The Graduate

Contributor Post by Nikita Arora

Sunday, August 22nd, 2021

Happy Sunday Folks! 👋


I had a busy weekend and staying out late isn’t the most conducive thing to do on a Saturday night if you have a blog to write on a Sunday. I question it each Sunday if I should switch writing to a week day, but then I also forget about it until the next Sunday arrives, and so I remain in this loop. But on the plus side, it actually prevents me from making questionable choices because I am reminded of you guys and want to remain loyal to you! So, thank you for keeping me in check! Haha. And I think we will continue with this cadence for now. It is good for me.


I watched ‘The Graduate’ this week — the 1967 movie with Dustin Hoffmann, Anne Bancroft and Katherine Ross. What a funny movie! I went down the wikipedia hole after watching it and was surprised to find out that in real life, Anne Bancroft (Mrs. Robinson) was only 6 years older than Dustin Hoffmann (Benji). But in the movie, they cast her as being 20 years older than him! WTF!! Oh, and here’s another fun fact – Katherine Ross, who played Elaine (Mrs. Robinson’s daughter) has been married 5 times in real life! But the thing that really caught my attention was the Simon and Garfunkel song “Hello darkness, my old friend…” and it automatically reminded me of … you know who! 😉



The song inspired me to check in on my old friend SPAC and look at the ones that graduated to trading as public companies. Since earnings season is almost done with 90% of the graduated SPACs having reported their Q2 earnings, I was curious how many ended up raising or lowering their guidance. As you can see from the table below, out of the total 172 De-spac’ed companies that have announced earnings so far, 27% raised their guidance and 13% reaffirmed it. Only 18% actually lowered or withdrew their guidance. I don’t have the data for how the non-SPAC IPOs of 2021 are doing, but my hunch is that these numbers are comparable to the traditional IPOs.



The top 10 names to raise guidance are below. As I was looking through the names, I noticed some interesting themes. Consumer, and bringing the consumer online remains the biggest macro theme. And while there are certain sectors that are ahead of others in bringing their consumers online, all of them have ‘tech’ as their middle name – whether its enabling sports betting/trading online ($DKNG, $RSI) or digital innovation in healthcare/lifestyle ($CLOV, $HIMS, $FREE, $PLBY) or digitizing real estate ($OPEN, $PRCH). Also, worth noting is that there are still names on this list that are trading below $10! ($HIMS, $SFT, $CLOV). Obviously that on its own doesn’t qualify them as a buy but what I am trying to highlight is that these are the names that not only delivered on what they promised, but further raised their projections. And yet here they are available at a discount from the original deal price.



On the flip side, the ones that withdrew the guidance (table below) also share the same ‘tech’ middle name. They were all promising to techify whatever sector they were operating in but forgot that delivering on those promises matters too. (But the fact that they made it this far does make them great salesmen (or conmen). Cuz jumping those many hoops to go public ain’t no easy task!)



But the key takeaway here is that as this earnings scoreboard starts to build, it will help us in discerning which companies are truly leading the ‘bring your consumer online’ (BYCO?!) charge.


Too bad that $PSTH will most likely not be joining that party because Billy wrote to his investors this week that he’s being sued and while he believes “the lawsuit is meritless, the nature of the suit and our legal system make it unlikely that it can be resolved in the short term” and so he may be returning the shareholders money. Well, are we that surprised? I told you guys back in June that Ackman ain’t thy spacman!


Lastly, we are starting to see SPAC deals get terminated now, eh. That’s a bit new. I am a fan of mergers and make ups, not break ups! And of all the deals out there, I wasn’t expecting the $MUDS deal with Topps to be the one ending up in the mud. I remember when the deal was first announced how strongly they emphasized on their partnership with MLB since 1951. 70 year old partnership! And over, just like that. The $MUDS warrants responded by falling almost 70%! Yikes.


That’s all the mud I got. Let’s see what this new week brings. I bailed on my tennis coach this morning, so I am sure I will be paying for it this week. Will report back next sunday!


Have a fabulous week! 💃

Nikita's Substack Feed

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