Happy Sunday Folks! š
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I had a busy weekend and staying out late isnāt 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.
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I watched āThe Graduateā this week ā 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 hereās another fun fact – Katherine Ross, who played Elaine (Mrs. Robinsonās daughter) has been married 5 times in real life! But the thing that really caught my attention was the Simon and Garfunkel song āHello darkness, my old friendā¦ā and it automatically reminded me of ⦠you know who! š
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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 theĀ tableĀ below, out of the total 172 De-spacāed companies that have announced earnings so far, 27% raised their guidance and 13% reaffirmed it. Only 18% actually lowered or withdrew their guidance. I donāt 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.
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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 ātechā 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 doesnāt 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.
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On the flip side, the ones that withdrew the guidance (table below) also share the same ātechā 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 aināt no easy task!)
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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 ābring your consumer onlineā (BYCO?!) charge.
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Too bad that $PSTH will most likely not be joining that party becauseĀ BillyĀ wrote to his investors this week that heās being sued and while he believes āthe lawsuit is meritless, the nature of the suit and our legal system make it unlikely that it can be resolved in the short termā and so he may be returning the shareholders money. Well, are we that surprised? I told you guys back in June thatĀ Ackman aināt thy spacman!
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Lastly, we are starting to see SPAC deals get terminated now, eh. Thatās a bit new. I am a fan of mergers and make ups, not break ups! And of all the deals out there, I wasnāt expecting theĀ $MUDS dealĀ 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 fallingĀ almost 70%! Yikes.
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Thatās all the mud I got. Letās 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!
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Have a fabulous week! š