Savvy Trades and Investments

[value1008]

ELMS - there are some good insights from Horst over at the new I-hub ELMS board. He's been swing-trading a number of SPACs and post-merger tickers.

First, here's what he clarified about ELMS' recent S-1 filing, which the market evidently misunderstood this past week, likely exacerbating the sell-off:

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[Horst at I-hub ELMS board:]
The S-1 was primarily registering warrant shares, earn-out shares, founder shares, private placement units etc. that were part of the SPAC merger deal, and the shares are being registered for resale by the eventual owners of those shares, not ELMS. So it's not a share offering in the usual sense, just registering the shares that were part of the merger deal . Traders always get spooked by these, so they present a good dip if one is looking. The company doesn't receive proceeds from these shares aside from warrants that may be exercised, though the sponsor, execs, etc. will get assorted incentive shares once the benchmarks of $12, $14, and $16 have been sustained for 20 out of 30 consecutive days respectively. This is standard chowder for SPACs.

Here's the equivalent S-1 for FSR [Fisker] that was filed shortly after its merger was consummated: https://www.sec.gov/Archives/edgar/data/1720990/000119312520289193/d92481ds1.htm

Here's the equivalent S-1 for QS [Quantumscape] shortly after its merger: https://www.sec.gov/Archives/edgar/data/1811414/000119312520320220/d53940ds1.htm

So this S-1 is just part of the process of registering already-disclosed eventual shares that were part of the SPAC merger deal.

Here's the ELMS S-1 which is worth reading in full even though it's long and tedious....
https://docoh.com/filing/1784168/0001213900-21-038397/ELMS-S1

The OS barely changed after the "offering" [from 124M O/S to 132.6M O/S] because the vast majority of these shares have not been issued yet - they will be once certain pps benchmarks are reached and once warrants are redeemed.
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And here is one of Horst's very recent posts about the Jefferies "initiating coverage" with a PT of $18:

$ELMS Buy Rating with 18.00 price target in new coverage by Jefferies

Jefferies was part of the ELMS merger deal and will get incentive shares after the stock has been at 12.00 or higher for 20 out of 30 consecutive post-merger trading days, which is why I've been waiting for the Jefferies coverage as an indicator that it's time for this ticker to start its overall upward trajectory. Warrant shares as well as Jefferies' and other earn-out/incentive shares were registered last Friday, and now that Jefferies has initiated coverage, imo the table is officially set here.

The other benchmarks for earnout shares are 14.00 and 16.00 respectively, also with that 20 out of 30 consecutive days provision, and warrants can be exercised at 11.50. Most de-SPACs require an 18.00 pps for 20 or 30 days tor the company to redeem warrants (I believe it's the same with ELMS but don't have the prospectus in front of me - correct me if I'm wrong).

At any rate, the big boys don't like to wait terribly long to cash in, so assuming a willing sector/market overall, I think it's likely we'll see an upward trajectory kick in sooner than later to hit that first 12.00 benchmark or higher for a sustained time. No guarantees, but this is how I've played all the good de-spacs - anticipating the channels outlined by these assorted incentives, assuming downward pressure once new shares hit followed by news that kickstarts a recovery, etc. - and it's been lucrative for me thus far.

Just my opinion of course, and there are never guarantees that any stock will perform as expected, as we all know.

[P.S.]--ARCA has had the algo set to "retail despair" for the last week and a half. It'll head back up when the shakedown phase is complete...