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Because it may never happen again. Only the owners know when the rug-pull is going to happen, and with every pump it is more likely to happen soon. Why risk getting caught on the wrong side of it? No need to be greedy, this is free money and pigs get slaughtered.
Please don't mistake my lack of a position to be a long. I'm simply waiting for the pump to take another short position. I have no illusions that this will go anywhere except zero. Eventually they will run out of excuses for press releases. And I think we're fairly close to shares from the first few exits unlocking, right? Poor Mr. Matus will learn what a proper rugpull looks like.
Fatshark is 15 years old. Rotor Riot is 7 years old. Teal is 8 years old. They are not building out, or setting up. Teal and Rotor Riot have never been profitable. Fatshark is very profitable, but RCAT didn't really buy fatshark, they just bought the boring part of it.
I'm not short, I covered at $2.50 (I announced this trade and my exit way back). Currently I don't have any position as a $2 stock is just not that interesting to short even when it goes to zero (not if).
I do have open sell orders at $4.00 and $4.50. And I will close them once again at $2.50 and $2.00 respectively. Those trades usually take a month. Unfortunately not even the last PR, which was pretty well done despite being borderline lies, didn't do much more than a short bump to $3.
Why don't I short any other company? Because I know everything there is to know about this one. It's obviously an exit-vehicle for the founders. The people involved have pulled this before, several times. So, it's easy money. $10-15k per trade, almost guaranteed, with very limited upside risk, because you know that eventually it will go to zero.
And before you ask, why am I posting about it here and not just reeking in the profits? As I have posted before, there is additional joy in telling people what is going to happen, them refusing to believe you, and then exactly that happening. Consider it the proverbial cherry on top.
The post-PR pumps are getting less (and thus there is a lack of PRs). Swing trading this is difficult, because a long position requires a PR-pump to be successful. The only sure thing is a short trade after a pump.
In regards to their potential, let's take off the rose-colored glasses for a minute: The US military isn't going to buy drones from a company that couldn't even penetrate the consumer market. Compare the Skydio offering to the Teal offering. Or Anduril. It's not even close. Teal has zero actual technology, it's all just a hotchpotch of available things with a plastic shell. If the US military truly purchases any of their drones, the US military will be embarrassing themselves. Any civilian will have a more capable drone, at a fraction of the price.
And opening a new manufacturing facility is just spitting in the face of investors. If they can't be profitable in their current facility, having a new one isn't going to change this for the better. Want to know why it sucks? Fatshark isn't moving any of their manufacturing there. So, paying rent on an old facility is better than using a paid-for new facility. That's all you need to know.
And this guy has 6 figures riding on this. What a risky (pro)position.
Oh dear. I know my role here is to play the devil's advocate, but seriously, how can you throw 6 figures out the window like this.
- Q1 revenue down 30% YoY. COGS flat. That means sales profits down 50% YoY.
- Q2-Q4 revenue doubled, yet sales profits down 20%.
- Investment income is more than profits
- net loss higher than revenues, while revenues are declining
- Admin fees and stock-compensations equalizing revenue
... and that's with them having chip inventory (apparently) until end of 2022. What happens if sales increase, or their inventory goes low? Their costs will skyrocket (chips cost anywhere between 300% to 1500% more than what they used to).
I don't have any net position, at this level the stock price could go either way short term. But there is absolutely no way that this would go anywhere except zero: They have 50M in the bank, and they will blow through it in ~2 years, and then dilute your position some more. If this had much room to run, they wouldn't be pulling cash out at such a rate.
On your dime, too! As if anyone in Ukraine will buy a less effective DJI drone for 5x the price.
Is it just me, or is the RCAT leadership missing an opportunity to pump the stuck with a "selling drones to Ukraine" PR?
Good old profiteering ...
Yes, they paid their debts. RCAT still didn't buy the actual meat of Fatshark.
Do you actually read these earnings reports? You will read it anyway after they pulled the rug, so doing it a little early doesn't hurt.
Fatshark's factory is not owned by Fatshark and thus couldn't be sold alongside. The HD technology is owned by hd-zero.com, so it couldn't have been included in the sale. It's in the 10Q Oct 2021 report that was posted here, when they clarified what they actually bought and how much for. If you pay close attention, they also don't say Fatshark is a manufacturer of headsets, but only a provider of said items. Interestingly, they fully lied in the 10K of April 2021, where they said that fatshark is developing the Shark Byte technology. What they actually should have said is that they are developing Shark Byte products based on HD Zero technology.
Fact of the matter remains: RCAT bought inventory, the brand, and a non-compete for 2 years - already half expired. When RCAT becomes worthless, Fatshark can start making FPV headsets by themselves again, and they will have raked in 3-5 years of profits from the acquisition proceeds. Not a bad deal!
Do you realize these reports are "AI"-generated?
A real analyst would understand that the earnings growth is coming from additional acquisitions, while each of the acquired businesses show a decrease in earnings.
Ha. They tricked you too. Fatshark Holdings is a spinoff. It does not include the HD tech, nor the manufacturing facility.
Except it's NOT profitable, and all RCAT has done is purchase companies with investor money.
Also, the "revenue" figures they are citing are actually manufacturing capacity, not revenue. I feel obliged to point out there is a difference. Just like you didn't buy Fatshark and creamed over its digital technology. Instead, you bought some spin-off while the actual company and technology is still under private ownership.
A short doesn't bring down the price. Short selling requires a share to be borrowed, it therefore doesn't change the amount of shares in circulation. The lack of buyers is what is keeping the price down, and the owners selling - obviously.
and this prediction is based on what assumption?
Blackbox launch?
Revenue increase?
Profit increase?
Honestly ... the best case scenario is priced in, and that's the company surviving the next 5 years.
The lack of pump-PRs is worrying! Is this the final leg to $1 and then de-list? Or will we get more short-buying opportunities?
just keep buying the stock when it pumps to $4. that's all the christmas presents that I need. Although that PR they just posted didn't really do jack to the price ... so I'm wondering if this is indeed the last leg down or if we have more pumps to profit from.
Did you actually read the press release?
90M / 5 = 18.0M (5 companies selected)
18M / 5 = 3.5M (through 5 years)
They spent more than that on bonuses last year. And that's with the (wrong) assumption that Teal's offering is in the top 3. And even if this does work out as planned, that's still less than half than what RCAT paid for Teal.
Market is in full agreement, by the way: Price is still 40% down from the reverse merger, only increased by 30% (their potential profits increased several 100%).
The pre-market price is where RCAT was 5 days ago. As the price was dropping below $2, the PR hit. You may think that's a coincidence, but you also stand convinced that this one is going to be a winner.
So yes, my statement is here for everyone to see, in perpetuity. Just like your $8 prediction.
That's what they said about this quarter, and the one before it.
This is an exit vehicle for the company owners, and you're footing the bill. My job here is to make sure that you knew, and still fell for it. Just in case one of you decides to lawyer up and claim that this is a fraud and you didn't know it was a fraud. The defense can then go into this board, and point at these posts, clearly indicating that you knew this was a scam, and you decided to risk it anyway :)
You do invest into a company that just blew more than their revenue on R&D with no products to show for it. So I guess you already qualified for super stupid before your said anything :)
Too bad this won't ever get back into overbought territory :(
Because we've had such an impressive run ($4.20 to $2.00) in a zero interest rate environment: Let's discuss what will fuel our next "growth" period down to $1.00! Is it too soon to start guessing the delisting date?
The dumber the response, the more entertained I will be.
No. Smart money is short, they won't get squeezed. Dumb money piles in on earnings or press releases because they sound fancy.
No need to hope. Here's the cliff notes:
Fatshark in line with averages
Rotor Riot below average
LuGus below average
Teal no prior data
The last name isn't relevant. I also forgot the name and I'm too sad for not having any short position to care.
Fatshark:
They will emphasize how it has room to grow, and will cite that their digital system is gaining acceptance, when in fact sales only picked up due to availability problems of competitors. ER will forget to mention that they will be facing even more competition starting early next year.
Rotor Riot:
Youtube views are down 75% from 1 year ago. And that's all you need to know to paint a picture of the rest.
Man, I hope it pops on the ER. I think this fruit has one last juice in it. And I know none of the permabulls here will sell at $4 or $6, and will gladly borrow me their shares :)
Because we are all bored watching RCAT head into the inevitable abyss, there is time to discuss what you would call a stock that consistently pumps for a day and then returns all of the gains and then some over 3 months. I can't seem to get my suggestions past the parental filter ...
Load up, gentlemen, we're so close to this breaking out
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NOT
If you're long, you can't know what you own.
Are we kicking rocks, or treading water? Time for a pump so I can go short again?
Maybe in the meantime we can play PR-bingo? What's your guess for the next installment:
- A merger with Evergrande
- Announcement of new customer but no figures
- A completely new sales strategy
- Twitter poll if they should bail the stock and leave the longs holding the bag
- Final resting place of the DroneBox business plan
Good ER? Really!? What was good about it?
Or maybe they just posted the purchases immediately, and the sales 6 months later like Fatshark did.
Fatshark owner sold 522'722 shares at $4.90. Are you paying attention yet?
At least the market doesn't seem to care about your sentiments. We're down 40% from the reverse merger price. Market cap is down despite having acquired several companies, and shifting strategies over and over again. The drone market is twice the size now than it was back then. And management has diluted more shares than they will ever make in revenue in the next 10 years, and paid themselves handsomely for the pleasure.
As the old saying goes: If everyone is going the wrong way, check the side of the road you're on. Tooodelooo!
I closed my position, which means I bought back the shares that I shorted. Unfortunately I missed the last pump to re-enter. They will beat this dead horse for another year or two at least.
I will quote five things that I have been right about for every one thing you can find that I was wrong about. Go on, I'll wait ...
Besides. Your opinion matters zilch to me. You are - at best - a lemming that will get taken for his entire investment. And I will have the great pleasure of pointing out to you that "I told you so". When that day comes, we can have another conversation about credibility.
"I would want some of my original investment out of even a great investment for diversity as well as planting seeds in other places. Yours is not the only valid conclusion or opinion to why early angel investors sell."
I never said it's the only reason. But it's a fair assumption that they are selling for less than they bought in, yes? There's a difference between selling for a massive profit and diversifying your portfolio, and cutting your losses.
As to the synergies:
"Red Cat, he said, brings just the right mix of talent, experience and funding opportunities to help propel Teal to the next level."
Red Cat has no talent beneficial to Teal. In fact, the last drone that Teal and Rotor Riot worked together failed miserably. Fatshark is good at making goggles, which are irrelevant to Teal (see the remote control). And Fatshark's manufacturing is in China, which is not accessible for Teal's "Made in USA" market. Red Cat is also a younger company that Teal is. As is Rotor Riot.
So, that statement is about as boilerplate as it gets, and thus proves that there are no synergies (otherwise they'd be mentioned).
I closed my position weeks ago at $2.60, as I posted multiple times in the last few days. I was also pretty clear that my motivation isn't to save everyone, but to see you ignore my advice and then lose money. The more you buy and hold and tell me to kick rocks, the happier I will be when this thing hits 10 cents. When, not if.
What I post here has no impact on price. RCAT management is making sure the price will go up hard with some PR, and then slowly go down as they sell.
So, the question you should be asking isn't if I don't like making money. I've made plenty of it shorting. The question is, do you (and all the other guys here) prefer to insist on your view over making profits. I just don't ask that question, because I already know the answer.
What you don't seem to understand: my posts are a result of my projections, not my position. I have not made a secret about my previous short position even though it is irrelevant. This is supposed to be a forum where research about the company is shared, and then people can determine their own best course of action. The buying power on this forum did not move the needle when the stock was not popular. So, if you think that I'm posting here to try and move the stock down now that the volume is 1000x higher than before, you underestimate me. Also, since I don't currently hold a position, I'd be dumb to push the price down further with my posts.
The reason I post here is two-fold: I learn who I am betting against. And as I have said before, I get a kick out of telling people there is a train coming, and then seeing them get run over by that train.
There are many signs that the company is to some degree fraudulent. I am sharing those signs here - in contrast to repeating the company's press releases served with a side of the cognitive equivalent of "tO tHe MoOn!".
So far, the main criticism about my posts has been that I have a short position. I have yet to be proven wrong on any of my projections. This should make you worry. Clearly, it doesn't. You didn't even manage to use my projections to your advantage as a long! Which is why I am so happy with who I am betting against. Choo choo!
Careful.
If the infrastructure bill is passed, then by definition only solutions that exist will be acquired. RedCat doesn't have anything. Let's assume they had something right now, a contractor will still use what he already owns or has several years of existing market time.
Now, you might say, but what about Teal. Teal is a one-stop shop. They make everything. They will not benefit from any synergies from RCAT, as Teal's tech is by and large beyond everyone else. So, Teal's investors will price in what they bring to the table, as they should, and cash out. Unless you think that these investors - angel funds who specialize in early ventures and technology - are stupid and will just hand you free money.
Remember last year when Rotor Riot predicted 4M revenue? They didn't even manage half, and if we're assuming that their first fiscal months were like their last ones in the previous year, their revenue is down over 50%. Their youtube views are down over 50% from their peak 6 months ago, or over 30% from a year ago. When market shares decline, in order to prop up numbers new products have to be launched. There is one goggle in the lineup which at best will cannibalize Fatshark's existing goggle sales. Nobody is ditching DJI's offering in favor of Fatshark's, which is what they would need to capture new customers (or avoid losing old ones permanently). Rotor Riot has nothing coming. Fatshark will additionally siphon profits through the factory, using chip shortage as an excuse, as they should, because anyone dumb enough to fall for the most obvious trick in the book (owning both parties in a transaction but selling access only to one) will only learn their lesson one way. Additionally, Teal is a sinking ship by admission of investors selling their stakes, leaving the RCAT investors to pay for the parachute.
And after all this, you, Mr. Shalom, still seem willing to turn the other cheek. More power to you, I say!
We ain't seen nothing yet.
The market does too!
It's quite concerning that you would call this ER good. 4M revenue is not good for two companies that you almost paid 25M for, and that can't even get a gross margin of 20%. Loss 2x higher than revenues. Declining market shares. Zero moat. Fatshark also even acknowledged declining market share and surrendered technological superiority. Just like I predicted many months ago.
What I missed, but found interesting in this ER: the "Fatshark" that RedCat bought is just a shell company located in the Caymans. All the manufacturing is done by the wife, using her companies. Anyone know how to spell "transfer pricing"? Due to the reported gross margin (20%), and actual gross margin being somewhere near 100% on such products, you do the maths where the money is flowing.
Stock compensations almost equalized revenue. Which is strange, considering this company is supposed to have a bright future. So either the owners are bailing, or they're diluting shares. Neither explanation is positive for the longs.
The only positive outlook is that DroneBox is pretty much confirmed to never be a product. They have shifted their strategy from being a services company (last ER) to being a manufacturer (this ER). The marketing genius it must require to do a complete 180 on your business model and somehow not have one of the strategies declared a total failure? In either case, it's good news they at least recognize that DroneBox has no regulatory backing and very little chance of becoming a viable business.
Little tidbit for the perma-bulls here: Teal and Rotor Riot already once had a cooperation. The Teal One Race drone was manufactured by Teal, but was the brainchild of Kapper. No doubt that Rotor Riot collected a fine commission fee, as hinted at by some of their previous pilots in interviews. The product was a giant fail, if I had to guess they never sold more than double digit units. Why Matus would allow to get fooled twice shows the amount of options left on his plate.
Hoping for another pump so I can short this turd again. I feel bad for closing my position at $2.60 ...