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CEO taking stock in lieu of $400k salary
On July 28, 2023, GSE Systems Inc. (the “Company”) entered into a letter agreement (the “Letter Agreement”) with Kyle Loudermilk, the Chief Executive Officer of the Company, with respect to Mr. Loudermilk’s annual salary.
The Letter Agreement (i) reduces Mr. Loudermilk’s annual salary for the period of June 1, 2023 to May 30, 2024 (the “Effective Period”) from $446,250.00 to $46,250.00, and (ii) in lieu thereof, grants Mr. Loudermilk certain restricted stock units (“RSUs”) on a quarterly basis beginning September 30, 2023. The number of RSUs granted shall be determined by dividing the amount of Mr. Loudermilk’s salary reduction ($400,000.00 in the aggregate during the Effective Period) for each such period by the five-day volume weighted average price of the Company’s common stock (calculated to two decimal places) using all trades completed on a trading day as reported by NASDAQ; or, if the Company’s common stock is not then listed on the NASDAQ, by such other exchange on which the Company lists its common stock, immediately preceding the grant date, subject to vesting and all other terms and conditions set forth in the Company’s 1995 Long Term Incentive Plan.
The remainder of Mr. Loudermilk’s terms of employment remain unchanged and are as set forth in his Employment Agreement, dated July 1, 2015 (as amended July 1, 2016, June 12, 2017 and January 11, 2019) (the “Employment Agreement”). Additional compensation owed to Mr. Loudermilk pursuant to the Employment Agreement, such as bonus compensation and any other performance-based RSUs or equity awards, shall continue to be calculated based on Mr. Loudermilk’s prior annual salary of $446,250.00 as contemplated in the Employment Agreement.
https://www.sec.gov/Archives/edgar/data/944480/000094448023000072/form8-k_loudermilk.htm
Forbes article on REKR
This AI Watches Millions Of Cars Daily And Tells Cops If You’re Driving Like A Criminal
https://www.forbes.com/sites/thomasbrewster/2023/07/17/license-plate-reader-ai-criminal/?sh=7db21203ccc9
AI used to help with traffic in Tampa Bay area
https://www.abcactionnews.com/news/driving-tampa-bay-forward/artificial-intelligence-being-used-to-help-with-traffic-control-in-the-tampa-bay-area
Russell Increases Investment in Talkspace
https://beststocks.com/russell-investments-group-increases-investment-in/
Now or never
Very clean shell. Either they do a deal soon or no more filings...
We have historically relied on Dorman Industries, LLC to fund our ongoing administrative expenses. Dorman Industries, LLC has recently advised us that it will not fund our ongoing expenses after this Annual Report on Form 10-K is filed. Therefore, unless we find an alternative source of funding or acquire an operating business, we will be unable to continue our ongoing reporting obligations and this may be the last filing we make with the SEC. We cannot assure you that we will be successful in our efforts to locate financing or acquire an operating business or that any such acquisition will result in our future profitability. Our failure to successfully find alternative financing sources will result in our no longer being able to make public filings and could have a material adverse effect on the market price of our common stock and our ability to acquire a target business. Our failure to successfully acquire an operating business could have a material adverse effect on the market price of our common stock and our business, financial condition and results of operations.
https://www.sec.gov/ix?doc=/Archives/edgar/data/892832/000141057823000449/sdon-20221231x10k.htm
Creating intelligent city streets in Philadelphia Navy Yard with AWS Partner Rekor Systems
In 2022, the Philadelphia Industrial Development Corporation (PIDC) initiated a pilot project to analyze traffic patterns and provide analytics within the Philadelphia Navy Yard. The PIDC is Philadelphia’s public-private economic development corporation and master developer of the historic shipyard, which is now a thriving, mixed-use campus.
The PIDC had many objectives to consider when researching technology for this project. One of their key goals was to gain greater visibility into the impact that road closures and construction have on mobility and learn how to improve mobility during significant projects and events. Additionally, they were looking to strengthen the Navy Yard’s ability to understand the volume and traffic flow of car carriers or other large vehicles and quantify the impact of speed-mitigating devices deployed across hazardous stretches of roadway. Lastly, the PIDC wanted to address public safety issues related to speeding and collisions, and decrease damage to their property.
After much research, PIDC employed Rekor Systems, Inc. (Rekor) to bring this pilot project to fruition. Rekor is a global artificial intelligence (AI) technology company and an Amazon Web Services (AWS) Public Sector Partner with a mission to provide insights that build safer, smarter, and more efficient cities worldwide through intelligent infrastructure.
https://aws.amazon.com/blogs/publicsector/creating-intelligent-city-streets-philadelphia-navy-yard-aws-partner-rekor-systems/\
Talkspace Hits ‘Inflection Point’ as B2B Becomes Dominant Revenue Driver
https://bhbusiness.com/2023/02/22/talkspace-hits-inflection-point-as-b2b-becomes-dominant-revenue-driver/
revenue probably high eight figures by this time next year
Robert Berman
Yes. Zach, this is Robert. Thanks for the question. I'll take it – Eyal. We believe acquiring the resources that we need, and we think we will that Rekor will scale to substantial revenue probably high eight figures by this time next year, and the company will be profitable. We believe we have the visibility with customers that are adopting our technology now to get there, right? So that's what we're looking towards.
https://seekingalpha.com/article/4557704-rekor-systems-inc-rekr-q3-2022-earnings-call-transcript
Declared $0.075 dividend, not bad for a $0.30 stock.
Item 8.01. Other Events.
Declaration of Dividend
On October 27, 2022, Princeton Capital Corporation (the “Company”) issued a press release announcing that its Board of Directors has authorized and declared a cash dividend of $0.075 per share of common stock. The dividend is payable on December 1, 2022 to stockholders of record as of the close of business on November 21, 2022.
https://www.sec.gov/Archives/edgar/data/845385/000121390022066736/ea167643-8k_princetoncap.htm
Nokia wins five-year global 4G and 5G deal from AST
- Nokia wins five-year global 4G and 5G deal from AST SpaceMobile
- AST SpaceMobile plans to bring cellular connectivity directly to 4G and 5G devices via low Earth-orbiting satellites in collaboration with mobile network operators
- Nokia and AST SpaceMobile committed to finding real-world solutions to expand universal coverage and close the digital divide around the world
https://finance.yahoo.com/news/nokia-radio-technology-enable-ast-133100664.html
Talkspace: Deep Value Opportunity Primed For A Takeout
Deep Value Opportunity Primed For A Takeout
While the macro is clearly not in its favor, TALK's enterprise valuation at ~$58m (or a modest premium to its ~$184m cash pile) strikes me as far too cheap given TALK went public at a ~$1.4bn equity valuation in June 2021. The extent of the undervaluation creates M&A optionality here, with the universe of ample potential buyers spanning private equity, competitors, or a diversified player looking for a foothold into the high-growth behavioral health space. The recent disclosure of interim CEO Doug Braunstein's equity compensation package fully vesting upon a change of control also indicates the Board is open to a takeover. Even if a takeout doesn't materialize anytime soon, TALK's $184m of cash on its balance sheet and progress towards EBITDA breakeven ensures a sufficient runway without the need for future capital raises.
https://seekingalpha.com/article/4519112-talkspace-deep-value-opportunity-potential-takeout-catalyst
American Well becomes second suitor for Talkspace
Online-therapy app Talkspace (NASDAQ:TALK) recently received but declined a buyout approach from American Well Corp. (NYSE:AMWL) - the second would-be suitor that the struggling company has spurned in recent weeks, Seeking Alpha has learned.
https://seekingalpha.com/news/3848117-online-therapy-talkspace-receives-takeover-bid-from-america-well
Do you think that is the correct company? The investment was in Aristotle LLC, and that website is for Aristotle, Inc.
WE AT ARISTOTLE, INC.
LYSCF Jim on CNBC just mentioned this.
Citi sees acquisition more likely
"Grosslight said that some major shareholders of TALK that he spoke with were supportive of a sale and he also highlighted that there has been no update on the hiring of a permanent CEO and interim CEO Doug Braunstein was recently awarded equity compensation that vests upon a change on control."
https://seekingalpha.com/news/3845191-talkspace-nears-sessions-high-as-citi-sees-acquisition-more-likely
Canada bans China's Huawei Technologies from 5G networks
More business coming to NOK?
TORONTO — Wireless carriers in Canada won't be allowed to install Huawei equipment in their high-speed 5G networks, the Canadian government said Thursday, joining allies in banning the giant Chinese technology company.
Canada had been the only member of the Five Eyes intelligence-pooling alliance not to bar or restrict use of equipment from Huawei Technologies Co. Ltd. in its 5G networks. The U.S. and the other members — Britain, Australia and New Zealand — previously banned Huawei.
https://www.npr.org/2022/05/20/1100324929/canada-bans-chinas-huawei-technologies-from-5g-networks
NOK This Risen Phoenix Should Be In All Portfolios
Summary
- Nokia, a once beloved business, fell on bad times. It has now risen again, and looks to outperform in the near future.
- Nokia's core businesses are performing well, and its new management is executing on their plans to improve operational efficiencies.
- Nokia's 5G technology looks market-leading with more innovations to come. The market is expected to grow exponentially, with Nokia bound to benefit.
- Macro conditions are worsening, but we believe Nokia's positioning should allow it to navigate this well.
https://seekingalpha.com/article/4512539-nokia-this-risen-phoenix-should-be-in-all-portfolios
I had the same thought!
NLST I jumped back in. ST trade.
Nokia to supply Microsoft’s Azure networks
Nokia to supply data center switching portfolio for Microsoft’s data center networks
Nokia’s solutions will deliver the additional networking scale and capacity Microsoft requires for its data center environments to support the bandwidth growth to its Microsoft Azure platform
20 April 2022
Espoo, Finland – Nokia today announced it will provide its data center switching solutions for Microsoft’s data center facilities to support the bandwidth growth to Microsoft Azure as part of a multi-faceted deal. The deal expands the long-standing relationship between the companies, who have been working together to bring massively scaled, agile and highly resilient networking to the data center environment.
With the significant growth of cloud services and cloud computing and the move to 400GE, Nokia has been selected to supply its 7250 IXR chassis-based interconnect routers to support high-density 400GE applications in Microsoft’s ‘tier-2’ network architecture. Nokia will also be supplying fixed-form-factor platforms into other Microsoft network applications. This new agreement builds upon the companies’ collaboration as part of the open source SONiC initiative to develop chassis-based platforms focused on the requirements of high-capacity data centers.
Nokia’s next-generation data center switching portfolio platforms deliver the scale, openness, aggregation and interconnectivity required for modern data center networks. The 7250 IXR offers a broad range of high-performance chassis-based and fixed-form-factor options for data center top of rack (TOR), leaf, spine and super-spine applications. The platforms support port speeds up to 400GE, with a path to 800GE, along with comprehensive IP and Ethernet feature sets.
Vach Kompella, Vice President, IP Networks Division, Nokia, said: “Today’s data centers have their own unique operational challenges, and Nokia has been working closely for some time now with Microsoft to understand its evolving data center needs and requirements. Our expertise in building high-performance, chassis-based systems was a key factor in our selection.”
David Maltz, Technical Fellow and Corporate Vice President, Microsoft Azure Networking, said: “Nokia’s platforms were a natural choice to deliver the massive-scale interconnectivity that Microsoft requires. Nokia brings density, performance and flexibility to Microsoft’s data center networks and cloud environments and is partnering with Microsoft to deliver chassis switches running the open source networking operating system SONiC.”
https://www.nokia.com/about-us/news/releases/2022/04/20/nokia-to-supply-data-center-switching-portfolio-for-microsofts-data-center-networks/
Jefferies issues Buy-strong 2022 for European gear
efferies has started coverage of Nokia (NOK +0.6%) at a Buy, expecting a strong year for European telecom equipment even with some pressure easing off global wireless spending further in the future.
https://seekingalpha.com/news/3814662-jefferies-starts-nokia-at-buy-ahead-of-strong-2022-for-european-gear?mailingid=27059627&messageid=2900&serial=27059627.11272&utm_campaign=rta-stock-news&utm_content=link-1&utm_medium=email&utm_source=seeking_alpha&utm_term=27059627.11272
The last 21 times Nasdaq had an intraday reversal of +5% happened during brutal bear markets.
The last 21 times Nasdaq had an intraday reversal of +5% happened during brutal bear markets. pic.twitter.com/SkjGwUD6NH
— Otavio (Tavi) Costa (@TaviCosta) February 25, 2022
Crude - I closed out some WTI futures options on this pop.
Rover inks deal with Petco similar to Walmart deal...
Petco and Rover are expanding their partnership with a new initiative that will surface Rover’s pet-sitting services on Petco.com.
Petco was an early investor in Rover, a Seattle company that went public in August through a SPAC merger.
The deal between Petco and Rover is similar to the partnership Rover inked with Walmart, which also promotes the company’s services on its website.
Rover’s marketplace connects pet owners with service providers who can board, walk, or otherwise care for their pets, often when they’re at the office or on a trip.
It’s been a rough start to 2022 for Rover, with shares down nearly 50% amid a broader market dip for tech stocks. Shares of Rover were down more than 10% on Wednesday.
https://www.geekwire.com/2022/rover-inks-deal-with-petco-as-shares-of-pet-sitting-company-continue-falling/
SKLZ - bought some calls on the drop down maybe due to the MSFT/ATVI announcement?
DWAC more bizarre info…
That is, DWAC agreed that the PIPE investors can short DWAC stock right now.[2] This is a very unusual provision in SPAC PIPEs; most purchase agreements specifically say that the investors are not allowed to short.[3] In the Trump SPAC PIPE, they specifically are allowed to.
https://www.bloomberg.com/opinion/articles/2021-12-13/the-trump-spac-pipe-is-free-money
DWAC I'm just keeping puts open on it.
No idea if it will go to $100 or $10. But it is hilarious junk company/stock that the SEC and FINRA (both investigating) could shut down and it would go back to it's $10 SPAC cash price.
Also so very hilarious that Rep Nunes going to be CEO of a tech company promoting free speech. He has NO tech experience and he sued Twitter over posts about him!
They should be using a non-reporting penny stock to pull this off!
https://www.thestreet.com/video/donald-trump-social-media-sec
https://www.nytimes.com/2020/06/25/us/politics/devin-nunes-cow-tweets.html
I'm holding Dec/Jan $20/$25 strikes.
DWAC you can't even make this stuff up...
Similar financing as a penny stock convertible.
Probably go to $100, but what a joke.
Trump SPAC PIPE
In September, a company called Digital World Acquisition Corp. went public, raising $287.5 million by selling stock to investors at $10 per share. DWAC is a special purpose acquisition company, or SPAC, a blind pool to find another company to take public. The idea is that the SPAC puts the money it raises into a bank account, finds a private company that wants to go public, and merges with that target company. The target company gets the money in the SPAC’s bank account — $287.5 million or so, in DWAC’s case — and the public shareholders of the SPAC get back shares in the target company, which becomes a public company by merging with the SPAC. If the SPAC doesn’t find a deal within two years, or if the shareholders don't like the deal it finds, they get their $10 back. 1
In October, DWAC announced its merger, and it was a doozy. The private company that DWAC will take public is Trump Media & Technology Group, which is … a … media … and … technology … group? … affiliated with Donald Trump. Nobody had heard of TMTG before it announced its SPAC merger, and nobody has heard all that much about it since. “Trump Media & Technology Group (‘TMTG’) will soon be launching a social network, named ‘TRUTH Social,’” said the merger announcement, promising a beta launch in November. It missed that deadline. A test version of the site seemed to be just a clone of open-source social network Mastodon. TMTG’s website has a “company overview” slide deck that contains no business information and does not mention anyone involved in building its supposed technology. “This appears to be a shell company buying a shell company,” wrote Dan Primack.
I wrote at the time:
If Donald Trump announced “hey I’m gonna do a social media company, buy some stock,” people would buy some stock. And then he’d get a lot of money. And then if the social media platform did not end up being profitable — as I cannot imagine it would be! — then he would, uh, still have that money? And if the social media platform did not end up being launched — if Trump and his crack team of technologists just couldn’t actually build a well-functioning online social network — then he would, uh, still have that money? And if there was no crack team of technologists at all, if nobody even tried to build the social media platform — then you see where I am going with this right?
Anyway. The deal is that DWAC will put in the money in its bank account — about $293 million — and get about 37 million shares of TMTG 2 ; the current owners of TMTG — presumably Donald Trump and … some … other people? — will get a variable number of shares that I am just going to call 125.8 million. 3 So roughly speaking Trump is selling about 23% of his company for $293 million.
Before the merger was announced, DWAC’s stock traded publicly between call it $9.92 and $9.97 per share. This is normal for a SPAC in late 2021: SPACs were hot in early 2021 but the trend faded, and these days a SPAC share pretty much represents the right to get back $10 at some indefinite point in the next two years. The day after the merger was announced, DWAC closed at $45.50. The next day, it closed at $94.20. It has not closed below $40 since. On Friday it closed at $44.97.
This sounds good, but it is actually somewhat awkward for Trump and TMTG. The price is too high. Trump is selling about 23% of his company for $293 million, but the public market says that that stake is worth about $1.7 billion. 4
The public market, I should emphasize, is saying that based on nothing. As of last Friday, there was absolutely no financial or technical or business information about TMTG available to the public; so far there is almost no sign that TMTG is actually building a social network or a streaming platform or anything else. 5
But the market says that TMTG is worth $44.97 per share. And TMTG is selling stock — to DWAC — at $10 per share. 6 Seems like sort of a bad deal.
The obvious trade here for TMTG — essentially a meme stock riding high on retail enthusiasm — is to go sell more stock. Peel off a billion-dollar offering at $40 per share: That’s 25 million shares, less than it is issuing to DWAC, but for more than three times as much money. Great. I say this all the time: If you’re a meme company and everyone is buying your stock, the move is to sell your stock.
But TMTG can’t do that. TMTG is not a public company yet; it can’t sell stock to retail investors. DWAC is a public company, but SPACs can’t just go sell stock at market prices; SPACs are strange blind-pool money-in-trust creatures that come with investor protections, and selling a claim on $10 in cash for $40 seems like a no-no. 7
Still this is the right line of thinking if you’re Trump, or TMTG, or their advisers. Find someone to buy $1 billion of stock at a lot more than $10 per share, since the stock is trading at a lot more than $10 per share.
Well. Most SPACs, when they announce a merger, also announce a PIPE. A PIPE is a private investment in public equity: Some big institutional investors agree to invest in the combined public company alongside the SPAC. The PIPE is useful for two reasons. One, it guarantees the company some money: SPAC investors are allowed to take their $10 back, but PIPE investors normally make firm commitments to invest. So if you do a SPAC-plus-PIPE deal, you’re definitely raising some money. Second, it validates the SPAC price: The public investors in the SPAC, who have perhaps never heard of the company they are about to buy, can be more confident because some big sophisticated investors have negotiated to invest in the company, often — though not always — on the same terms as the SPAC investors.
When TMTG and DWAC announced their merger, they did not announce a PIPE. This was not surprising! The whole subtext here was that TMTG was not a real company; it has never disclosed any financial statements or business plans or operating executives or anything. No big institutional investors wanted to commit a lot of money to buy stock in a phantom company.
But since the stock traded up, things are different, and TMTG and DWAC have talked a lot about raising a PIPE. There are two basic ways to think about raising a PIPE here:
Go out to institutional investors, explain the business model, introduce them to the experienced management and technical teams, give them financial projections and let them pressure-test them, and generally get investors comfortable with a high-10-digit fundamental valuation for this company.
Go out to institutional investors and say “look if you buy stock at $30 you can sell it to some retail rubes at $40.”
On Saturday, 8 TMTG and DWAC announced a billion-dollar PIPE, and if you read the announcement very carefully I think you can tell which approach they took:
Trump Media & Technology Group Corp. (“TMTG”) and Digital World Acquisition Corp. (Nasdaq: DWAC), today announced that Digital World Acquisition Corp. (“DWAC”) has entered into subscription agreements for $1 billion in committed capital to be received upon consummation of their business combination (the “PIPE”) from a diverse group of institutional investors.
President Donald J. Trump, Chairman of TMTG, stated, “$1 billion sends an important message to Big Tech that censorship and political discrimination must end. America is ready for TRUTH Social, a platform that will not discriminate on the basis of political ideology. As our balance sheet expands, TMTG will be in a stronger position to fight back against the tyranny of Big Tech.” …
The per-share conversion price of the fully committed convertible preferred stock PIPE transaction represents a 20% discount to DWAC’s volume-weighted average closing price (“VWAP”) for the five trading days prior to and including December 1, 2021, subject to downward adjustment. If the VWAP of the combined entity for the 10 trading days after the closing of the business combination (“Closing VWAP”) is at or above $56, no downward adjustment will occur. If the Closing VWAP is below $56, then the conversion price shall be adjusted to the greater of a 40% discount to the Closing VWAP and the floor price of $10.00.
In a sense, the PIPE investors are buying TMTG stock at a price of $33.60 per share. 9 That is a nice number! It is higher than $10, but lower than $44.97; Trump is getting a good deal (selling stock at a higher price than in the SPAC deal) and the PIPE investors are getting a good deal (buying stock at a lower price than the current public price).
But that number is just a cap on the valuation that they’re paying; the important thing there is the closing adjustment. Who cares what the stock price of DWAC is now. Nobody trading DWAC’s public stock knows anything about TMTG. It has filed no financial statements, it has disclosed nothing about its business, it has no product, it is a completely imaginary company. It trades at $44.97 a share on vague retail enthusiasm. Eventually that will change. By the time the TMTG/DWAC merger closes and the PIPE investors have to put up their money, there will be a lot more public information about TMTG. Perhaps it will be good and confidence-inspiring and the stock will be up. Perhaps it will be bad and vague and the stock will be … up? Who knows. But eventually we’ll know more. By the time the SPAC merger closes and the PIPE investors have to put up their billion dollars, TMTG will be a somewhat more known and predictable thing.
If after all of that information is disclosed and the merger closes the stock price is up, then, great, the PIPE investors will buy stock at $33.60 per share, an even bigger discount to the higher price.
If the stock price is down, then the PIPE investors will buy stock at a 40% discount to whatever the stock price is after the merger closes. If the stock averages $20 per share after the merger closes, the PIPE investors will pay $12. (If the stock averages $16.67 or below, the PIPE investors will pay $10 per share, so they are taking some real risk if the deal absolutely collapses.)
If the stock price is flat, or up a little bit, the PIPE price will adjust down. If the stock averages $45 after the merger closes — a bit higher than it finished last week — PIPE investors will buy at $27 per share.
What will these PIPE investors do, when they buy stock at a 40% discount to the trading price after the SPAC merger? I don’t know, but I think … they will … sell it? For more than they paid for it? Like if the stock is trading at $45, the SPAC investors will buy at $27 and then sell at $45. If the stock is trading at $80, the SPAC investors will buy at $33.60 and sell at $80.
Ordinarily in SPAC mergers, the PIPE investors can’t sell their stock the day after the merger closes, because the company has not yet registered their resales of stock with the Securities and Exchange Commission. (Sometimes the PIPE investors also sign lockup agreements restricting their sales, though this does not seem to be the norm.) But the investors have “registration rights”: The company promises to file a registration statement soon after the merger closes, letting them resell their shares. Usually they can sell within, say, a couple of months. 10
Not in the Trump deal! From the Form 8-K that DWAC filed this morning (emphasis added):
The PIPE Investors were also given registration rights in a registration rights agreement (the “Registration Rights Agreement”) pursuant to which DWAC will be required to file a resale registration statement for all of the shares of common stock issuable upon conversion of the Preferred Stock held by the PIPE Investors within 10 days following the filing of the proxy statement/prospectus to be filed in connection with the TMTG Business Combination and shall be declared effective no later than the closing of the TMTG Business Combination (the “Initial Registration Statement”). Thereafter, Pubco will be required to register and to maintain the registration for all shares underlying the Preferred Stock until the Effective Date.
Liquidated Damages. Failure by Pubco to timely file and to obtain and maintain effectiveness of any registration statement required to be filed under the Registration Rights Agreement will result in Pubco paying to each PIPE Investor an amount in cash, as liquidated damages and not as a penalty, equal to (A) with respect to the first two months, 2% of the subscription price paid by each PIPE Investor for any unregistered registrable securities, plus (B) with respect to the third month and beyond, 6% of the subscription price paid by each PIPE Investor for any unregistered registrable securities. ...
Liquidated Damages Escrow Account. Upon the Closing, Pubco will deposit into a third party escrow account solely for purposes of paying the holders any required liquidated damages as they accrue (the “Liquidated Damages Escrow Account”), an amount equal to 20% of the aggregate subscription price paid by all the PIPE Investors for any registrable securities not, on the Closing, covered by (i.e. eligible for resale pursuant to) the Initial Registration Statement.
DWAC and TMTG have promised the PIPE investors that they’ll be able to freely resell their stock the minute the merger closes. If they can’t — if the SEC has not yet signed off on the registration statement — then they get 2% to 6% interest per month, paid out of a 20% escrow on the money they put up.
Here’s a weird thing. The PIPE investors get to resell their stock starting the day the merger closes. But the number of shares that they get is set based on the trading price of the stock over the 10 days after the closing, with a 40% discount. That is, they get to sell the stock before they find out how many shares they get. The trade is:
Let's say that on the closing date the stock is trading at $40. At $40, the PIPE investors have a $24 conversion price; their $1 billion investment gets them 41.7 million shares of stock.
The first day after closing, the PIPE investors sell all 41.7 million shares, driving the price down to $30. They clear an average of $35 per share, or $1.46 billion, a 46% return on their investment.
But! The number of shares they get is set based on the average closing price over the 10 days after the merger; so far (after one day), the average closing price is $30. At a 40% discount that means an $18 conversion price, or 55.6 million shares, 13.9 million more shares than they sold.
The next day, the PIPE investors sell those 13.9 million shares, driving the price down to $25. They clear an average of $27.50 per share, or another $382 million.
But! Now the average closing price is $27.50, 11 which works out to a conversion price of $16.50, or 60.6 million shares, 5 million more than they sold.
The next day they keep selling, making more money and driving the price down.
Etc.
This is actually a well-known trade with a name. It is called a “death-spiral convertible.”
Now, I should say two things here. One is that usually death-spiral convertibles have no floor price; the stock can keep going down as long as the holders sell. Here the floor price is $10: The conversion price can’t be lower than $10, so the most shares the PIPE holders can ever get is 100 million.
The other is that the schematic strategy I laid out above is not actually optimal for the PIPE holders. The price might go up! This is a meme stock, retail investors will buy it, and maybe the stock will rally over those 10 days after closing. If you sell 60 million shares and the stock rallies so that the average closing price is above $56 per share, then you convert at the cap of $33.60 per share, you get 29.8 million shares from TMTG, and you are effectively short 30 million shares in a rising market, a terrible fate. I think realistically the trade is that you sell the 29.8 million guaranteed shares over the first few days and then only sell more at the end of the 10 days if the market price is lower. What I laid out above is a classic death-spiral strategy, but most death-spiral convertibles are not meme stocks.
Still the important point is that the PIPE here is explicitly designed for TMTG to sell stock to hedge funds at a huge discount, and for those hedge funds to immediately turn around and sell the stock to retail investors at a markup. That’s why the conversion price and registration rights are set up the way they are. This is an indirect way to do a big meme-stock offering to retail investors, with some hedge funds standing in the middle and getting a cut.
That said! There is more information about TMTG publicly available now! The Form 8-K for the PIPE includes “a presentation (the ‘Corporate Presentation’) that DWAC and TMTG have utilized in various meetings with securities analysts, investors and others”; presumably it is the pitch deck that they used to sell the PIPE. Here it is. I said about TMTG’s previous investor presentation that it includes no dollar signs, but this one does. Some are in the “Transaction Overview” slide (slide 5), where they are attached to the sources and uses of cash in the SPAC/PIPE transaction, 12 but there is also a “Comparable Company Analysis” showing what other social-media and streaming companies are worth, and even a page of “Pro Forma Revenue Projections” predicting that Trump’s media company will be bringing in $3.7 billion, mostly in streaming subscription fees, by 2026. Why not!
I have also said in the past that nobody knows anything about who is actually building TMTG’s social network. But now we do! Here is the list:
relates to The Trump SPAC Did a PIPE
Well! Now you almost know the name of the chief technology officer of Trump Media and Technology Group. It’s Josh A. (“Personnel subject to change.”) The chief product officer is Billy B. All very reassuring.
Also in that 8-K:
DWAC has received certain preliminary, fact-finding inquiries from regulatory authorities, with which it is cooperating. Specifically, in late October and in early November 2021, DWAC received a request for information from FINRA, surrounding events (specifically, a review of trading) that preceded the public announcement of the October 20, 2021 Merger Agreement. According to FINRA’s request, the inquiry should not be construed as an indication that FINRA has determined that any violations of Nasdaq rules or federal securities laws have occurred, nor as a reflection upon the merits of the securities involved or upon any person who effected transactions in such securities. Additionally, in early November 2021, DWAC received a voluntary information and document request from the SEC which sought, inter alia, documents relating to meetings of DWAC’s Board of Directors, policies and procedures relating to trading, the identification of banking, telephone, and email addresses, the identities of certain investors, and certain documents and communications between DWAC and TMTG. According to the SEC’s request, the investigation does not mean that the SEC has concluded that anyone violated the law or that the SEC has a negative opinion of DWAC or any person, event, or security.
Sure why not. As of 11 a.m. this morning the stock was down slightly, which honestly I found surprising. If you are buying this stock it is a bet on chaos, and so far you are getting as much chaos as you could want.
https://www.bloomberg.com/news/articles/2021-12-06/spac-merging-with-trump-media-firm-gets-sec-information-request?sref=QwUUmmsp
NOK top pick for Morgan Stanley in 2022
- Analyst Dominik Olszewski said Nokia (NOK) shares are likely to benefit as the company continues to improve its margins, continued momentum in network infrastructure spending and a "simpler play on continued 5G spending."
- Morgan Stanley reports 5.71% increase in ownership of NOK / Nokia Corp.
https://seekingalpha.com/news/3778180-nokia-asml-holding-are-morgan-stanleys-top-picks-for-2022?utm_campaign=rta-stock-news&utm_content=link-1&utm_medium=email&utm_source=seeking_alpha&utm_term=RTA+News+Smart
https://fintel.io/so/us/nok/morgan-stanley
HOOD on the watch list, about 567.9mil shares unlock 12/1, 859mil o/s
recent weak revs/earnings
https://www.sec.gov/Archives/edgar/data/0001783879/000162828021014488/robinhoods-1a2.htm
Elon Musk has sold roughly $5 billion in Tesla stock this week, and probably isn’t done
https://www.marketwatch.com/story/elon-musk-sells-tesla-stock-in-plan-set-before-twitter-poll-sec-filing-shows-11636591389?siteid=bnbh
On Maxing Out Positions…
Maxing out on uranium.
https://adventuresincapitalism.com/2021/11/08/on-maxing-out-positions/
OUTLOOK bumped up expectations...
Full year 2021 Full year 2023
Net sales1 EUR 21.7 billion to EUR 22.7 billion Grow faster than the market
Comparable operating margin 10 to 12% 10 to 13%
Free cash flow Clearly positive Clearly positive
Comparable ROIC2 17 to 21% 15 to 20%
Nokia Corporation Financial Report for Q3 2021
28 October 2021 at 08:00 EEST
Nokia Corporation Financial Report for Q3 2021
Strong profitability and cash generation
Constant currency sales growth of 2% constrained by expected supply chain and Mobile Networks North America headwinds
Strong sales growth in Network Infrastructure (+6% y-o-y constant currency) and Cloud & Network Services (+12%)
Comparable gross margin of 40.8% (reported 40.7%), reflecting continued strong execution across the business
Mobile Networks comparable gross margin of 37.8% (+220 bps y-o-y) showed better cost competitiveness
Comparable operating margin of 11.7% (reported 9.3%), new operating model bringing strong financial accountability
Comparable diluted EPS of EUR 0.08; reported diluted EPS of EUR 0.06
Strong free cash flow generation of €0.7bn
Launched new FP5 IP routing silicon which sets new industry benchmarks particularly on power efficiency
Continuing to manage supply chain constraints but challenges are increasing into Q4
Reiterating our full year guidance for net sales of €21.7bn – 22.7bn and comparable operating margin of 10-12% and now expect to be towards upper-end of the margin range considering continued strong performance
All financial metrics above refer to Q3 2021
This is a summary of the Nokia Corporation Financial Report for Q3 published today. Nokia only publishes a summary of its financial reports in stock exchange releases. The summary focuses on Nokia Group's financial information as well as on Nokia's outlook. The detailed, segment-level discussion will be available in the complete financial report hosted at www.nokia.com/financials. A video interview summarizing the key points of our Q3 results will also be published on the website. Investors should not solely rely on summaries of Nokia's financial reports, but should also review the complete report with tables.
PEKKA LUNDMARK, PRESIDENT AND CEO, ON Q3 2021 RESULTS
We delivered another great quarter driven by our increased investments in technology leadership and strong market demand. The highlight of the quarter was the launch of our next generation FP5 IP routing silicon – delivering up to three times more capacity while reducing power consumption by up to 75% per bit compared to previous generation. This will help reduce the carbon footprint of both Nokia and our customers, while also helping customers to manage their operating expenses.
The third quarter saw us achieve 2% constant currency net sales growth despite the impact of earlier communicated headwinds in North America for Mobile Networks and global supply chain constraints. These headwinds were offset by strong growth in Network Infrastructure against a tough year-on-year comparison and by Cloud and Network Services achieving double-digit growth. Our comparable operating margin for the quarter was 11.7%, which is a further testament to the accountability and financial discipline that our new operating model is driving through the organization.
We now have over 380 private wireless customers and the business continues to grow strongly. We are further increasing our investment to ensure we maintain the lead we have built with the industry’s most complete offering.
Overall, I am pleased with our strong financial performance in 2021 so far. We continue to expect seasonality to be less pronounced this year than previously and are reiterating our full year 2021 outlook. Considering our continued strength, we now expect to be towards the upper-end of our comparable operating margin range. As we look ahead, we believe we are well positioned to capitalize on strong demand in our end markets through strengthened technology leadership and improved cost competitiveness. However, the uncertainty around the global semiconductor market limits our visibility into Q4 and 2022. We are working closely not only with our suppliers to ensure component availability but also with our customers to ensure we can meet their needs and mitigate the unprecedented component cost inflation our industry faces. Coupled with the one-offs we’ve benefited from this year, this may limit our margin expansion potential in 2022.
https://www.nokia.com/about-us/news/releases/2021/10/28/nokia-corporation-financial-report-for-q3-2021/
Yes, bought a few more down here in the $3's also.
SDC - 30% float short
Yeah, SPACs appear to be getting active again. I was in/out BRPM for quick one.