Govprs, on February 22, I posted here the following two posts (see Post #1 and Post #2 below) I had originally posted on the Stocktwits board. The XOS share price has nearly doubled since then, closing today at $13.57, while SOLO closed at $0.2369. A SOLO shareholder who posts on Stocktwits told me that he followed my advice from Post #2 (reproduced below), and must be very happy today.
The XOS share price closed today even higher than my $12 estimate, because I used a very conservative valuation for the two combined companies of only 100 million in my calculations. The higher the XOS share price goes prior to the merger, the more likely that the merger is approved by both XOS and SOLO shareholders. If XOS stays at today's closing share price of $13.57, the SOLO share would be worth $13.57x0.0145(the exchange rate)=$0.20, which is not too far from SOLO closing share price today.
This is just the beginning in my opinion. Following the merger, if approved, XOS share price will go much higher, this is why SOLO management is proposing voting in favor of the merger, and rightly do, in my opinion.
Post #1
Following are my calculations. Note that my SOLO exchange rate matches the results of another member using a completely different method.
- Calculated current number of XOS shares based on initial merger PR stating that XOS management owns 3.23 million shares, representing 49.5% of all outstanding XOS shares, so XOS outstanding shares = 3.23/0.495 = 6.5 million.
- After the merger XOS will own 79% of the shares in the combined company, which can be estimated by 6.5/0.79 = 8.23, or 8.23 million shares.
- SOLO shares = 8.23 - 6.5 = 1.73 million (or 0.21x8.23)
- There are currently 119 outstanding SOLO shares, so exchange ratio = 1.73/119 = 0.0145
- Assuming a combined company worth of $100 million, XOS shares would be worth 100/8=12, or $12 a share at time of merger, SOLO shares at time of merger would be worth 0.21x$100=$21 million/119 million outstanding shares = $0.18
Post #2
Assuming the calculations in my previous post (above) are correct (i.e., at time of merger, if approved, SOLO shares are worth $0.18, while XOS shares are worth $12), would suggest a good strategy for current SOLO shareholders would be to vote in favor of the merger, sell their SOLO shares and buy XOS shares (as long as SOLO shares are above $0.18, and XOS shares are below $12).
AI
