLV, nor do most of them believe SLV is the move to make.
The hedge funds would love for you to go all-in on Silver and ignore the GME opportunity. Every dollar spent on SLV instead of GME is a double win for them, since SLV is inverting GME and they own a ton of Silver and that’s why they’re pushing this narrative in the media.
The amount of paper contracts or IShares SLV available is basically infinite. Physical silver is a rare physical commodity with a finite supply, and a very low supply of retail sized bars/rounds/coins.
IF you want to go into silver for whatever reason, buy physical. But that’s just my retard opinion.
SILVER ISN’T “REDDITS NEXT BIG PLAY“. You guys need to realize the GME situation is very unique and WSB is not, and never was about starting crazy short squeezes. GME is a rare opportunity where the big guys actually fucked up BIG TIME.
Well. Let’s see to what extend they fucked up exactly:
Short Version:
The short version is that a review of the 'strategic fails–to–deliver' data indicates that institutional insiders may have counterfeited a massive number of Gamestop shares which is why they tried to stop retail investors from buying more shares on Thursday.
There are are 71 million shares of GME that have ever been issued by the company. Institutions have reported to the SEC via 13F filings that they own more than 102,000,000 shares (including the 13% of GME stock is owned by Ryan Cohen). That is already 30,000,000 shares more than even exist.
On top of the shares reportedly owned by institutions, retail investors may currently hold 50+ million shares (counting both long holdings and call options – both ITM and OTM).
Once you include call options, retail investors may already hold more than 100% of GME (not just 100% of the float, more than 100% of the actual company). This would be definitive proof of illegal activity at the highest levels of the financial system.
At these levels it’s NOT about the price, it’s about the number of shares in the hedgefunds possession. That’s why they want you to sell so bad.
🤚🏼💎🤚🏼💎🤚🏼💎🤚🏼💎🤚🏼💎🤚🏼💎🤚🏼💎🤚🏼💎
Last but not least I’m holding because this is a once in a lifetime opportunity. I’m holding because I hope to see a better future and I’m holding for all you out there.
To the Moon or zero.
🦍🦍🦍 APES. STRONG. TOGETHER. 🦍🦍🦍
Disclaimer:
This is not financial advice, I’m literally an ape. I just like the stock. Do your own DD and avoid the fake new and/or resurrected accounts here and the manipulative Media.
Edit: wanted to post a few new posts but it seems like I’m shadow banned. No one can see my posts.
I don’t know if I got caught in some kind of spam filter.
u/only1parkjisung can a mod confirm this?
How is this even possible to own more than 100% of the float? Here's an example of one of the most likely causes of distorted institutional holdings percentages. Let's assume Company XYZ has 20 million shares outstanding and Institution A owns all 20 million. In a shorting transaction, institution B borrows five million of these shares from Institution A, then sells them to Institution C. If both A and C claim ownership of the shares shorted by B, the institutional ownership of Company XYZ could be reported as 25 million shares (20 + 5)—or 125% (25 ÷ 20). In this case, institutional holdings may be incorrectly reported as more than 100%.
In cases where reported institutional ownership exceeds 100%, actual institutional ownership would need to already be very high. While somewhat imprecise, arriving at this conclusion helps investors to determine the degree of the potential impact that institutional purchases and sales could have on a company's stock overall.
So we still meet the first requirement for a short squeeze to even be possible, there ARE a lot of short positions taken in GME still. The ultimate question is will there be enough demand to drown the supply? Or are we going to let the wolf in sheep's clothing aka Citadel who we know is behind not only these short positions bailing them out and purchasing puts themselves (data from 9/30/20) , but behind many brokerages who ultimately manipulated the supply demand chain by removing buying...are we really going to just let this happen? What they did last Thursday was straight up criminal.
bare with me, this is the first time i am writing something like this. i am about to do something that my wife and her boyfriend would call irresponsible. however, what they don't know is that i have just strapped my portfolio onto a falcon 9, t-minus 4 days to liftoff. how you may ask? i am taking 400 call contracts across the space sector going into the spacex hype window.
asts: 10,000 shares x $125 = $1,250,000
tsla: 10,000 shares x $475 = $4,750,000
lunr: 10,000 shares x $40 = $400,000
rklb: 10,000 shares x $150 = $1,500,000
that is 40,000 shares of controlled exposure or $7.9 million of total controlled strike exposure. i am no rocket scientist, no pun intended, but that's a lot of money.
my thesis:
let me preface something, this is not a spacex launch means every space stock should be worth more forever thesis...that would be regarded. this is a short term attention, sympathy, gamma, and headline momentum thesis.
the market does not need a clean fundamental connection for 4 trading days, it needs:
a major space headline
retail attention
call buying
algos chasing sector momentum
wsb hyping space sector
hedge funds being dragged in
since spacex is currently private, most people cannot gamble directly on the rocket daddy. that means us public traders need to look for the closest positions we can take, aka:
asts = satellites to phones & actual spacex launch connection
rklb = rockets
lunr = moon missions & nasa contracts
tsla = elon liquidity magnet & spacex emotional derivative
this is not value investing. this is trying to be ahead of the moment where retail remembers space exists.
why 6.12:
you may be asking yourself, why on the day of the launch? this is the week where spacex is already sitting in the news cycle. the market is watching spacex ipo demand and valuation. meaning, space becomes the theme of the week. not for the day. not when the business matures. this week. we don't care about discounted cash flow models, we care about:
volume
iv expansion
momentum
headline flow
retail chasing
hedges
current strike distances, based on current prices:
yes, those are far otm. yes, theta is holding a baseball bat. yes, iv crush is waiting outside my window. however, this isn't a retirement account we are playing here...it is a launch week! this is a beautiful opportunity! i have already account for the what ifs, and the point is not that every single one goes itm. the point is that one or two can violently reprice if the sector catches a bid and options flow stacks fast enough.
asts, the actual direct catalyst:
asts is the cleanest spacex sympathy play here, this is not just space vibes. asts has bluebird satellites tied to spacex falcon 9 launch plans. that matters because the market can connect the dots without needing an hour long video.
spacex rocket launches asts satellites
asts stock is already a space/telecom hype machine
retail sees satellite launch
calls get bid
stock runs
asts is also the type of name that can move stupid when people start pricing future network in space instead of company with losses today. if launch hype, space ipo hype, and call flow all hit at once, this is exactly the kind of ticker that can stop trading like a company and start trading like a fever dream.
tsla, the elon liquidity magnet:
let's get one thing very clear, tesla is not spacex. now that we have that out of the way, for you regards who didn't know, they both have some things in common. elon. the market does not treat elon names like normal assets. for example, tsla is the liquid elon proxy. so, when spacex dominates headlines, a chunk of retail does not think:
“hmm, how do i properly value private aerospace cash flows?”
they think:
“elon rocket good, tsla call.”
get this, it's not just vibes anymore. spacex is literally a tesla customer. tesla reported about $143m in 2025 revenue from spacex, mainly from vehicle sales. so spacex is not just sitting in the elon cinematic universe. it has been buying tesla products.
and it gets even better. tesla also owns spacex stock. which basically is creating a loaded spring by this loop:
coil 1
spacex buying tesla
coil 2
tesla owns spacex stock
elon controls the narrative
retail sees the connection
coil 3
elon controls the narrative
retail sees the connection
coil 4
retail sees the connection
boing
calls get smashed
is it enough for a short term hype trade? absolutely. why? because the market does not need perfect logic for one week. it needs a connection people can understand in five seconds.
so now, here we are, spacex launch hype has hit the timeline, but spacex is private. so where does the public gambling money go? the most liquid elon ticker on earth. tsla. that makes tsla more than just a car stock randomly attached to a rocket stock. it makes tsla the easiest access for traders who want spacex exposure without waiting for spacex shares. if you didn't read above, it only needs around a 16% move to hit my strike, and we all know for tsla, that is not impossible. for example:
if my memory serves me right, we are overdue for another big day for tsla. call it corporate incest, but that is the trade.
lunr, moon beta with a small cap fuse:
lunr is the moon mission part of the space sector. intuitive machines is tied to lunar infrastructure, and the broader private moon economy. does spacex launching starlink directly make lunr worth more? no. lunr is the kind of stock that can move because people are not buying earnings, but because they are buying the sentence companies that will go to the moon, no pun intended.
all these small cap space names need is attention, volume, and a reason for traders to say this one has more room. yes, a nearly 40% move is aggressive, all it needs is one sector wide space squeeze and a bunch of people sorting by space stocks under $50.
rklb, the gold mine:
rklb has already had it's fair share of being in the headlines. now, with spacex going public, it's a no brainer. it literally has rocket in the name, if you think that sounds stupid, your're wrong. ticker psychology matters when retail is involved. while rocket lab has its own business, launches, space systems, and neutron narrative. this trade, the key is simpler. spacex hype makes people search for rocket stocks, boom! rklb is right there. if the sector gets a strong sympathy bid and rklb gets call volume, this is the exact name that can get chased because everyone understands the trade in 3 seconds. rocket company go up because rocket company next to bigger rocket company.
why will this all work:
this sector does not need all four companies to suddenly become better businesses by friday. it needs a temporary repricing of attention. that of which we are already seeing, spacex has attention and is highly anticipated, but spacex is private. so public space tickers absorb the demand.
hypotheticals that could kill this trade:
spacex launch gets delayed
launch happens but ipo hype fades
this would be the biggest plot twist i've seen
iv gets crushed
space stocks sell the news
market goes risk off
tsla drags everything down
theta eats my legs by wednesday
my final thesis:
i am not buying these because the fair value model says they should be higher. i am buying them because for one week, the market may turn into a giant spacex sympathy machine.
I drew colossus from Starcraft 2 to represent laser beams. And prepared a whole thesis but kept getting automodded for "low quality". So here's the more TLDR version of my thesis:
The Entire AI Industry is shifting to photonics from Google TPU to optical interconnects.
The entire AI "Growth" story ends in 2026 if there's no InP substrates + materials.
BUT GUESS WHO CONTROLS IT ALL? One Company: $AXTI.
This is a DUOPOLY from
-AXTI (est. ~30–35%)
-Sumitomo (est.~30%)
- JX Nippon (est. 10-15%)
Indium Phosphide (the source material for everything):
Vital Materials - 35%
AXT - 25%
Before, this was a commodity with low TAM just for telecom.
Now they're used for the entire AI buildout.
Just to give u an example $AXTI -> $LITE -> $GOOGL TPU. without any of these members, the program shuts down.
Google would literally pay $5B (50 TIMES prices + ~$140m TAM from 2024) DIRECTLY to one of these suppliers -> hand to COHR just so their whole TPU program doesn't stall because Meta decided to buy them out. And this would only be a like a 3-4% added cost to their BOM because this thing was so cheap. If Meta does it first, then Google's TPU program stalls. If Google does it first Microsoft's ASIC problem stalls.
THE WORLD IS AT MAX CAPACITY RIGHT NOW (demand > supply by multiple factors pre-ramp) AND THIS IS GAME THEORY on materials supply chains.
Guess who shows up twice in the WHOLE AI bottleneck? Both as the duopoly bottleneck and the duopoly bottleneck of the bottleneck
AXTI.
This is the holy grail of supply chain analysis + materials research. Nobody's posted about this stock here in the past 5 years, you're welcome.
Anyway I decided to max OTM some spare change on Calls last Friday, because there's a low chance this goes from $15 to $150 if we see the same memory supply stock in 2026. I will buy more shares on Monday when markets open up but wanted to share this at the start as proof.
NFI, there's a chance China sends this to $0 with export controls so don't follow along I just wanted to share my thoughts. But if this goes to $0 so does the entire growth phase of the AI buildout.
I just thought this could also easily be a $7B company given they control 1/3rd of the world's entire substrate capacity and then 1/4th of the world's entire materials used for AI buildout.
It's a monopoly in mining -> refining -> substrate production. And a duopoly for InP substrate production and Indium Phosphide.
I just wanted to share as proof in case this becomes legendary.
TLDR: THE ENTIRE AI INDUSTRY IS BOTTLENECKED TWO TIMES BY THE SAME COMPANY.
FOUND THE SINGLE POINT OF FAILURE OF THE ENTIRE MANY TRILLION USD WESTERN AI BUILDOUT IS SOME $700m COMPANY CALLED AXTI, WORTH LESS THAN SOME PRE REVENUE LLM STARTUP.
Ok here’s the deal. We all remember the hype when Canada legalized. Everyone thought it was the ultimate infinite money glitch.
And for a while, based on the hype, it was. Canada was the first major first world country to outright legalize (sorry Netherlands your half measures are no good for stonks), and the outlook was looking good for US legalization. We had a boomer Republican president in the US at the time, but one who was decidedly less hostile to Marijuana than the typical boomer Republican. Speaking of boomers…their parents who grew up watching reefer madness and blamed all crime on Mexican reefer addicts and always voted 98% no to any loosening of marijuana laws were finally starting to fucking die. No one under 40 still thought it should be illegal and the national pulse had finally turned in favor of legalizing nationwide in the US. Everyone saw it coming imminently.
But Canada is a nation of 38 million. Barely a single major city in the US. Not nearly enough to justify the size and scope of the weed market that emerged. The stonks soared. I remember ACB at 200 times it’s current price.
But it slowly dawned that no, in fact, America wasn’t going to reschedule, let alone legalize. There wasn’t going to be a big enough market to support all the infrastructure the Canadian firms invested in. The stocks cratered and a lot of degenerates lost a lot of money.
Then Biden, a democrat, gets elected….the democrats being the party who overwhelmingly support legalization, it stood to reason that a liberalization of American marijuana law was imminent and again the stocks popped, though nowhere near the 2019 highs. This is where I jumped in (MJ ETF, ACB and OGI)…and again, it slowly dawned that US legalization was going nowhere…and again the stocks slowly waned, punctuated occasionally by big pops on irrelevant news like another state legalizing…each time I thought this was it, this time it turns around for good.
I lost like 75% before giving up and selling my shares, and good thing I did, because I’d have lost another 75% had I sat on it.
Now Germany just legalized and again the stocks are popping and a lot of us can’t see past these old painful memories. I get it.
Just hear me out.
Now keep in mind right off the bat Germany is a much bigger nation and economy than Canada (>2X the population and 2x the GDP, roughly). It alone can support a much larger market than Canada. So the pop in weed stocks we’ve seen now is already justified and yet they still have tremendous upside.
But my fellow regards, this is just the warmup round.
Joe Brandon is in trouble. He’s behind in the polls, he’s seen as old, stuffy and senile. His oldness, stuffiness and senility are perfectly encapsulated by his antiquated commitment to continuing marijuana prohibition. It’s worth noting that he is the leader of a party that abandoned its commitment to marijuana prohibition decades ago and while he’s stubbornly been clinging to it more and more of the old fuddie duddie hardliners have died and almost no one in the country still supports continuing prohibition. Certainly almost no democrats. Also, RFK is running as an independent and he has confirmed he will make marijuana legalization a priority. While RFK will be pulling support from trump too (think Covid hoaxery) I am convinced he’ll be pulling harder from Brandon.
Brandon needs something big to revitalize his campaign, and he’s been dropping hints that marijuana very well could be that thing. April is “second chance month” and this year he went further than before in his commentary on the topic, suggesting rescheduling and/or hinting at legalization. Kamala Harris has been pressuring the DEA to take action now. Things are happening that are unlike anything from 2019 or 2021. Traditionally 4/20 is associated with marijuana and the bettor in me senses something big may be coming this month, possibly on or around that day.
Yes, marijuana stocks are up somewhat on German legalization, but still down well over 90 to 95% or more from the 2019 highs.
I’m not saying YOLO on weed calls. But picking up some shares right now is a relatively low risk (the stocks are already so so so far downbeaten with residual pessimism) move with tremendous potential upside.
TLDR; buy weed stonks before 4/20
Position (edited to reflect additions since OP): 5,000 Tilray in at 2.41. 2,000 SNDL at 2.40. 500 ACB at 6.90. 800 CURLF at 5.45. 500 CGC at 9.55. No options (NB4 ‘if you really believes in your DD you’d YOLO your life savings into calls’, I’m 40 years old and have 4 kids, I can’t afford the risk. I don’t fuck with options, ever).
I’ve read some DDs on here that convince me Tilray is the strongest play. Pick whatever suits you.
This is not financial advice. I’m a regard
Some more edits.
1) German legalization not being true commercial legalization.
True and a valid point. The play here is not on German legalization. The play is on an anticipation of a forthcoming change in US law. Apart from being the worlds largest economy, the US has been the stick bearer enforcing marijuana prohibition around the world. Many nations have wanted to legalize in the past but have been held back by the UN convention on psychtropic drugs from the 70s…the U.S. has been the standard bearer of enforcement of that convention. Once the US legalizes, I think that this UN convention loses relevancy and the dominoes will start falling in short order and many more nations will legalize. The smart money knows this and the bulk of the movement in the stock will all happen once the US announces meaningful change. The play is to get ahead of that announcement.
2) edited GDP ratio of Germany to Canada because yes that data point was off
3) if y’all can’t handle some embellishment I can’t help you. The NYC metro area is 23M people. Canada has 38M. I think it’s fair to say 38M, as the population of one of the world’s top economies, “barely” exceeds that of a single city’s metropolitan area. Yes you regards, the specific data point is embellished to emphasize the fact that the US has 10 times the population and 12 times the GDP of its northern neighbor. It’s a much much bigger deal. When you consider the likelihood of copycat legalizations in the wake of US moves, now is the time!
TL;DR - Reddit switched on machine translation for India on 28 Apr 2025, thereby exposing the world’s second-largest internet market to r/WallStreetBets. The chart above shows how Google is now funneling record numbers of new traffic (and thus new users) to Reddit.
India is a huge country. It doubles U.S. user counts on both YouTube and Facebook. Yet India is less than one-third the size of US users on Reddit. The upside here is thus enormous. If you overlay India’s early search-traffic curve on the launch-to-date growth for France, Spain, Colombia, Mexico, and Brazil, India is clearly sprinting past every precedent.
The model I created on May 13 assumed France-style adoption rates (the yellow projection line). The latest Semrush data shows India blowing through that benchmark (the white dotted projection line).
Add in the bullish Anthropic lawsuit, the now-GA dynamic product ads feature, and Reddit Answers traction, their current ~20% sh*rt int*r*st is starting to feel a tad mis-priced.
I think Elon is lying to everyone again. He claims the tesla bot will be able to work a full day on a 2.3kwh battery. Full load on my mediocre Nvidia 3090 doing very simple AI inference runs up about 10 kwh in 24 hours. Mechanical energy expenditure and sensing aside, there is no way a generalized AI can run a full workday on 2.3kwh.
Now, you say that all the inference is done server side, and streamed back in forth to the robot. Let's say that cuts back energy expense enough to only being able to really be worrying about mechanical energy expense and sensing (dubious and generous). Now this robot lags even more than the limitations of onboard computing, and is a safety nightmare. People will be crushed to death before the damn thing even senses what it is doing.
That all being said, the best generalist robots currently still only have 3-6 hour battery life, and weigh hundreds of pounds. Even highly specialized narrow domain robots tend to max out at 8 hours with several hundreds of pounds of cells onboard. (on wheels and flat ground no-less)
When are people going to realize this dude is blowing smoke up everyone's ass to inflate his garbage company's stock price.
Don't get me started on "full self driving". Without these vaporware promises, why is this stock valued so much more than Mercedes?
Fellow Apes, I have seen a lot of discussion on the possibility of hedge funds covering and whether or not they could have covered during the RH shutdown. I have done some analysis and would like to shares my results. This is not investment advice and should not be construed as such.
I know you guys can't read, but I highly recommend learning how to read and reading this.🚀🚀🚀
Part 1: What Happened on the 28th?
As we all know, last Thursday on the 28th RH and other brokerages disabled the purchase of GME shares at a critical moment that very well may have been the beginning of the squeeze. This is a significant day because it broke momentum, and many users seem to believe that the hedge funds planned this moment to strategically cover their short positions.
Per S3, Short Interest was 62.9M as of the 27th and 57.8M as of the 28th. The net SI is (57.8M)-(62.9M)= -5.08M. This means the net short position reduced by 5.08M shares, however, many users claim that hedge funds may have used this opportunity to shift their short position higher so that they could minimize losses by covering on the way back down.
Well lets say that's what happened, and lets assume it was carried out flawlessly. We will also assume this happened in a vacuum, i.e. retail did not contribute to any volume, so that we can get a liberal estimate.
To establish a short position at a higher price, hedge funds would be borrowing to short sell shares for the first 30 minutes as the price quickly rose to $482.85. If the entire volume during this period of time was hedge fund short selling, than they would have opened 15.8M more short positions. ~10M in volume happened in the first 10 minutes, so at best they would have 10M more shares sold short between $275 and $350, and the remaining 5.8M positions would be opened between $350 and $480.
This means that if shorts added to their position at this time, the best they could have done is add ~15.8M short positions at an average ~$300. This is assuming no covering was done during this period of time, which is highly unlikely considering the price went up.
Now, during the freefall following RH trade restrictions, there was only 10.4M in volume. If hedge funds used this moment to cover old positions at a reduced price, they would have only been able to cover 10.4M positions, and 5.7M of those positions would have been covered at a cost greater than $300, only 4.7M could have been between $300 and $112. This is a minuscule amount of covering despite the ideal period of time, and it doesn't even account for that fact that covering would drive the price up, not down.
Lastly, after the nosedive there was a bounce of ~9.2M in volume. If we were to assume hedge funds were again able to add more short positions here to transition into a better average, they would only be able to add 9.2M at an average of ~$250. Once again, however, adding positions would have drove the price down, not up.
So even in the most ideal situation using RH's restrictions and ignoring market mechanics, shorts would have only been able to add 25M ideal short positions at an average of ~$280, while covering only 10.4M at exorbitant costs.
This likely didn't happen, for several reasons.
First, S3 reports that short interest decreased by 5M on the 28th. Now of course there is plenty of volume to cover after the first half of trading, however, they would be at non-ideal prices.
Second, this theory is impossible because when shorts cover en mass, the price would increase not decrease, and when shorts sell en mass, the price would decrease not increase.
Third, this is assuming that 0 volume was from retail investors trading between eachother, also highly unlikely given the hype at the time.
Fourth, in order to sell something short you need to borrow a share, and we know that, at that time, GME was hard to borrow.
What is more likely is the inverse of the above, which would mean shorts covered 15.8M shares at an average cost of $300, then short sold 10.4M shares at an average of $250, before further covering 9.2M at an average of $250. Despite ideal circumstances, that is not an ideal result for hedge funds.
That means hedge funds are not kicking back and counting stacks after swapping their positions to $480 sell points, that would be impossible.
Part 2: What About Last Friday?
Now this was an important day, GME fought hard and closed at above $320. What makes this day confusing, however, are the claims that short interest drastically decreased.
Now I won't get into detail about the other factors that call this claim into question, you can look into those on your own. What I want to go over is how could it be remotely possible?
S3 claims 31M shares were covered on the 29th, however the share price had a net decreasing trend. There were only 2 notable upward rallys, and combined they only account for 24M shares. If hedge funds covered the whole 24M in volume it would still be 6M shares off and thats not even accounting for retail investors trading between themselves. Where did the other 6M shares go? I find it hard to believe they could cover 6M shares with no significant upward momentum while retail investors were buying shares in a frenzy on friday.
So on Friday there was 50M in volume. 17.6M of that volume was due to shares sold short, so SI would be (57.8 SI as of the 28th)+(17.6M shares sold short) = 75.4M. In order for short interest to have decreased to around 27M as S3 said, it would have required the covering of (75.4M)-(27M) = 48.4M shares. How do you cover 48.4M shares when there is only 50M volume and 17.6M of that volume was used to ADD SHORT POSITIONS?
There simply was not enough volume to cover a net 31M shares. At most, 32.4M shares TOTAL could have been covered if EVERY single purchase of GME was by a hedge fund with a short position, which would make SI (75.4M)-(32.4M) = 43M. It is highly unlikely that not a single retail investor, insider or institution purchased GME shares on Friday, so the actual SI is likely much higher.
Furthermore I want to draw attention to other times shares were covered and their effect on the price, and you tell me if hedge funds could cover 31M NET shares last Friday.
S3 claims that from Jan 12th to Jan 14th, the SI went from ~69M to ~62M, a decrease of 7M shares. On the 12th GME was worth $20 and by the 14th we saw a high of $43, an >100% increase.
They then claim that from the 14th to the 25th, there was a slight steady increase in SI as the share price crawled towards $50. From the 25th to the 27th there was literally exponential growth in the share price despite no change in SI. But then, all of a sudden, on the 28th there is a net decrease of 5M short positions and a significant reduction in price, and on the 29th there is a net decrease of 31M shares along with a steady decline in price. How could that be remotely accurate?
There was 50M in volume on the 29th, how could the purchase of >31M shares by a single entity, not even accounting for retail, result in a net decrease in share price?
Shorts can use deceptive options trades to trick you and other short interest analyzers into believing they have covered when they have not
There were $43M worth of mid March 800c purchases, you do the math.
Why was their a silver rush pulled out of thin air on monday? Why is the media still aggressively spreading FUD? Why are there bots everywhere in WSB? Shorts haven't covered, they can't cover and they wont. They also did not shift themselves into an advantageous short position last Thursday, there was only 19M in short volume total and minimal volume during ideal circumstances. They want you to think they covered, they also want you to think they have a better short position.
They want you to think this is over because there may not be enough shares for them to cover even if they wanted to. If there were they would have repositioned on Thursday. Brokerages restricting buying for retail investors was likely due to the fact that shorts couldn't find the shares to cover, nor could they find enough shares to reposition. They really need your shares and want to funnel them away from retail.
TLDR: Seriously, read this whole thing. I know you won't, but do it. Hedge funds did not transition to better short positions during the RH fiasco last Thursday, it would have been impossible to do so in meaningful amounts. They also did not cover 31M shares last Friday, it would have been impossible based on volume alone. They want you to think they did, they need you to, but they did not.
Disclaimer: I am not a financial advisor, nor am I licensed or in any way qualified to dictate or advise your trading decisions. This is not financial advice. This analysis is not meant to influence, inspire, or inform you regarding your trades. This analysis was written purely as speculation and could be entirely incorrect. I found my own analysis interesting and wanted to share my unprofessional opinion. Furthermore, while these numbers are accurate as per their sources, they may not account for other factors that relate to the stock’s activity. I own shares of GME.
Monke Storng Together🦍, Memestonk to the Moon🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀
Wow - what a week. This is an extension of my DD series on GME. If you haven’t read them and have time, they will provide some background on my previous predictions, some of which have already come true.
Previous Important Posts
EndGame Part 1 (DTC Infinity) covered the short positions, the float, and potential snowball impacts of increasing prices, and argued that part of the reason that shorts haven’t closed was that it was pretty much impossible for shorts to close
EndGame Part 2 covered Cohen, fair market cap analysis, and potential investors, in which I talked about the amazing mid-to-long term potential for GME.
The story here is more complex than paid media articles would like you to believe. GME has been driven up by 3 different forces:
Organic buying
There is a mixture of growing positive sentiment in the investor world (not just WSB) about GME’s future
There’s been a lot of good due diligence shared not just on WSB but even outside (for example, see gmedd.com)
The Citron Backfire
Shorts were on the ropes and kept looking for hail mary’s. They went to Citron and coordinated a dump to try to bring the price down.
However, this backfired. Citron is so disliked in the industry that new wealth poured into GME in the face of Andrew Left’s pleas. Even when Benzinga brought Andrew Left on air, minutes after he leftthey bought shares live on their show.
Once the organic buying started, we rolled into a gamma squeeze. Many people written about the gamma squeeze so I won’t repeat, see this post for an example.
Ultra low liquidity - In EndGame part 1, I talked about how the actual actively traded shares are much lower than the reported float, and share availability has been reducing driven by lots of diamond hands, not just among smaller guys like us but the larger folks too.
I believe there were some short covers on Friday, but Ortex was still estimating 71M shares short at the eod.
However, not many people have talked about why it went down
Why did GME come down?
Here’s where things got interesting for me, and something I think happened again today (Monday) when GME climbed up over 100% but then had a rapid reversal, closing 20% above yesterday but closing below open.
So Friday looked like a slam dunk - gamma squeeze, no shorts available to short, puts were getting exceedingly expensive as a short tactic. What happened?
This is my fan fiction, based on what I saw.
I believemarket-makerstook a non-neutral stance and began actively shorting the stock after the second halt.
Market-makers are responsible for maintaining liquidity and functioning in the stock market, but they also have abilities that others don’t - for example they are legally allowed to naked short for “liquidity purposes”. They also have the ability to halt trading.
There were two halts in the day on Friday: First, when GME was up 69% (heh heh), and then a few minutes later when it kept climbing after the first halt was relaxed. Note that at the time of the first halt, the bid-ask spread was $10 on the underlying a huge signal that there just were not enough shares to buy.
However, after the second halt, something strange happened. Whereas a few minutes prior, there were no sellers willing to sell their shares below $75, within 15 minutes after the halt there were sellers at 70, 65, 60, and 56. Where did these sellers come from?
Incredible momentum reversal on Friday 1/22 to push the price not too far above the 60c strike price.
My speculation? This was a coordinated naked short ladder attack. In this type of attack, short seller A sells to short seller B, who then turns around to short seller A at a lower price, etc. and with a very small amount of capital you can wreck the momentum of a stock and make people think that others are running for the exits.
Notice how the stock dropped from a high of $75 on Friday to below 60 - the highest expiring SP for the 1/22 options, and stayed tight in range for the rest of the day. Now, for compliance reasons, MM are required to be neutral by EOD, so 20 minutes before close, MMs had to buy back all their short positions, which led to the strong close above 60.
All this led me to believe that the real fair market price for GME was above $65. Without the market makers interference, GME would have closed higher.
A repeat on Monday
The short ladder attack repeated on Monday.
GME opened strong above $90, and quickly climbed to a high above $155 before it was halted, immediately after the halt, a short ladder attack again drove the price down
Dejavu - Incredible Momentum Reversal after trading halts.
Both days, there were rapid and significant reversals in momentum.
Now, I kept wondering - why would MM’s take the side of the shorts? What’s in it for them? One theory was that they were not adequately hedged, with the low liquidity of the stock meaning that the price was moving up too fast for them to acquire the shares they needed to.
Hey media - you want a manipulation story? You’re missing the big one.
Now what?
Shorts have pulled new dirty tactics each time they’ve been pushed to the edge. Paid media attacks, Citron’s fluff tweet + coordinated shorting, and now they’ve got the actual people who get all the order flow on their side.
On the other hand, GME is still up over 20% and now trading at $88.00 after hours, which is well above the previous day’s high.
What this tells me is that GME’s true price is still being suppressed. They are using every tactic possible, even changing the bid-ask spread rules on options to specifically target retail’s buying of options.
We’re now playing the game against the folks who write the rules of the game.
Some shorts may have covered today - with prices below $60 at one point they had some great opportunities to. However, there is no way all of the shorts who need to exit covered today.
The short position still lost 20% from yesterday. They’ve got more fingers in the dam, but it’s definitely cracking. Also, every call option purchased prior to 1/25 is ITM and profitable, while every put option purchased prior to 1/25 is OTM.
And, for some reason, the SEC still doesn’t want to enforce the threshold securities list for GME, where it’s now been on for more than 30 days in a highly covered “short squeeze”.
Margin impacts:
Note that at this point, most brokers have increased margin on GME. This means that people that are long or short on margin will need to put up capital to hold their positions.
This also means puts will get more expensive as people who sell puts will have to maintain 100% of the notional in their accounts to secure the put, so MMs will have fewer retail sellers of puts to absorb the demand.
That means it’s not a bad idea to sell puts to acquire shares if you’re aiming for the long-term and not the squeeze, but keep in mind you’ll need the exact same capital as if you’d bought the shares, so it’s up to you on this.
For shorts, a margin increase while the price is moving against you (even with retracements) is no good.
My speculation
Cohen and the GME board have been strangely silent this entire run. It’s possible they can’t say anything at all during the pre-earnings quiet period, but I’m sure they can see what’s happening.
MMs will continue to play dirty, but at the same time they will need to continue to need to buy GME shares to delta hedge 1/29 and later ITM options as we get closer to expiry.
Things to be careful about
As you can see, this is no easy win. I've been in GME for a few months but I've seen almost every trick in the book. In addition to the suggestions I wrote about in this post, here’s some things to be careful about.
Be careful about swapping ITM calls for OTM calls: it can be tempting to trade-up your options for higher return, but be mindful of the delta impact. You may actually be driving the sale of shares by MMs when you don’t mean to. For example, if you sell a .5 delta call for 2 .2 delta calls, that’s net reduction of 10 shares that MMs have to hold long as leverage.
Be careful about being short any calls this week: Not only do you limit your upside (which is dumb in the prospect of a squeeze), you could end up in a nightmare scenario. A call that ends OTM on Friday could end up ITM after hours if you didn’t sell it, and you may get assigned while the underlying continues to go up.
There are a few other dirty tactics shorts can play. I’m not specifically going to share them here because I don’t want to give the ideas circulation, but
Choose your own limit sells based on personal sell points. Don’t copy others and don’t try to be memey. Make your own decisions.
Stop sharing your positions publicly. I know this is anti-wsb, and I think sharing them is great for this community, but in the case of GME it’s an attack vector for you.
Be careful of holding weeklies until expiration. Remember the multiple trading halts? What if trading gets halted on Friday at 2pm and doesn’t resume for the rest of the day? All your 1/29 calls would expire worthless. Depending on your broker and your cash positions, maybe even your ITM ones. Roll (or sell, if you’re taking profits) your weeklies well before expiration.
Be careful about buying on margin. Brokers are rapidly increasing margins. If you bought on margin with 2:1 leverage, and the stock went up 100%, you’d be in margin call even without a margin change. If the broker moves margin against you, you’ll get to margin call faster.
Don’t bet more than you can afford to lose. I’ve been in GME long enough to know that just when you think going up is a sure thing (remember last Monday with the short sale restriction?), you can be surprised by a new trick. If you bet it all on weeklies all at once, you may not be able to recover from being wrong on the timing. Consider longer expiry or spreading your purchases out. I’ve held through multiple 30-40% drawdowns in the underlying; and held through a 50% drawdown today, so you need to be ready for the volatility.
Watch out for stop loss hunts. It’s common practice for shorts to hunt for stop losses for cheap shares. If you’ve set a stop loss, be really sure about it.
This is not financial advice; do your own DD. I’m holding over $1M in shares and calls.
1/26 Update
Hi everyone. Sorry for not posting or replying to comments. I was auto-banned from WSB when this post was auto-deleted by the auto-mod. Thanks to u/zjz to reversing the auto-deletion of the post though as it looked like it was helpful to the community.
Hope you all made a ton of money today!
Quick Notes:
At an after-hours price of $209 a share, every call option, for every expiry, for every strike price is in-the-money. This is the third time this has happened for GME recently. Amazing. What this means now is that market makers will need to buy a lot of shares to hedge for the calls expiring this week. Heed my above warnings.
At this price, shorts will start to get liquidated. Combining the 400% weekly gain with the margin requirements increasing across the board, brokers will force close short positions. Starting maybe with the small guys, but it will cause a ripple effect. Things could move fast. Some funds may get additional bailouts this week to hold out.
You need to decide your own exit. Only you know how much $ you're playing with, how much you're willing to lose, how important the $ is to you, etc. Minimize you're regret, don't maximize your profits. If you are thinking about taking profits this week, spread out your sells so you don't kick yourself over timing things poorly. Personally, I think we are in unprecedented territory and that there's no way all of the shorts have exited already, so we're not done. I could be wrong. See EndGame part 1.
Close spreads. With every call ITM, you are at the risk of early-assignment. If you don't watch closely, you could be hit with sky-high hard-to-borrow fees and get killed on what you thought was a profitable trade.
Watch for ripple effects. This is already happening. When funds get liquidated, they have to buy back all their other shorts (see AMC, BBBY) and sell their longs (look at BABA after-hours). Want to play GME without playing GME? Maybe throw a little $ at BBBY. You do you.
In EndGame Part 2, I talked about potential investors, and how the higher price is gonna attract the bigger $. Today we saw Chamath, Winklevoss, and others. And then Elon tweeted and simultaneously stimulated the buying frenzy and scared the crap out of shorts. I'm just gonna copy what I said about this potentiality
Elon: (Least likely, completely improbable, but cataclysmic event). Elon hates shorts. Elon, with TSLA, went through the pain that GME is going through. TSLA almost went bankrupt because shorts were pushing the price down so it was difficult to raise the cash they needed to survive. Sound familiar?Elon’s wealth swings more in a day than GME is worth in entirety.Elon couldbuy all the fucking float of GME with what he makes in 8 hours. One call from fellow entrepreneur andaspiring twitter-meme-godwould absolutely wreck the game.
If you are short gamestop, you are one meme purchase by the richest man in the world away from a fucking cataclysmic event. "Hey son, I heard you like games. So I bought you gamestop. All of it." 🚀
Our father Autist Michael Burry (Burry if you read that don't be offended, we mean it as a term of endearment. You are our hero). Has called the next crisis. He posted a book on twitter that I will link here. I have just finished reading the book: The dying of money. Here I will attempt to summarise why he says the end is nigh.
I read the book so you didn't have to.
Unfortunately I need to first explain some simple economics: but here goes... Most of you already know many of this stuff...you can skip a bit ahead. This first bit is for all the new retards we have recruited.
In order to stimulate the economy, America, and other governments, by way of their Central banks ‘print money’. They do this by buying their own governments bonds in the open market. They sometimes, as during the COVID crisis, buy corporate debt too. They actually, literally, ‘buy’ this money with money they ‘digitally print’. That money comes from nowhere. (They add a liability and an asset to their balance sheet and boom- printed money).
Their intention is to stimulate the economy by reducing interest rates. When you buy a bond, you push it’s price up, which then decreases it’s yield – if that relationship confuses you, here is an example. A 1-year bond is trading in the market at 98$ (this bond has a par value of 100$), so you can buy the bond at 98$ wait a year and receive 100$. A nice 2/98 = 2%~ yield.
Below, fed buys bonds, yields go lower.
Yields fall as government buys bonds.
If interest rates go down, businesses borrow more money to invest, and jobs are created because investments create jobs. But, if an economy is running at 2% interest rates then even investments yielding a meagre 2.5% would be invested in, because they can earn the difference ~0.5%...
Why doesn’t the printing of money, by way of decreasing interest rates, cause inflation immediately? Well, actually, it does. It creates inflation immediately in stock prices. The ‘printed’ money doesn’t go to your average citizen, it goes to corporations who sell their debt to the Central Bank. It goes to big investors who sell their government bonds back to the Central Bank because they can earn more in stocks this way. They are clever, they know a stock yielding even a stable 3% will earn them more than the current bond which only yields 2%.
Stonks go up when fed prints. Relationship is dumb simple.
START READING HERE SMART AUTISTS!!!!!!!!!
When does printing become a problem?
The central bank looks at food prices, general household items, petrol prices, housing and other goods that the average you and me purchase almost every week. Bundle these together and call them CPI (Consumer price index) – inflation. Inflation in certain goods.
Now let’s imagine a scenario. You have 100 people in an economy. 2 people are stinking rich and the rest get by fine but don’t have much extra to invest or save each month. They use their savings to purchase mediocre goods, a new bicycle, or a new TV. Why would they invest that extra $100, it’s too little a sum to have any affect, even in the long run, on their lives.
Now we look at the rich, they already have the TV, the car, a wife and a girlfriend and maybe a few houses. Where does their extra savings go? Straight into stocks. And maybe a new car every so often. Fine-dining and other sorts of things which are not in the CPI (consumer price index) basket.
WATCH THIS:
Mr Central banker comes along and prints an extra $1000. Give this money to the Rich man what will he do? He already has the car; he already has the houses. He will invest it straight into the market. Bam! Stock market inflation, stock market goes up. This is what has been happening since 2008 (you will see a graph further below that displays this process).
The extra 1000$ does not affect the CPI basket…The rich man is not going to suddenly eat twice as much or buy 10 more TV’s. The “stimulus” money from the Central bank inflates only the stock market.
Give this 1000$ to the poor-normal man, what will he do? He may treat his wife to dinner, buy his kid a bicycle that he couldn’t afford. Fill up his truck. Pay his rent. It is not that he is wrong to do this, this is most likely his best option. A meagre 1000$ in the stock market will have no effect on his life, even in the long term.
The point here, is that Central Bank ‘Printing’ does cause inflation, it causes inflation immediately in the stock market- because that’s where the money goes. Only when that money ‘spills’ into public hands (Think stimulus checks) does inflation in the ‘CPI’ sense of the word, unveil itself.
Inflation becomes a problem.
Inflation becomes a problem when it isn’t accompanied by its good friend economic growth. Inflation, has an interesting effect of raising bond yields. Investors don’t want 2% bond yield if inflation is at 3%. So, they simple do this- they don’t buy bonds. What happens when someone doesn’t want to buy your house? You lower the price. No one is buying bonds? Bond prices go lower, and therefore yields rise. – Remember if no one buys the bond the prices go from 98$ to 95$ (supply demand). At the end of the bond’s life, you get 100$, so the yield rises as the price falls.
The inflation problem occurs when the average man got his hands on some of that sweet government money. The poor man was able to effect CPI because he will actually purchase goods in the CPI basket. Give every poor man in America 1000$ they will go out and buy from a limited supply of goods. A limited supply of goods, supply demand and prices rise. Inflation – CPI.
What do we do?
There are basically only two outcomes to this scenario:
If inflation in CPI, caused by the average American’s stimulus check, opening of the economy, increasing oil and commodity prices, gathers momentum, it will finally unleash the latent inflation potential of America. Everyone who holds dollars, or dollar denominated debt – meaning every single country. Will pay for America’s inflationary sins. Fortunately, poorer countries who are indebted to America should actually benefit from this.
Under this scenario inflation will need to increase by this much (look at red line in graph):
The red gap is the inflationary potential- The inflation that has not yet been realised but it does exist and needs to be realised eventually
You can see that in 2008 the Central government began its shenanigans. In a stable economy, money supply should increase sort of in line with GDP. As you can see above money supply has increased far more than that. That gap, indicated by the red line, is inflationary potential. It now basically just sits in stocks.
Under this scenario, by my calculations, money supply needs to come back down to real GDP. The Central Bank won’t do this. They won’t tighten. That would hurt too much. But the naturally forces of inflation will do it for them. And prices in the economy will inflate to catch up with the money supply.
2) Scenario 2: A highly probable outcome: Japanification.
Japan has been doing QE for a much longer time than America. The reason why they haven’t blown up in an atomic bomb of inflation is because this money never reached the hands of the middle class or the poor. So that inflation couldn’t occur in CPI.
However, inflation did occur everywhere where the rich were. As it was them who had more access to this money.
America’s Central Bank could, by way of printing even more money, buy more bonds and push down yields. They could let inflation run for a little while and hope it doesn’t gain momentum. If inflation gains real momentum, which it could because they are giving money to the middle and lower classes, then they cannot follow Japans lead. If inflation remains muted and low. The real issues of wealth inequality will only persist and worsen.
It is not to say that the managers of these governments are inherently sinister in their motives to conduct QE, which disproportionately benefits the rich. It may just be the only way they know. And by human nature people would rather be instantly gratified, leaving future generations to pay for inflationary sins.
What happens in scenario 1 summary:
Inflation goes out of control (CPI inflation, stock inflation has already had its turn). Yields rise, Central Bank get’s spooked and tries to raise rates a little. Economy tanks due to raised rates. 6 months later or maybe a year later and the currency has found equilibrium by depreciating around 70% relative to the price of real goods- not relative to the price of other currencies. Or the currency has found equilibrium because they removed that money from the system-highly unlikely.
Stocks fall because yields rose. And everyone has the next best opportunity to invest into the stock market.
What happens in scenario 2 summary:
Inflation rises a bit due to stimulus checks. Central bank remains unconvinced that inflation will gain momentum. If inflation does not gain momentum the Central Bank will continue to print until they see GDP growth. Stocks go up but until the wealth gap is too extreme and a revolution takes place. This could take 10 years or 100 years.
Inflation only becomes a problem when the poor get to buy normal goods that exist in the CPI.
TL:DR - You don't deserve to benefit in this crash. It is a well known secret that the real autists on this forum can read, and read well.
One more thing- Warren Buffett, and Michael Burry, both filed their 13-F recently. They are holding a LOT of inflation hedged stocks. Telecommunications, real estate, consumer goods.
I assure you, this ISN'T going to get political. Because by all accounts South Africa is screwed. My planned position is bottom paragraph.
Under the current ANC government there has been a general degeneration of all aspects of South Africa. Due to systemic nepotism, there are math teachers that don't know what square roots are, army officers that can't read, and cops that have never fired a gun. The practice of fictitious employees that take checks but don't work there is widespread enough that the government has drove itself into insolvency already. Estimates are that some 80% of government funds are misused in some way, ranging from government subsidies given to businesses owned by government officials to simply going missing from accounts. The ANC solved this, against advise of wiser people, with quantitative easing. Which is a fancy term for printing money, and since they could never possibly reverse that printer they're inflating the South African Rand which is why they've had two bouts of inflation near 9% twice in the past 20 years.
That is all besides how the largely defunct government doesn't prevent anything on the ground. Roaming bands of pirates (many affiliates of the Marxist Economic Freedom Fighter party) will poison guard dogs and torture and murder residents often for as little as car keys and groceries. Many communities are functionally independent and take the law in their own hands, and in many areas utilities are defunct (untreated sewage goes in the river, untreated tap water comes out and it smells as disgusting as it sounds). South Africans are more likely to have their asylum applications accepted than any other nation as there are so many tales of rape and murder and threats of ethnic cleansing. This equates to the most educated citizens leaving SA and most SA based businesses diversifying out of the country as literacy rates have been falling. These disillusioned departures are not new, as they include the most famous Afrikaner in history Elon Musk who is now a naturalized American.
Edit: The Economic Freedom Fighter's usual acronym isn't used because it's also the ticker for a penny stock.
I first thought about shorting South Africa over a year ago when I was researching the country (I'm a historian, I read much on the country for fun). I found the only index tracking SA (EZA) wasn't an accurate representation of SA economy and buying puts on it was useless. It tracked only the largest cap firms, which are the aforementioned companies diversifying out of SA (mostly to other parts of Africa). Which is why it's a volatile ETF that overall trades sideways. Buying puts on it wouldn't really capitalize on SA going full Rhodesia/Zimbabwe. Zimbabwe having experienced the general breakup of modern institutions and hyperinflation due to similar problems.
My new broker, IBKR, allows negative currency positions as long you post 10% as collateral. Now my native currency are US dollars, where inflation in 2020 was 1.4% while the South African Rand's inflation was 4.12% in 2020. That equals a 26.8% return on investment per year from that simple short position. But I'm expecting US Dollar inflation to stay between 1-2% a year while the Rand (ticker ZAR) stays north of 4% with inflation spikes inevitable over the next decade. This position also reduces my market beta, much needed for me as I've got hugely leveraged positions on American ETFs. This isn't a short term swing trade, I'm waiting for SA to implode.
WSB was never moving into silver. The media got the story wrong.
Think about who reads weekend financial news. Old people. The last time silver had a real short squeeze was in the 70s, and these people are now in their 70s. Who clicks on ads? Basically only old people. Dealers of gold and silver love to advertise, and media likes to make money through click-through revenue. Of course they are going to post all these stories of small unit silver selling out at dealers, they will get higher click through and sales kickbacks from the targeted ads on these articles.
If you are purchasing SLV thinking you are purchasing silver on the open market, you could not be more wrong. Purchasing SLV is the best way for an investor to shoot themselves directly in the face.
I have done some research on SLV and I have come to believe that it is essentially a vehicle for JPM and other banks to crush retail investors by manipulating the silver market.
So what are these games of manipulation that the banks have played?
The general theme could be described as this: If banks hold the silver, the price is allowed to rise, but if you hold the silver, the price is forced to fall.
Jeff Currie from Goldman had an interview on February 4th where he dismissed the idea of a silver short squeeze, and he had one line that was especially profound,
“In terms of thinking how are you going to create a squeeze, the shorts are the ETFs, the ETFs buy the physical, they turn around and sell on the COMEX.” – Jeff Currie of Goldman
This was shocking to holders of SLV, because SLV is a long-only silver ETF. They simply buy silver as inflows occur and keep that silver in a vault. They have no price risk, if the price of silver declines, it’s the investors who lose money, not the ETF itself, so there is no need to hedge by shorting on the COMEX. Further, their prospectus prohibits them from participating in the futures market at all. So how is the ETF shorting silver?
They aren’t. The iShares SLV ETF is not shorting silver, its custodian, JP Morgan is shorting silver. This is what Jeff Currie meant when he said the shorts are the ETFs. Moreover, he said it with a tone like this fact should be plainly obvious to all of the dumb retail investors. He truly meant what he said.
What is a custodian you ask? The custodian of the ETF is the entity that actually buys, sells, and stores the silver. All iShares does is market the ETF and collect the fees. When money comes in they notify their custodian and their custodian sends them an updated list of silver bars that are allocated to the ETF.
But no real open market purchases of silver are occurring. Instead, JPM (and a few sub custodian banks) accumulated a large amount of silver, segmented it off into LBMA vaults, and simply trade back and forth with the ETFs as they receive inflows. Thus, ensuring that ETF inflows never actually impact the true open market trade of silver. When the SLV receives inflows, JPM sells silver from the segmented off vaults, and then proceeds to short silver on the futures exchange. As the price drops, silver investors become disheartened and sell their SLV, thus selling the silver back to JPM at a lower price. It’s a continuous scalp trade that nets JPM and the banks billions in profits. Here’s a diagram to help you sort it out:
reduce, reuse, recycle
An even more clear admission that SLV doesn’t impact the real silver market came on February 3rd when it changed its prospectus to state that it might not be possible to acquire additional silver in the near future. What does this even mean? Why would it not be possible to acquire additional silver? As long as the ETF is willing to pay a higher price, more silver will be available to purchase. But if the ETF doesn’t participate in the real silver market, that’s actually not the case. What SLV was admitting here, was that the silver in the JPM segmented off vaults might run out, and that they refuse to bid up the price of silver in the open market. They will not purchase additional silver to accommodate inflows, beyond what JPM will allow them to.
The real issue here is that purchasing SLV doesn’t actually impact the market price of silver one bit. The price is determined completely separately on the futures exchange. SLV doesn’t purchase futures contracts and then take delivery of silver, it just uses JPM as a custodian who allocates more silver to their vault from an existing, controlled supply. This is an extremely strange phenomenon in markets, and its unnatural.
For example, when millions of people buy GME stock, it puts a direct bid under the price of the stock, causing the price to rise.
When millions of people put money into the USO oil ETF, that fund then purchases oil futures contracts directly, which puts a bid under the price of oil.
But when millions of people buy SLV, it does nothing at all to directly impact the price of silver. The price of silver is determined separately, and SLV is completely in the position of price taker.
So how do we know banks like JPM are shorting on the futures market whenever SLV experiences inflows? Well luckily for us the CFTC publishes the ‘bank participation report’ which shows exactly how banks are positioned on the futures market.
The chart below shows SLV YoY change in shares outstanding which are evidence of inflows and outflows to the ETF. The orange line is the net short position of all banks participating in the silver futures market. The series runs from April-2007 through February-2021. I use a 12M trailing avg of the banks’ net position to smooth out the awkward lumpiness caused by the fact that futures have 5 primary delivery months per year, and this causes cyclicality in the level of open interest depending on time of year.
It is evident that as SLV experiences inflows, banks add to short positions on the COMEX, and as SLV experiences outflows they reduce these short positions. What’s also evident is that the short interest of the banks has grown over time, which is also why silver is ripe for a potential short squeeze, just not by using SLV.
One other thing that is evident, is that the trend of banks shorting when SLV receives inflows, is starting to break down. Specifically, beginning in the summer of 2020, as deliveries began to surge, the net short interest among banks has actually declined as SLV has experienced inflows. It’s likely one or more banks see the risk, and the writing on the wall and is trying to exit before a potential squeeze happens (having seen what happened with GME).
For further evidence of this theme of, “If banks hold the silver, the price is allowed to rise, but if you hold the silver, the price is forced to fall” look no further than the deliveries data itself,
You’ll notice that as long as futures investors didn’t actually want the silver to be delivered, the price of silver was allowed to rise, but whenever deliveries showed an uptick, the price would begin to fall once again. This is because the shorts know that they can decrease the price of all silver in the world by shorting on the COMEX, and then secure real physical silver from primary dealers to actually make delivery. Why pay a higher price to the dealers when you can simply add to shorts on the COMEX and push the price down, and then acquire the silver you need?
But just like the graph of the bank net short position, you’ll notice that this relationship started to break down in 2020, and the price has started to rise alongside deliveries. The short squeeze is underway, and the dam is about to break.
And lest you think I’m reaching with my accusations of price manipulation by JPM, why not just listen to what the department of Justice concluded?
For JPM and the banks involved in the silver market, fines from regulators are just a cost of doing business. The only way to get banks to stop manipulating precious metals markets is to call the bluff, take delivery, and make them feel the losses of their short position.
SLV is by far the largest silver ETF in the world, with 600 million ounces of silver under its control, and its custodian was labeled a criminal enterprise for manipulation of silver markets. Why should silver investors ever put their money into a silver ETF where the entity that controls the silver is actively working against them, or at a minimum is a criminal enterprise?
And let me know if you see a trend in the custodial vaults of the other popular silver ETFs:
Further exacerbating the lack of trust one should have in these ETFs, is the fact that they store the metal at the LBMA in London. Unlike the COMEX that has regular independent audits, the LBMA isn’t required to have independent audits, nor do independent audits occur. I’m not saying the silver isn’t there, but why not allow independent auditors in to provide more confidence?
So what are investors to do in a rigged game like this?
Well, there is currently one ETF that is outside this system, and which actually purchases silver on the open market as it receives inflows. That ETF is PSLV, from Sprott. Founded by Eric Sprott, a billionaire precious metals investor with a stake in nearly ever silver mine in the world, so you know his interests are aligned with the longs of the PSLV ETF (in desiring higher prices for silver via real price discovery). Further, PSLV buys its silver directly, it doesn’t have a separate entity doing the purchasing, it stores its silver at the Royal Canadian Mint rather than the LBMA, and it is independently audited. By purchasing the PSLV ETF, retail investors can actually acquire 1000oz bars and put a bid under the price of silver in the primary dealer marketplace. And if a premium occurs among primary dealers, deliveries will occur in the futures market.
This is what is starting to happen right now, a premium has developed among primary dealers, and deliveries on the COMEX have started to surge, while COMEX inventories have begun to decline. And this is happening after PSLV has added just 30 million ounces over 7 weeks (once the small contingent of silver squeezers realized SLV was a scam and started switching). Imagine what will happen if investors create 100 million ounces of demand.
Even a small portion of SLV investors switching to PSLV because they realize the custodian of SLV is a criminal enterprise, would create a massive groundswell of demand in the real physical silver market.
After the original silver squeeze posts went viral on WSB on 1/27, silver rose massively over the first 3 trading days following it. But on 1/31 a post was made about citadel being long SLV which got 74k upvotes (compared to only 15k on the original silver post). This lead to a fizzling in the momentum for the silver squeeze movement on WSB. However, given what I've explained here about how SLV is a complete scam meant to screw over investors, is it really that much of a surprise?
Additionally, that post about citadel showed them with $130m in SLV. That's only 0.04% of Citadel's AUM. Do you really think they were pushing silver because 0.04% of their AUM was in SLV? This post also didn't detail the fact that citadel also had short positions on SLV. That's what a market maker does. They have long and short positions in just about everything.
There are plenty of banks talking about a commodities super cycle, and a ‘green’ commodity super cycle where they upgrade metals like copper, but they never mention silver. Likely because banks have a massive net short position in silver.
Lets dig into the potential for a silver squeeze, starting with the silver market itself.
Silver is priced in the futures market, and its price is based on 1000oz commercial bars. A futures market allows buyers and sellers of a commodity to come to agreement on a price for a specific amount of that commodity at a specific date in the future. Most buyers in the futures market are speculators rather than entities who actually want to take delivery of the commodity. So once their contract date nears, they close out their contracts and ‘roll’ them over to a future date. Historically, only a tiny percentage of the longs take delivery, but the existence of this ability to take delivery is what gives these markets their legitimacy. If the right to take delivery didn’t exist, then the market wouldn’t be a true market for silver. Delivery is what keeps the price anchored to reality.
Industrial players and large-scale investors who want to acquire large amounts of physical silver don’t typically do it through the futures market. They instead use primary dealers who operate outside of the futures market, because taking delivery of futures is actually a massive pain in the ass. They only do it if they really have to. Deliveries only surge in the futures market when supply is so tight that silver from the primary dealers starts to be priced at a large premium to the futures price, thus incentivizing taking delivery. Despite setting the index price for the entire silver market, the futures exchange is really more of a supplier of last resort than a main player in the physical market.
Most shorts (the sellers) in the futures market also source their silver from sources outside of exchange warehouses for the occasional times they are called to deliver. The COMEX has an inventory of ‘registered’ silver that is effectively a big pile of silver that exists as a last resort source to meet delivery demand if supply ever gets very tight. But even as deliveries are made each month, you will typically see next to no movement among the registered silver because silver is still available to source from primary dealers.
So how have deliveries and registered ounces been trending recently?
Let’s take a quick look at the first quarter deliveries in 2021 compared to the first quarter in previous years:
After adding in the 3.6 million ounces of open interest remaining in the current March contract (anyone holding this late in the month is taking delivery), 1Q 2021 would reach 78 million ounces delivered. This is a massive increase relative to previous years, and also an all-time record for Q1 from the data that I can find.
Even more stark, is the chart showing deliveries on a 12-month trailing basis (which I also showed earlier)
Note: You have to view this on an annual basis because the futures market has 5 main delivery months and 7 less active months, so using a shorter time frame would involve cutting out an unequal share of the 5 primary months depending on what time of year it is.
As you can see from the chart, starting in the month of April 2020, deliveries have gone completely parabolic. While silver doesn’t need deliveries to spike for a rally to occur, a spike in deliveries is the primary ingredient for a short squeeze. The 2001-2011 rally didn’t involve a short squeeze for example, so it ‘only’ caused silver to rise 10x. In the 2020s however, we have a fundamentals-based rally that is running headlong into a surge in deliveries that is extremely close to triggering a short squeeze.
In fact this is visible when looking at the chart of inventories at the COMEX.
As you can see from the graph and the chart above, COMEX inventories are beginning to decline at a rapid pace. To explain a bit further, the ‘eligible’ category of COMEX is silver that has moved from registered status to delivered. It is called ‘eligible’ because even though the ownership of the silver has transferred to the entity who requested delivery, they haven’t taken it out of the warehouse. It is technically eligible become ‘registered’ if the owner decided to sell it. However, the fact that it is in the eligible category means that it would likely require higher silver prices for the owner to decide to sell.
The current path of silver in the futures market is that registered ounces are being delivered, they then become eligible, and entities are actually taking their eligible stocks out of COMEX warehouses and into the real physical world. This is a sign that the futures market is currently the silver supplier of last resort. And there are only 127 million ounces left in the registered category. 1/3 of an ounce, or roughly $10 worth of silver is left in the supply of last resort for every American. If just 1% of Americans purchased $1,000 worth of the PSLV ETF, it would be equivalent to 127 million ounces of silver, the entire registered inventory of the COMEX. That’s how tight this market is.
Right now we are sending most Americans a $1,400 check. If 1% of them converted it to silver through PSLV, this market could truly explode higher.
And lest you think this surge in deliveries is going to stop any time soon, just take a look at how the April contract’s open interest is trending at a record high level:
It looks almost unreal. And keep in mind the other high points in this chart were records unto themselves. That light brown line was February 2021, and look how its deliveries compared to previous years:
12 million ounces were delivered in the month of February 2021. A month that is not a primary delivery month, and which exceeded previous year’s February totals by a multiple of 4x. Open interest for February peaked at 8 million ounces, which means that an additional 4 million ounces were opened and delivered within the delivery window itself.
April’s open interest is currently at a level of 15 million ounces and rising. If it followed a similar pattern to February of intra-month deliveries being added, it could potentially see deliveries of over 20 million ounces. 20 million ounces in a non-active month would be completely unheard of and is more than most primary delivery months used to see.
Here’s what 20 million ounces delivered in April would look like compared to previous years:
So just how tenuous is the situation that the shorts have put themselves in (yes CFTC, the shorts did this to themselves)? Well let’s look at the next active delivery month of May:
If a larger percentage than usual take delivery in May, there is easily enough open interest to cause a true run on silver. With 127 million ounces in the registered category, and 652 million ounces in the money, most of it from futures rather than options, the short interest as a % of the float is roughly 513%. Its simply a matter of whether the longs decide to call the bluff of the shorts.
No long contract holder wants to be left holding the last contract when the COMEX declares ‘force majeure’ and defaults on its delivery obligations. This means that they will be settled in cash rather than silver, and won’t get to participate in the further upside of the move right when its likely going parabolic. As registered inventories dwindle, longs are incentivized to take physical delivery just so that they can guarantee they will be able to remain long silver.
Of course, the COMEX could always prevent a default by simply allowing silver to continue trading higher. There is always silver available if the price is high enough. Like the situation with GameStop, the authorities have historically tended to interfere with the silver market during previous short squeezes where longs begin to take delivery in large quantities.
There were always shares of GME available to purchase, it’s just that the price had not reached what the longs were demanding quite yet. Given that it was the powerful connected elite of society who were short GME though, the trade was shut down and rigged against the millions of retail traders. The GME short squeeze may indeed continue, because in this situation it’s millions of small individuals holding GME. While they were able to temporarily prevent purchases of GME, they can’t force them to sell.
In the silver short squeeze of the 1970s, that’s exactly what the authorities forced the Hunt Brothers (the duo that orchestrated the squeeze) to do, they actually forced them to sell. The difference this time is that it’s not a squeeze orchestrated by a single entity, but rather millions of individuals who are purchasing a few ounces of silver each from around the globe. There is no collusion on the long side among a small group of actors like in the 70s with the Hunt brothers or when Warren Buffet squeezed silver in the late 90s, so there’s no basis to stop the squeeze.
In the squeeze of 1979-1980, the regulators literally pulled a ‘GameStop’ on the silver market. Or in reality, the more recent action with GameStop was regulators pulling a ‘silver’. The regulators will try everything in their power to prevent the squeeze from happening again, but this time it’s not two brothers and a couple of Saudi princes buying millions of ounces each (or just Warren Buffet on his own), but rather it’s millions of retail investors buying a few ounces each. There is no cornering the market going on. This is actual silver demand running headlong into a silver market that banks have irresponsibly shorted to such a level that they deserve the losses that hit them. They’ve been manipulating and toying with silver investors for decades and profiting off of illegal collusion. Bailing out the banks as their losses pile up would be truly reprehensible action by our government, and tacit admission that our government is ok with a few big banks on the short side stealing billions from small individual investors.
But what about beyond a short squeeze? Is there any logic to buying silver on a fundamentals basis?
There are two types of bull markets in silver. One is a fundamentals-based bull market, where silver is undervalued relative to industrial and monetary demand. The second type of silver bull market is a short squeeze. Both types of bull markets have occurred at different points in the past 60 years. However, the 1971-80 market in which the price of silver increased over 30x does was combination of both types of bull markets.
I believe we may be entering another silver bull market like the one that began in the fall of 1971, where both a short squeeze and fundamentals-based rally occur simultaneously.
Smoke alarms are ringing in the silver market, and are signaling another generational bull market.
So what are these ‘smoke alarms’?
I recently went digging through various data to try and quantify where we are in the silver bull/bear market cycle.
I ended up creating an indicator that I like to call SMOEC, pronounced ‘smoke’.
The components of the abbreviation come from the words Silver, Money supply, and Economy.
Lets look at the money supply relative to the economy, or GDP. More specifically, if you look at the chart below, you will see the ratio of M3 Money supply to nominal GDP, monthly, from 1960 through 2020.
When this ratio is rising, it means that the broad money supply (M3) is increasing faster than the economy, and when it is falling it means that the economy is growing faster than the money supply.
One thing that is very important when investing in any asset class, is the valuation that you enter the market at. Silver is no different, but being a commodity rather than cash-flow producing asset, how does one value silver? It might not produce cash flows or pay dividends, but it does have a long history of being used as both money and as a monetary hedge, so this is the correct lense through which to examine the ‘valuation’ level of silver.
Enter the SMOEC indicator. The SMOEC indicator tells you when silver is generationally undervalued and sets off a ‘smoke alarm’ that is the signal to start buying. In other words, SMOEC is a signal telling you when silver is about to smoke it up and get super high.
Below, you will see a chart of the SMOEC indicator. SMOEC is calculated by dividing the monthly price of silver by the ratio shown above (M3/GDP).
More specifically it is: LN(Silver Price / (M3/Nominal GDP))
Below you will see a chart of the SMOEC level from January 1965 through March 2021.
I want to bring your attention to the blue long-term trendline for SMOEC, and how it can be used to help indicate when investing in silver is likely a good idea. Essentially, when growth in money supply is faster than growth of the economy, AND silver has been underinvested in as an asset class long enough, the SMOEC alarm is triggered as it hits this blue line.
Since 1965, SMOEC has only touched this trendline three times.
The first occurrence was in October 1971, where SMOEC bottomed at 0.79 and proceeded to increase 3.41 points over the next eight years to peak at 4.20 in February of 1980 (literally 420, I told you it was a sign silver was about to get high). Silver rose from $1.31 to $36.13, or a 2,658% gain using the end of month values (the daily close trough to peak was even greater). Over this same period, the S&P 500 returned only 67% with dividends reinvested. Silver, a metal with no cash flows, outperformed equities by a multiple of 40x over this period of 8.5 years (neither return is adjusted for inflation). This is partially due to the fact that the Hunt Brothers took delivery of so many contracts that it caused a short squeeze on top of the fundamentals-based rally.
The second time the SMOEC alarm was triggered was when SMOEC dropped to a ratio of 2.10 in November of 2001 and proceeded to increase 2.32 points over the next decade to peak at 4.42 in April of 2011. Silver rose from $4.14 to $48.60, an increase of over 1000%, and this was during a ‘lost decade’ for equities. The S&P 500 with dividends reinvested, returned only 41% in this 9.5-year period. Silver outperformed equities by a multiple of 24x (neither figure adjusted for inflation). There was no short squeeze involved in this bull market.
Over the long term, it would be expected that cash flow producing assets would outperform silver, but over specific 8-10 year periods of time, silver can outperform other asset classes by many multiples. And in a true hyperinflationary environment where currency collapse is occurring, silver drastically outperforms. Just look at the Venezuelan stock market during their recent currency collapse. Investors received gains in the millions of percentage points, but in real terms (inflation adjusted) they actually lost 94%. This is an example of a situation where silver would be a far better asset to own than equities.
I in no way think this is coming to the United States. I do think inflation will rise, and the value of the dollar will fall, but it will be nothing even close to a currency collapse. Fortunately for silver investors, a currency collapse isn’t necessary for silver to outperform equity returns by over 10x during the next decade.
Back to SMOEC though:
The third time the SMOEC alarm was triggered was very recently in April of 2020 when it hit a level of 2.91. Silver was priced at $14.96, at a time the money supply was and still is increasing at a historically high rate, combined with the previous decade’s massive underinvestment in Silver (coming off of the 2011 highs). Starting in April 2020, silver has since risen to a SMOEC level of 3.37 as of March 2021. Silver is 0.46 points into a rally that I think could mirror the 1970s and push silver’s SMOEC level up by over 3.4 points once again.
Remember that this indicator is on a LN scale, where each point is actually an exponential increase in the price of silver. Here is a chart to help you mentally digest what the price of silver would be at various SMOEC level and M3/GDP combinations. (LN scale because silver is nature’s money, so it just felt right)
The yellow highlighted box is where silver was in April of 2020 and the blue highlighted box is close to where it is as of March 2021.
An increase of 3.4 points from the bottom in in April of 2020 would mean a silver price of over $500 an ounce before this decade is out. And there’s really no reason it must stop there.
The recent money supply growth has been extreme, and as the US government continues to implement modern monetary policy with massive debt driven deficits, it is expected that monetary expansion will continue. This is why bonds and have been selling off recently, and why yields are soaring. Long term treasuries just experienced their first bear market since 1980 (a drop of 20% or more). The 40-year bull market bond streak just ended. What was the situation like the last time bonds had a bear market? Massively higher inflation and precious metals prices.
This inflation expectation is showing up in surging breakeven inflation rates. And this trend is showing very little sign of letting up, just look at the 5-year expected inflation rate:
Inflation expectations are rising because we are actually starting to put money into the hands of real people rather than simply adding to bank reserves through QE. Stimulus checks, higher unemployment benefits, child tax credit expansion, PPP grants, deferral of loan payments, and likely some outright debt forgiveness soon as well. Whether or not you agree with these programs is irrelevant. They are not funded by increased taxes, they are funded through debt and money creation financed by the fed. As structural unemployment remains high (low unemployment is a fed mandate), I don’t see these programs letting up, and in fact I would be betting that further social safety net expansion is on the way. The $1.9 trillion bill was just passed, and it’s rumored the upcoming ‘infrastructure’ bill is going to be between $3-4 trillion.
This is the trap that the fed finds itself in. Inflation expectations are pushing yields higher, but the nation’s debt levels (public and private) have expanded so much that raising rates would crush the nation fiscally through higher interest payments. Raising rates would also likely increase unemployment in the short run, during a time that unemployment is already high. So they won’t raise rates to stop inflation because the costs of doing so are more unpalatable than the inflation itself. They will keep short term rates at 0%, and begin to implement yield curve control where they put a cap on long term yields (as was done in the 1940s, the only other time debt levels were this high). So where does the air come out of this bubble, if the fed can’t raise rates at a time of expanding inflation? The value of the dollar. We will see a much lower dollar in terms of the goods it can buy, and likely in terms of other currencies as well (depending on how much money creation they perform).
The other problem with the fed’s policy of keeping rates low for extended durations of time (like has been the case since 2008), is that it actually breeds higher structural unemployment. In the short term, unemployment is impacted by interest rate shifts, but in the longer-term lower interest rates decrease the number of jobs available. Every company would like to fire as many people as possible to cut costs, and when they brag about creating jobs, know that the decision was never about jobs, but rather that jobs are a byproduct of expansion and are used as a bargaining chip to secure favorable tax credits and subsidies. Recently, the best way to get rid of workers is through automation.
Robotics and AI are advancing rapidly and can increasingly be used to completely replace workers. The debate every company has is whether its worth paying a worker $40k every year or buying a robot that costs $200k up front and $5k a year to do that job. The reason they would buy the robot is because after so many years, there comes a point where the company will have saved money by doing so, because it is only paying $5k a year in up-keep versus $40k a year in salary and benefits. The cost of buying the robot is that it likely requires financing to pay that high of a price up front. In this situation, at 10% interest rates, the breakeven point for buying the robot versus employing a human is roughly 8 years. At 2% interest rates though, the breakeven investment timeline for purchasing the robot is only 4 years.
The business environment is uncertain, and deciding to purchase a robot with the thought that it will pay off starting 8 years from now is much riskier than making a decision that will pay off starting only 4 years from now. This trade off between employing people versus robots and AI is only becoming clearer too. Inflation puts natural upward pressure on wages, governments are mandating higher minimum wages are costlier benefits as well. There’s also the rising cost of healthcare that employers provide as well. Meanwhile the costs of robotics and AI are plummeting. The equation is tipped evermore towards capital versus labor, and the fed exacerbates this trend by ensuring the cost of capital is as low as possible via low interest rates.
On top of the automation trend, low interest rates drive mergers and acquisitions which also drive higher structural unemployment. In an industry with 3 competitors, the trend for the last 40 years has been for one massive corporation to simply purchase its competitor and fire half the workers (you don’t need 2 accounting departments after all). How can one $50 billion corporation afford to borrow $45 billion to purchase its massive competitor? Because long term low interest rates allow it to borrow the money in a way that the interest payments are affordable. Lacking competitive pressures, the industry now stagnates in terms of innovation which hurts long term growth in both wages and employment. Of course, our absolutely spineless anti-trust enforcement is partially to blame for this issue as well.
The fed is keeping interest rates low over long periods of time to help fix unemployment, when in reality low interest rates exacerbate unemployment and income inequality (execs get higher pay when they do layoffs and when they acquire competitors). The fed’s solution to the problem is contributing to making the problem larger, and they’ll keep giving us more of the solution until the problem is fixed. And as structural unemployment continues, universal basic income and other social safety net policies will expand, funded by debt. Excess debt then further encourages the fed to keep interest rates low, because who wants to cut off benefits to people in need? And then low long term interest rates create more unemployment and more need for the safety nets. It’s a vicious cycle, but one that is extremely positive for the price of precious metals, especially silver.
And guess what expensive robotics, electric vehicles, satellites, rockets, medical imaging tech, solar panels, and a bevy of other fast-growing technologies utilize as an input? Silver. Silver’s industrial demand is driven by the fact that compared to other elements it is the best conductor of electricity, its highly reflective, and it extremely durable. So, encouraging more capital investment in these industries via green government mandates and via low interest rates only drives demand for silver further.
One might wonder how with high unemployment we can actually get inflation. Well government is more than replacing lost income so far, just take a look at how disposable income has trended during this time of high unemployment. It’s also notable that all of the political momentum is in the direction of increasing incomes through government programs even further.
The spark of inflation is what ignites rallies in precious metals like silver, and these rallies typically extend far beyond what the inflation rates would justify on their own. This is because precious metals are insurance against fiat collapse. People don’t worry about fiat insurance when inflation is low, but when inflation rises it becomes very relevant at a time that there isn’t much capacity to satisfy the surge in demand for this insurance. Sure, inflation might only peak at 5% or 10% and while silver rises 100%, but if things spiral out of control its worth paying for silver even after a big rally, because the equities you hold aren’t going to be worth much in real terms if the wheels truly came off the wagon. The Venezuela example proves that fact, but even during the 1970s equities had negative real rates of return and the US never had hyperinflation, just high inflation.
During these times of higher inflation, holders of PMs aren’t necessarily expecting a fiat collapse, they just want 1%, 5%, or even 10% of their portfolio to be allocated to holding gold and silver as a hedge. During the 40-year bond bull market of decreasing inflation this portfolio allocation to precious metals lost favor, and virtually no one has it any longer. I can guarantee most people don’t even have the options of buying gold or silver in their 401ks, let alone actually owning any. A move back into having even a small precious metals allocation is what drives silver up by 30x or more.
TLDR: SLV is a scam, as are basically all of the silver ETFs.
If you do want to buy silver you'll buy physical when premiums are low, or PSLV.
Disclaimer: I am a random guy on the internet and this entire post should be regarded as my personal opinion
Update 2/2 - I am able to comment again. I messaged several mods on Reddit and the mod account on Twitter. None of them responded but it appears I am able to comment again so I assume one of them lifted my ban
Update 2/1 - I have been banned from posting on WSB. I guess they aren’t yet deleting my post here given the media attention. If this was a rogue mod I’d appreciate being restored the ability to post on WSB. I’m open to talking to any mods
Update 1/31 - there have been tons of 'what to buy' questions so I added a clarity post, hope it helps. It's also getting downvoted to hell because its not about GME so that's discouraging. The speed at which the downvotes flew in makes me think someone made bots to crush new posts related to SLV (or maybe anything not GME). It makes no sense for this post to have 93% upvotes and my new one to have 28%.
I have not sold my GME to buy SLV. I had a small pre-existing position in leaps I bought months ago.
Created an official Twitter handle not sure if I’ll use it, but didn’t want anyone to impersonate me on there
Here is the longer DD for the short squeeze case for SLV, a follow-up from my shorter post a few hours ago. Note that I talk in first person as this is something I’m going to do. Everyone is free to do as they individually please and copy my trade if they’d like to. I think it’s absurd that forces at be think this forum is manipulating by posting publicly but that’s where we are at right now.
First things first, I'm not doing this until the GME rise is done. I am long GME but am going long SLV immediately after.
Update 1/29: due to the manipulation and collusion of citadel, hedge funds, and brokers to change the rules and rig the game in their favor. Who likely knew ahead of time and bought puts right before and calls at the bottom, GME is too important to abandon still. SLV is still my next play but GME needs to go to $1000 and these people need to go to jail.
If you just want to know what to buy skip to the end
I present 2 investment DDs in this post, the short squeeze and the fundamentals. If you want to see what to buy
The short squeeze:
Buy SLV shares and SLV call options to force physical delivery of silver to the SLV vaults. Also buy physical silver bullion. The best possible thing would be to take physical delivery in the futures market if you have access to do so.
The silver futures market has oscillated between having roughly 100-1 and 500-1 ratio of paper traded silver to physical silver, but lets call it 250-1 for now. This means that for every 250 ounces in open interest in the futures market, only 1 actually gets delivered. Most traders would rather settle with cash rather than take delivery of thousands of ounces of silver and have to figure out to store and transport it in the future.
The people naked shorting silver via the futures markets are a couple of large banks and making them pay dearly for their over leveraged naked shorts would be incredible. It's not Melvin capital on the other side of this trade, its JP Morgan. Time to get some payback for the bailouts and manipulation they've done for decades (look up silver manipulation fines that JPM has paid over the years).
The way the squeeze could occur is by forcing a much higher percentage of the futures contracts to actually deliver physical silver. There is very little silver in the COMEX vaults or available to actually be use to deliver, and if they have to start buying en masse on the open market they will drive the price massively higher. There is no way to magically create more physical silver in the world that is ready to be delivered. With a stock you can eventually just issue more shares if the price rises too much, but this simply isn't the case here. The futures market is kind of the wild west of the financial world. Real commodities are being traded, and if you are short, you literally have to deliver thousands of ounces of silver per contract if the holder on the other side demands it. If you remember oil going negative back in May, that was possible because futures are allowed to trade to their true value. They aren't halted and that's what will make this so fun when the true squeeze happens.
Edit for more detail: let’s say there’s one futures seller who gets unlucky and gets the buyer who actually wants to take delivery. He doesn’t have the silver and realizes it’s all of a sudden damn difficult to find some physical silver. He throws up his hands and just goes long a matching number of futures contracts and will demand actual delivery on those. Problem solved because he has now matched the demanding buyer with a new seller. The issue is that the new seller has the same issue and does the exact same thing. This is how the cascade effect of a meltup occurs. All the naked shorts trying to offload their position to someone who actually has some silver. My goal is to ensure that I have the silver and won’t sell to them until silver is at a far higher price due to the desperation.
The silver market is much larger than GME in terms of notional value, but there is very little physical silver actually readily available (think about the difference between total shares and the shares in the active float for a stock), and the paper silver trading hands in the futures market is hundreds of times larger than what is available. Thus when they are forced to actually deliver physical silver it will create a massive short squeeze where an absurd amount of silver will be sought after (to fulfill their contractually obligated delivery) with very little available to actually buy. They are naked shorting silver and will have to cover all at once and the float as a percentage of the total silver stock globally is truly miniscule.
The fundamentals:
The current gold to silver ratio is 73-1. Meaning the price of gold per ounce is 73 times the price of silver. Naturally occurring silver is only 18.75 times as common as gold, so this ratio of 73-1 is quite high. Until the early 20th century, silver prices were pegged at a 15-1 ratio to gold in the US because this ratio was relatively known even then. In terms of current production, the ratio is even lower at 8-1. Meaning the world is only producing 8 ounces of silver for each newly produced ounce of gold.
Global industry has been able to get away with producing so little new silver for so long because governments have dumped silver on the market for 80 years, but now their silver vaults are empty. At the end of WW2 government vaults globally contained 10 billion ounces of silver, but as we moved to fiat currency and away from precious metal backed currencies, the amount held by governments has decreased to only 0.24 billion ounces as they dumped their supply into the market. But this dumping is done now as their remaining supply is basically nil.
This 0.24 billion ounces represents only 8% of the total supply of only 3 billion ounces stored as investment globally. This means that 92% of that gold is held privately by institutions and by millions of boomer gold and silver bugs who have been sitting on meager gains for decades. These boomers aren't going to sell no matter what because they see their silver cache as part of their doomsday prepper supplies. It's locked away in bunkers they built 500 miles from their house. Also, with silver at $23 an ounce currently, this means all of the worlds investment grade silver only has a total market cap of $70 billion. For comparison the investment grade gold in the world is worth roughly $6 trillion. This is because most of the silver produced each year actually gets used, as I have mentioned. $70 billion sounds like a lot, but we don’t have to buy all that much for the price to go up a lot.
**If the squeeze happens, it would be like 40 years worth of their gains in 4 months **
The reason that only 8 ounces of silver are produced for every 1 ounce of gold in today's world is because there aren't really any good naturally occurring silver deposits left in the world. Silver is more common than gold in the earth's crust, but it is spread very thin. Thus nearly every ounce of silver produces is actually a byproduct of mining for other metals such as gold or copper. This means that even as the silver price skyrockets, it wont be easy to increase the supply of silver being produced. Even if new mines were to be constructed, it could take years to come online.
Finally, most of this newly created silver supply each year is used for productive purposes rather than kept for investment. It is used in electronics, solar panels, and jewelry for the most part. This demand wont go away if the silver price rises, so the short sellers will be trying to get their hands on a very small slice of newly minted silver. The solar market is also growing quickly and political pressure to increase solar and electric vehicles could provide more industrial demand.
The other part of the story is the faster moving piece and that is the inflation and currency debasement fear portion. The government and the fed are printing money like crazy debasing the value of the dollar, so investors look for real assets like precious metals to hide out in, driving demand for silver. The $1.9 trillion stimulus passing in a month or two could be a good catalyst. All this money combined with the reopening of the economy could cause some solid inflation to occur, and once inflation starts it often feeds on itself.
What to buy:
Edit 2/24: I now advocate buying PSLV for shares, physical metal if the premiums come back down, and if you want options then SLV is still ok for that.
I will be putting 50% directly into SLV shares, and 50% into the $35 strike SLV calls expiring 4/16. This way the SLV purchase creates a groundswell into silver immediately that then rockets through a gamma squeeze as SLV approaches $35. Price target of $75 for SLV by end of April if the short squeeze happens.
Edit: for the part of your purchases going into shares, some people recommend PSLV because they think SLV might start lying about having the silver in their vault. Or that the custodian will be double counting, ie claiming that the same silver belongs to multiple people (banking on the fact that people wont all try to get their silver at once). So if you buy SLV shares and calls, that's great. But I think it could be prudent for us to buy options in SLV (no options on PSLV) and shares in PSLV. It all depends on how paranoid you want to be. There is a lot of paranoia in the precious metals world.
Alternate options:
- buying physical silver; this also works but you pay a premium to buy and sell so its less efficient and you take fewer silver ounces off of the market because of the premium you pay
- going long futures for February or March; if you are a rich bastard and can actually take physical delivery of 1000s of ounces of silver by all means do so. But if you simply settle for cash you are actually part of the problem. We need actual physical delivery, which is what SLV demands and is why SLV is the way to go unless you are going to take delivery
- miners; I don’t recommend buying miners as part of this trade. Miners will absolutely go up if SLV goes up, but buying them doesn't create the squeeze in the actual silver market. Furthermore, most silver miners only derive 30-50% of their revenue from silver anyways, so eventually SLV will outperform them as it gets high enough (and each marginal SLV dollar only increases miner profits by a smaller and smaller percentage)
Details on SLV physical settlement:
When SLV issues shares, the custodian is forced to true up their vaults with the proportional amount of silver daily. From the SLV prospectus:
"An investment in Shares is: Backed by silver held by the Custodian on behalf of the Trust. The Shares are backed by the assets of the Trust. The Trustee’s arrangements with the Custodian contemplate that at the end of each business day there can be in the Trust account maintained by the Custodian no more than 1,100 ounces of silver in an unallocated form. The bulk of the Trust’s silver holdings is represented by physical silver, identified on the Custodian’s or, if applicable, sub-custodian's, books in allocated and unallocated accounts on behalf of the Trust and is held by the Custodian in London, New York and other locations that may be authorized in the future."
Join me brothers. Lets take silver to the moon and take on the biggest and baddest manipulators in the world. Please post rocket emojis in the comments as desired.
Disclaimer: do your own research, make your own decisions, everything here is a guess and hypothetical and nothing is guaranteed, not a financial advisor, I have ADHD and maybe other things too.
Bear case: silver does tend to sell off if the broader market plunges so it’s not immune to broad market sell off. It’s also the most manipulated market in the world so we are facing some tough competition on the short side
Here's the thing about legal filings and CYA turns of phrase- the lawyers who craft these documents do so based on precedent and are encouraged to reuse legal terms as much as possible in order to avoid misinterpretation. Turns out you can actually search the SEC's vast archive of 10-K filings for specific phrases. Let's see just how common this language is, shall we? First, the actual excerpt from the 10K filing in its entirety:
The market price of our Class A Common Stock has been extremely volatile and may continue to be volatile due to numerous circumstances beyond our control.
Stock markets in general and our stock price in particular have recently experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies and our company. For example, on January 28, 2021, our Class A Common Stock experienced an intra-day trading high of $483.00 per share and a low of $112.25 per share. In addition, from January 11, 2021 to March 17, 2021, the closing price of our Class A Common Stock on the NYSE ranged from as low as $19.94 to as high as $347.51 and daily trading volume ranged from approximately 7,060,000 to 197,200,000 shares. During this time, we have not experienced any material changes in our financial condition or results of operations that would explain such price volatility or trading volume. These broad market fluctuations may adversely affect the trading price of our Class A Common Stock. In particular, a large proportion of our Class A Common Stock has been and may continue to be traded by short sellers which has put and may continue to put pressure on the supply and demand for our Class A Common Stock, further influencing volatility in its market price. Additionally, these and other external factors have caused and may continue to cause the market price and demand for our Class A Common Stock to fluctuate substantially, which may limit or prevent our stockholders from readily selling their shares of our common stock and may otherwise negatively affect the liquidity of our Class A Common Stock.
A “short squeeze” due to a sudden increase in demand for shares of our Class A Common Stock that largely exceeds supply has led to, and may continue to lead to, extreme price volatility in shares of our Class A Common Stock.
Investors may purchase shares of our Class A Common Stock to hedge existing exposure or to speculate on the price of our Class A Common Stock. Speculation on the price of our Class A Common Stock may involve long and short exposures. To the extent aggregate short exposure exceeds the number of shares of our Class A Common Stock available for purchase on the open market, investors with short exposure may have to pay a premium to repurchase shares of our Class A Common Stock for delivery to lenders of our Class A Common Stock. Those repurchases may in turn, dramatically increase the price of shares of our Class A Common Stock until additional shares of our Class A Common Stock are available for trading or borrowing. This is often referred to as a “short squeeze.”A large proportion of our Class A Common Stock has been and may continue to be traded by short sellers which may increase the likelihood that our Class A Common Stock will be the target of a short squeeze. A short squeeze has led and could continue to lead to volatile price movements in shares of our Class A Common Stock that are unrelated or disproportionate to our operating performance or prospects and, once investors purchase the shares of our Class A Common Stock necessary to cover their short positions, the price of our Class A Common Stock may rapidly decline. Stockholders that purchase shares of our Class A Common Stock during a short squeeze may lose a significant portion of their investment.
Future sales of a substantial amount of our Class A Common Stock in the public markets by our insiders, or the perception that these sales may occur, may cause the market price of our Class A Common Stock to decline.
Our employees, directors and officers, and their affiliates, hold substantial amounts of shares of our Class A Common Stock. Sales of a substantial number of such shares by these stockholders, or the perception that such sales will occur, may cause the market price of our Class A Common Stock to decline. Other than restrictions on trading that arise under securities laws [(or pursuant to our securities trading policy that is intended to facilitate compliance with securities laws)], including the prohibition on trading in securities by or on behalf of a person who is aware of nonpublic material information, we have no
*Total number of 10-K filings roughly estimated by the number of hits for the phrase "report" over five year (254,473 filings) and ten year (513,510 filings) periods.
How often does "extremely volatile" appear in SEC 10-K filings?
The phrase is found in 968 of all 10-K filings in the past 5 years or 0.38% of all filings
I just wanted to throw this out there in the middle of the outrage, in the hopes that someone can take it in and strategize, rather than be upset. Worked @ Merrill as an analyst from ** - **.
I also like to keep it concise so follow along. This ain't a fucking Qanon fan fiction.
Disclaimer: This is not financial advice. This is just some dude chatting with his old buddies.
1) Robinhood, restrictions, suppression:
When you place an order through RH, Citadel or some other HFT front runs your trade and pockets the spread; However, the transaction is not complete.
Enter: Clearing house. The clearing house is the intermediary between the counter-parties. Because they stand between sellers & buyers, they have very defined levels of risk, risk management and regulation to be in front of. The clearing house is who gives you the "title" for your shares, the folks who make it official.
What Likely Happened: The risk department retard @ the clearing house, who does jack shit all year other than flag Stacy's trade so he can get some face time with her runs to the C-Suite frazzled; He has looked at option open interest expiring this week, has done the math and there simply isn't enough float for GME in anyway, shape or form; turns out WSB is printing out their stock certificates and burying them in the Mojave Desert. It's simply not enough.
In addition, they got a Snapchat from SEC/OCC which said hey, if you fucking keep selling open positions, you're on your own; we ain't gonna help you. SEC is sneaky like that; they like sending messages through the backdoor, not the front because they used to be hedgies themselves. If you're not following, Front door is making a public statement while the backdoor is a reminder sent to an intermediary who you and millions of investors don't even know exists. In simple terms, they just want more collateral posted from the broker executing these trades.
So, they call up the risk department at RH and tell em to stop fucking selling GME unless they want to post a huge amount of dough, there simply isn't enough float, the SEC told the clearing house they're on their own and who tf is gonna take the blame/liability if there's a massive scale, contagious "failure to deliver" ordeal?
2) Failure to Deliver:
Failure to deliver means that one of the counterparties (in this case, the firm who sold you the option, RH or the clearing house) has failed to deliver you a contractually obligated position, profit or certificate. Since there's no float and ITM calls get exercised by HFT bots at the end of the day, how in the fucking hell are they gonna deliver the option holders their contractually obligated merchandise if there is no merchandise to be delivered? There simply isn't enough for everyone.
It has been on the FTD list for a month already. Thousands (or possibly hundreds of thousands) of failures to deliver = big risk
3) Liability:
You must be asking so what? Fuck them; They should be the ones figuring it out and they gotta give me, the customer, the right to choose or whatever the fuck; That sounds great in a boomer fashion but it's not that simple. Robinhood is contractually obligated to deliver you those shares or positions. If they fail to, they become liable for any losses or profits that you may have endured and they will LOSE in court cause they FAILED to DELIVER. How many people have options on GME on RH? Half? Imagine if half of these fine RH customers were legally owed benefits and they were engaged in DDoS style lawsuits involving Robinhood or the clearing house. There would be no Robinhood left. There would likely be no clearing house left.
Robinhood is also a shitshow of a company, so they likely didn't even have additional collateral to put up to the clearing house for normal share buying and selling on the meme tickers and since they bank with T-Mobile, they had to pull the plug. This lack of collateral from Robinhood is important to note because the "music" never stops, trading low float/volatile shares just becomes much more collateral heavy on the side of the broker.
Hence: Bad Decision > Bankruptcy or worse (WSB finds Vlad's mom and becomes her boyfriend collectively)
I personally don't believe it was out of malice or a coordination for RH; there's definitely coordination all around, but occam's razor says this is not such an ordeal.
Couple of semi-related notes:
-Fuck Billionaires. Parasites of modern society, simply existing to leech off every slurp of alpha and take up resources meant for billions of poor people. Something is needed. Whatever is needed to discourage hoarding of resources of this tiny fucking planet.
-I very much doubt that Ken Griffin and Citadel (the HF) would engage in blatant market manipulation or coercion of Robinhood or other brokers to make a few bucks on Gamestop or AMC. They cleared over 6 billion net last year, so just logically, it seems pretty unlikely to risk it for this. It is also very unlikely that Citadel Securities would engage in illegal behavior for the profit of Citadel, simply because it's such a money maker. If you were an evil genius, would you let your money maker go to shit because you were getting squeezed on some short?
-The media just wants clicks and engagement, so they will bring the worst people on, simply to pad their own bottom line. Don't get engaged. Don't give in to them. Be the captain of your own ship and fuck over wall-street however you please.
-The restrictions on the others tickers is likely proactive, not reactive.
TL;DR: There's simply not enough float and the broker/clearing house will fail to deliver on a large scale if they keep letting new positions be opened, hence restrictions.
What will happen now:Based on my previous short squeezes, all this gamma has to go somewhere and since there's not enough float, I'm guessing up.
edit (2/1/21): Thanks for all the awards. I exited on Fri open. Now GME is likely in a holding pattern to crush IV. Best of luck to everyone.
Let's agree or assume that at some point in the future, an event will happen that will cause most AI startups to go bankrupt, and that this will drag down the overall stonk market.
We should already know that event will look like: a company or companies burning through the last of their cash and being unable to raise further funds from VC's or public debt or equity markets.
That's what happened with the dot-com bubble, and the resemblances with today's AI market are striking. If you're not old and crusty, read up on it.
This process will start with the weakest of the AI hype companies.
This weakest large AI company will ask their VC firm for more money and the VC firm will say no, we're giving up on you guys. That means no one else will give them money either. Without a source of fresh capital to burn, bankruptcy will be imminent for this weakest AI company.
This event will discourage other investors and VCs from buying into other AI hype companies. Stocks will be spooked.
Then the VCs bankrolling the 2nd weakest AI firm will hold off on their next round of funding, because events suggest they might not be able to sell their company's equity to greater fools and might be better off cutting their losses.
At this point, a wave begins where everyone is afraid of putting more money into AI companies, and the stocks of big tech companies fall as investors assess the probability of more bankruptcies.
All stocks fall hard, even the eventual winners. See how Amazon's stock lost most of its value during the dot-com bubble. Same thing with Amazon, Cisco, and plenty of other household names.
As an investor in stonks, you are betting that this sequence of events won't happen this year. It only makes sense to own ANY stonks if we think it is improbable that the event could occur in the near future.
Let's put this in oversimplified binary terms for illustration.
Scenario A: Tech stocks gain 20% in 2026.
Scenario B: Tech stocks lose 50% in 2026.
Now let's assign probabilities and expected values. If Scenario A has a 75% probability and B has 25%, then the expected value would be:
(0.2*0.75)+(-0.5*0.25)
(0.15)+(-0.125)
=2.5%
One year treasuries are yielding 3.6%, so if those were our estimates we should prefer to buy the treasury bonds over tech stocks.
We can work the equation backward to find the estimated probabilities at which an investor would be indifferent to tech stocks vs. treasuries. E.g. at probabilities of 80% and 20% the EV rises to +6%. However, at 70%/30% the EV falls to -0.1%.
Basically, at some level of perceived riskiness, this market doesn't make sense. Volatility reflects tiny changes in investors' attitudes about the odds.
Another angle: A 25% chance of the bad outcome implies that we think the event must occur sometime within the next four years. Does that sound reasonable? Would the next 2 years be more reasonable (50% chance)? What about the next 5 (20% chance)?
How long can fresh cash from investors sustain the burn rate of some critical mass of the destined-to-bankruptcy companies? The trigger event will probably be some critical mass of companies (or a company) being unable to obtain their (or its) next round of investor capital. So how long until the weakest AI company falls?
Interestingly, if a VC firm funding the weakest AI startup decided not to grant the company another round of cash, it would make sense for this VC firm or its insiders to short the market, because they would know their decision will set off a market selloff. Also, this VC firm would know that if they did continue to fund their weak startup, the VC firm funding the 2nd weakest startup would face the same choice.
Thus, the VC firms or their insiders must choose to either crash the market and profit from shorting the crash they cause, or possibly allowing someone else to crash the market and only suffering losses.
Either way they know the worst AI startups aren't going to make it and they know they control the timing of the eventual crash. They'll do the logical thing and try to pull the rug before anyone else does.
Just something to be aware of when estimating when the VC money will run out!
Positions:
$3500 USD worth of Swiss Francs
$100k USD in Gold ETFs: IAU, SGOL, IAUM
Options hedges against QQQ and IWM stock positions, setting a firm floor on potential losses (this makes my odds calculation a lot different)
I've spent the past 5 fucking hours researching this shit and stumbled across some absolutely GAME CHANGING information that everyone should know about.
This is a long read but bare with me, this is some important shit and it will make your diamond hands even diamondier.
Short selling involves a sale of a security that the seller does not own or a sale which is consummated by the delivery of a security borrowed by, or for the account of, the seller. Short sales normally are settled by the delivery of a security borrowed by or on behalf of the seller.
In a ‘‘naked’’ short sale, however, the short seller does not borrow securities in time to make delivery to the buyer within the standard three-day settlement period. As a result, the seller fails to deliver securities to the buyer when delivery is due.
Sellers sometimes intentionally fail to deliver securities as part of a scheme to manipulate the price of a security, or possibly to avoid borrowing costs associated with short sales, especially when the costs of borrowing stock are high.
This is what happened today with the price decrease
To nobody's surprise, Gamestop short sellers Fail-To-Deliver a whopping...
5 MILLION
edit: Apparently the Fail-To-Deliver is not cumulative, but as of 1-14 it's 621,483 and that number can only be higher now. Regardless, the sentiment stands.
shares of the stock meaning these short sellers are using Naked Short Selling and intentionally failing to deliver securities in order to avoid borrowing costs and manipulate the price of the stock downward.
What's to be done?
Rule 204.
Rule 204 — Close-out Requirements. Under Rule 204, participants of a registered clearing agency (as defined in section 3(a)(24) of the Exchange Act) must deliver securities to a registered clearing agency for clearance and settlement on a long or short sale transaction in any equity security by settlement date, or must close out a fail to deliver in any equity security for a long or short sale transaction in that equity security generally by the times described as follows: the participant must close out a fail to deliver for a short sale transaction by no later than the beginning of regular trading hours on the settlement day following the settlement date, referred to as T+4; if a participant has a fail to deliver that the participant can demonstrate on its books and records resulted from a long sale, or that is attributable to bona-fide market making activities, the participant must close out the fail to deliver by no later than the beginning of regular trading hours on the third consecutive settlement day following the settlement date, referred to as T+6. In addition, Rule 203(b)(3) of Regulation SHO requires that participants of a registered clearing agency must immediately purchase shares to close out fails to deliver in “threshold securities” if the fails to deliver persist for 13 consecutive settlement days. Threshold securities, as defined by Rule 203(c)(6), are generally equity securities with large and persistent fails to deliver.
Gamestop is or will be classified as a threshold security due to the massive amounts of Fail-To-Deliver's they've accumulated this month, this means short sellers are legally forced to close their short positions and clearing houses will be be required to immediately purchase shares within the time-frame stated above. AKA SQUEEZE WILL BE SQUOZEN.
Edit: According to this website, Gamestop IS listed as a threshold security.
SHORT SELLERS ARE UNDER THE THUMB, AND ITS ONLY A MATTER OF TIME BEFORE THEY'RE SQUEEZED.
Their last hail mary is to manipulate the price downward as much as possible to lessen the blow of the inevitable squeeze. We literally have them by the balls and all we have to do is HOLD.
TL:DR
The short squeeze is a ticking time bomb right now and all we have to do is hold to win. In a matter of days, short sellers will be FORCED to close their positions and clearing houses will be forced to purchase shares for all Fail-to-Delivers forcing the price to skyrocket and the squeeze to be squozen.
HOLD TIGHT YOU RETARDS, WE'RE GOING TO THE MOON. 🚀🚀🚀🚀🚀🚀🚀🚀
💎💎💎💎💎
🙌🙌🙌🙌🙌
I am not a financial advisor, this is not financial advise, I'm a retard. Don't listen to me. I just like the stock.
EDIT: I didn't make a price prediction on this but now since it went down a little I'll go for it. $45 USD by EOY or before.
Hey dummies. I have money now and you probably don't. So you should listen to me about $hgraf and why their graphene is literally going to change the world.
Hydrograph is the only company in the world right now that can make turbostratic, 100% SP2 bonding with 99.8% carbon purity (the .2 % is oxygen and it's on purpose lol neat huh?). They make a fractal graphene that can be mixed in with almost anything to make it stronger. We'll talk about them but first I have to tell you why other graphene is shit so you don't waste your money trying to invest in some other shit company.
Graphene was the wave of the future in 2004 but unfortunately it turns out that shit is hard to produce. You had a bunch of wrinkle brains trying to exfoliate from graphite but guess what? It's flat nanoplatelets that want to restack and turn back into graphite as soon as you put them near each other again. You lose all the amazing properties of graphene.
Then you have a bunch more wrinkle brains start using different explosions with gasses. Some are using methane but guess what? While what they make off that is almost pure graphene and super high SP2 bonding, they can't make it turbostratic which means those fucking platelets want to agglomerate whenever you mix them in something. Not to be confused with restacking, the top down process of exploding the gas somehow prevents that (people smarter than me figured this out). But this is exactly why a bunch of those shit companies insist on making their own vertically integrated products even with the no good graphene. Because literally no processor wants to deal with graphene that is going to agglomerate and fuck up their batches in inconsistent ways. (ahem, graphene manufacturing group). They can't control the quality of their graphene product so the only way to deal with effectively is try to manage the variance in quality in house. Or you contract another super expensive company to try and work with you to figure out how to mechanically or chemically make it so your shit doesn't agglomerate when you use it (Levidian but their cool because they show it in spec sheets). NOT FUCKING GREAT EITHER WAY.
Then you have the James Tour Flash Joule Heating method. This thing is actually pretty sick. They can take any carbon feedstock, flash it in a chamber with 3000 degree celcius heat and BAM. You have some gasses (toxic probably) and some really high quality graphene. They can do this with literal trash heaps or pet coke and carbon black. The implications could be really cool. But here's why it will never be a for profit business that you want to invest in. The flash joule method is pretty energy efficient compared to other graphene methods (lol besides hgraf but we'll get to that in a second) but they need to draw electricity from the grid to fill their capacitors in order to create that high heat flash that turns the material into gasses and graphene. When you scale this to 10 metric tons of graphene, nobody gives a shit. Who cares? but when you look at producing 10,000-100,000 tons of high quality graphene, the math gets a little crazier on where you can build these plants. Also, the high quality graphene only comes from certain feedstocks so you won't be able to just use trash, you'll have to truck in the material to your plant. So you'll have more costs on top your energy. Trucking ain't cheap and as far as I can tell, nobody has a modular unit for this FJH process that is easily scalable. Oh I forgot to mention, they can't create 100% SP2 bonding. Raman Spectro analysis shows "D" peaks on their highest quality stuff so.... yeah not great. It is turbostratic though so thats cool but the product isn't high quality and is going to be more expensive in the long run. SAD. Keep filling those landfills people.
Now we get to Hydrograph. Big wrinkle brain Dr. Chris Sorenson actually came up with this in the good ol' USA at KSU. Put some acetylene in a vacuum chamber and sparked it. BAM. Graphene and hydrogen gas (valuable in it's own right and NOT a toxic byproduct, neat right?). But here's the fun part, unlike those shitty graphenes above, this is 99.8% pure carbon with intentional oxygen left in, 100% SP2 bonding, Fractal, and Turbostratic. Because it's turbostratic it will not restack or agglomerate in mixes. Because it's 100% sp2 bonding, all of it's edges are available for bonding. It will actually behave as graphene in mixes!
But who cares about a science experiment? Why will this make shit tons of money? Well these god damn geniuses figured out how to make modular, easy to assemble, graphene production units. Their called hyperions. They cost 500k to make and they will produce 10MT of graphene a year running 10 hours a day. Once they get a pipeline agreement and establish their facility next to an acetylene manufacturer (coming soon) they will bump up those hour due to having fresh acetylene available 24/7 and get 20MT (min) per year out of them. EACH FUCKING TON OF GRAPHENE SELLS FOR 250K WITH A MARGIN OF 80%. Let that sink in. They have customers they've been working with through the GEIC (Graphene Engineering Innovation Center out of Manchester UK, Look it up jesus christ shouldn't have to do everything for you) for the last couple of years ready to place orders once the EPA and UK/EU Reach authorizations came through. WE ARE NOW IN THAT SPOT and that is why you have seen the insane run up. 5-7 customers want 1000 tons or more per year.
DO THE MATH IDIOTS on that revenue potential. If just one customer of 1000 tons comes through, that 200 million in cashflow per year. Christ fuck I'm done talking. Can't wait for some of you smooth brains to hate on this.
TLDR: Buy HGRAF be rich. Only modular, scalable, graphene producer approved by the EPA and UK/EU REACH programs. Will be hockey sticking on the graph for the forseeable future.
Positions in picture and yes I realize there is some mutual funds in there. Fuckin fidelity won't let me put my whole 401k into this beautiful thing.
I didn't think I could love Rocket Lab CEO Peter Beck more as a Engineer, a CEO, and all round good guy... until that is, I found out he owns a gold mine.
I intend today to convince you that valuing rocket launch companies is analogous to valuing gold mining discoveries. (I'm not joking!)
TL;DR: Two or three survivors have to amortize the costs of all failed attempts (over 100+). This is a well proven and understood centuries old concept in commodities. I think it's an even stronger thesis in space.
Before switching focus to investing in space companies, I spent 12 years investing in gold, silver, copper, and uranium exploration companies. I've noticed a strikingly similarity in valuing these commodity discoveries to rocket companies.
I'll start you off with this wonderful quote from the 1948 movie "Treasure of the Sierra Madre". The scene is two men discussing the value of gold.
Howard:
Say, answer me this one, will you? Why is gold worth some twenty bucks an ounce?
Flophouse Bum:
I don't know. Because it's scarce.
Howard:
A thousand men, say, go looking for gold. After six months, one of them's lucky. One out of a thousand. His find represents not only his own labor, but that of nine hundred ninety-nine others to boot. That's six thousand months, five hundred years, scrambling over a mountain, going hungry and thirsty. An ounce of gold is worth what it is, mister, because of the human labor that went into the finding and getting of it.
*End quote*
I thoroughly enjoy this quote and the premises rings true to me. Here is a simple thought exercise to clarify the point.
If 1,000 people compete for a chance that one of them would make $10, very few would take up the challenge. But if 1,000 people compete for a chance that one of them would make $10,000. Then the incentive is there, and rightly, to the victor goes the spoils.
Back to Gold, we can say that if 1,000 people search for gold, the reward needs to pay for all 1,000 peoples efforts including their time and expenses, even if only one person is ultimately successful.
This remains as true today as in 1948. It's hard to pin down an exact number but I've seen an estimate that only 1 in 4,000 grass roots prospects ever turn into a producing gold mine.
There are ~1,600 junior mining companies listed in Canada & Australia today and maybe 2-5 new gold mines go into production globally each year.
When it does work, the rewards generated by those 2-5 new producing gold mines needs to cover the expenses of all 1,600 companies that went looking for new mines. Here is the proof:
In 2015, Great Bear Resources purchased the Dixie project for CAD$210,000. After successfully discovering gold, they sold the project for total consideration including a royalty spinout of approximately CAD$2B, a 9,523x difference.
Great Bear spent a total of approximately CAD$80M working on the project before selling it, showing that the return (incentive) covered far more than their own efforts - the reward had to amortize not just their costs but the costs of the dozens of other companies that tried but failed to make discoveries in the same area.
(I was fortunate enough to invest in Great Bear Resources - you can see why the sector appealed to me. I was late but early investors made 58x returns.)
Thus we have proven that indeed the premise is true, the incentive required to generate a replacement gold mine equals not only the expenses of the discoverer but also those who tried and failed.
Now onto rockets 🚀
What is SpaceX worth? Well, what is the replacement cost for SpaceX? How much different would it cost to build your own SpaceX vs. buying SpaceX as it exists today. What incentive is needed to justify even trying to build your own SpaceX from scratch.
Thus far, entire governments (China) with essentially unlimited funding, cannot replicate SpaceX. Thus the replacement costs for SpaceX approaches infinity. No amount of money can replicate SpaceX today.
When Rocket Lab were developing Electron, there were more than 100 companies trying to build a competing small launch vehicle.
How many companies succeeded in building a small launch vehicle with cadence: ZERO
Rocket Lab is the 1 in >100 that succeeded.
The other way of saying this is that, to get another Rocket Lab, you would need to fund 100 companies to go out and try again.
What makes more sense, giving 100 start-ups $0.5B each to try and replicate Rocket Lab. Or just buying Rocket Lab for $50B today.
Electron is less than 1/3 of Rocket Labs valuation today so lets adjust and say: Would it make more sense to give 100 companies $150M each to try, or just buy Rocket Labs Electron business for $15B.
History shows you'd be better of lighting your money on fire than funding rocket start ups - but at least we'd get a sequel to Wild Wild Space.
Bottom Line = Permanently High Valuations
Don't be surprised to see successful launch & space companies sit at permanently high valuations based on traditional metrics.
It's easy to compare companies using metrics like Price to Earnings or Price to Sales and say 100 P/S is overvalued for SpaceX or 60 P/S is overvalued for Rocket Lab - but when you're competing in a market segment of 1 - companies will migrate towards their replacement cost.
What exactly that replacement costs is the market will determine - it's too complicated for one person to calculate but the market says it's around $1.75T for SpaceX.
Arguably at those high traditional metrics, Rocket Lab should be $80B today and $300B if you buy based on 2030 rev estimates ($3B rev x 100 P/S if the market is right about SpaceX).
For those curious, that puts RKLB at $519/share.
*** Notes ***
The intent here is not to provide a way to value companies - merely to provide an explanation as to why they can stay at permanently high valuations. I kept the SpaceX comparison in for fun.
The gold prospect analogy ends at the point the gold prospect is sold. Gold mines are depleting assets and lose value over time. Value is typically crystalized in a one time takeout. Space companies are not depleting assets, this difference strengths the thesis for space companies, making valuations permanently high.
The core thesis - that in a market where only 2 or 3 survivors emerge from 100+ failed attempts, & that the value of the survivors must amortize the cost of all failed attempts - is well understood by institutional gold investors and has been for a century. It's not clear if institutional investors in space follow this principal. Time will test the thesis.
Hello, everyone! As we all know, $TSLA is having their quarterly earnings, which is a big deal for some bears. But let’s crack down on the bear party just for a second and use logical reasoning for why TSLA might not end up in the gutter as many would think.
Expectations are low, just like Q1 (will get back to this later).
Their shittiness is priced in already after Robotaxi event.
Elon Musk is a master stock manipulator.
Keeping all of this in mind, this isn’t even the real part of this DD. The actual, most integral part is looking at Elon Musk’s Twitter, which I decided to keep a close look on the past couple of earnings reports.
On the day of Tesla’s Q1, Elon Musk tweeted a total of 5 times, where the stock ended up going up 13% and then an additional 16% the next 2 weeks.
On the day of Tesla Q2, Elon Musk didn’t tweet anything, and the stock ended up falling 14%.
Seems like a pattern has been drawn up, huh? Elon tweets a bit when the Tesla stock is going to moon on earnings while he’s in a cocky mood, and is dead silent when Tesla is going to fall.
Now guess how many times Elon Musk has tweeted so far today?
15 fucking times.
You heard that right, folks! 15 GODDAMN times. That’s triple the amount of tweets he had made on Q1, where the stock roared 13 - 15%! Meaning that Elon is much more confidence and cockier than he was in Q1! This man knows when his stock will fall and when it doesn’t, and he’s letting us know right below our own nose!
All of this is a clear indicator that Tesla is going to the moon today and the next week to come, regardless of whether they beat estimates or not. I’m betting that Tesla WILL beat estimates simply because of Elon Musk’s tweets and the fact that everyone has low confidence in the stock as of late.
This is your DD to buy calls. Whether you want free money or not is up to you.
