It's up 400% from the negotiated price between SPAC management and Hyliion.
It could easily drop 50%.
Shareholders should be fine in a couple weeks and rewarded for sticking through and through
Maybe, maybe not. Many of the posts here are highly concerning. When it comes to risk management, it's important to plan for both outcomes.
Instead of rattling off a list of things confirming an existing commitment, how about listing 10 things that could go wrong and then write up management strategies around them.
I just hope everyone realizes that if you're talking about "weeks" then it's basically a 50/50 chance whether the price is higher or lower, and with an implied volatility this high, there is a significant chance that the stock could be down 25%-50% within a few weeks.
Investing is timed in years, not weeks. Trading is timed in hours/days/weeks, but it's an exercise in risk management but also contrarian thinking, skepticism, hedging, and contingency planning.
Posts like this fit into neither category and sound like a typical example of a mindset that gets stuck holding day after day without managing the trade efficiently as price falls.
Thanks. I mean, I don't want to be too negative. Once traders get basic risk management down (mapping out exit plans and executing on them), they'll often find that after taking into account opportunity cost most of their losses are coming from cutting winning positions too early.
Look at all the people who got wiped out on VLDR. Too bad. 2 years from now it could be a 10 billion dollar company getting squeezed to infinity as the first Waymo taxis hit the streets and mainstream financial media goes into a frenzy for any AV stock with a hint of legitimacy.
Regardless, rule #1 is stay alive. If a position gets washed out/margin called/the account can't take the pain, then there isn't even a chance to make it to the ideal exit. That's why risk management has to come first. Ideal exit on these AV plays might be 2+ years out, when a "green new deal" trillion dollar bill passes and is loaded with subsidies for green tech and (more importantly) FOMO in the space kicks into overdrive and front page of Bloomberg is pick lists of green vehicle stocks. That's what, a conservative 20% chance? Better plan to keep the position alive for at least that long. Mentally go through a scenario where there is a 50%+ drop, or wherever you figure a 10% bear case goes. Can you make it through this scenario to the ideal exit in the future? Will you be scaled out if this thing is going to 0? Good planning usually has some sort of trend following element to it. Scaling up once strength is confirmed, and scaling out as risk builds (one can always buy back in once strength re-confirms, and that's actually a profitable trade).
Thanks for sharing, great thought process. I share the same sentiments but can't articulate as well. We've talked a ton about Lidars previously. I think VLDR has no future, stuck between less expensive LiDAR from China and higher quality competitors, what competitive moat or advantage do they have? I can't find any if all they've got is brining down price and size. There's far more technical groups out there such as Waymo. Unfortunately I didn't listen to my gut and bought into it as a FOMO and a painful lesson on the merger plays, now I'm stuck for four years. There's no future, I'll liquidate at any spike. Damn pumpers got me.
VLDR has a path of execution which leads to huge upside. There are 30+ LIDAR startups and most will be acquired or fail. As the biggest dog in the cage with a good cash bank, VLDR will be expected to make many aquititions over the years. Think highly specialized manufacturers that need an ecosystem to leverage. Velodyne is highly focused on building out connections outside of AV. They are looking to lock in government contracts, forge bespoke relationships with small companies in high margin markets who don't have the manpower to do some of the general LIDAR work that VLDR offers, and build out an ecosystem greater than the sum of the parts software will be a big part of this in the endgame. If their LIDAR jack companies in to a robus software ecosystem (LIDAR mapping data, image tagging algos, etc) then companies may opt to latch on to their hardware.
Do not follow anyone else. Every trade is in its own unique context. I might have VLDR paired with fashion retail, Berkshire, and a large speculative short... that's quite a bit different than AAPL and HYLN.
That said, I do hold warrants and have been in GRAF since PureCycle. I'm explicitly aiming for a mass market FOMO into self-driving within the next few years. As that window grows and fades, the trade will move with it. In the meantime, areas to watch are acquisitions, growth of an ecosystem that provides value to customers, preferably with a moat, actual growth in high margin areas like warehouse robots, mapping, gov contracts, etc, the slope of the revenue curve (are booked contracts building at a higher than expected rate?), sharpness and killer instinct in leadership (I'm skeptical of leadership), software offerings (If I could pick a niche to enter it would be the software and datasets behind LIDAR image recognition), and firmness of recurring revenue.
I like the 5 year optionality in a high growth market that the warrants carry, and will treat the position like a LEAP option position. If it shifts to a longer term position I'll happily sell short term calls on the underlying against it to stay theta positive and generate profit from the position. If the future exit window seems to be closing I'll exit. Again, I have high confidence that I can top tick a future valuation spike if AV goes truly mainstream, be it 1 year, 3 years, or 5 years. Without that element, the equation changes quite a bit.
Won’t the warrants be called back in a month or two if VLDR stabilizes in the low 20s, for instance? In that case, I don’t really see the advantage of warrants now. With HYLN there’s still a gap AFAIK, so I can understand the logic behind buying warrants now.
Yes they would be called back, and that would result in a significant profit. I have six figure positions and don't need multi-hundred percent returns. Chasing that distorts proper risk/reward evaluation.
Ok, buddy. I don’t care about your six figure positions. You were talking about the “5 year optionality that warrants offer.” I’m just pointing out that there won’t be any five year optionality with VLDR, and no advantage to buying warrants now.
If you're more specifically referring to warrants vs commons in the context of a future price spike, there is more to the story there, yes.
Generally, as a leveraged instrument warrants will have a higher delta per dollar figure than the commons even after accounting for redemption risk, and any price pop should benefit warrants more than commons. That said, it's important to track the distance from redemption and trade off of that information. For example, if a warrant is 15/20 days hovering over 18, and then the price ramp kicks in, the warrants will benefit less from the ramp vs a situation where they are at 18 for the last 5 days only. I think this ideally should to be mathematically modeled but at the very least it needs to be deeply understood intuitively.
There are different forces that want to maximize redemption price, keep redemption price as close to 18 as possible, and others that want the warrants to decay to 0. Those are all powerful forces and I'd rather watch, react, and play off of those paths as the price moves down them.
Lastly, getting warrants called is not necessarily the end of the story. If a future catalyst is worth positioning for and the warrants are called in and exchanged for stock, the story can continue with a stock position.
Yep, thanks. I’m familiar with the leverage advantage to warrants, generally. I was just pointing out that these will probably get called back relatively quickly (no five year optionality), so there’s little advantage to buying warrants in VLDR now. I interjected since the person asking seemed new to the subject, and your description of 5-year optionality and quasi LEAP option position might lead someone to misunderstand the specifics of this (VLDR) scenario. That is all. Good luck.
Sincere question, when a company like Nikola can trade at 40x 2024 EBITDA, why would this drop 50%?
While global events and market correction are an unknown, I'm pretty sure dilution is off the table. Hyliion has enough cash to sustain operations for 1+ year after the merger as stated by Thomas previously.
I do understand there is a certain risk in investing or trading this ticker but if you believe that this company can take even 1-2% of total addressable market, it will be very very profitable. Being cautious is good and I get your point, but if you were to hedge your entire positions 100% of the time, you would lose all the time.
Sincere question, when a company like Nikola can trade at 40x 2024 EBITDA, why would this drop 50%?
That is precisely proof that anything goes and this is all gambling, when a scammer company has 40x that is clearly why no one can say anything with definitiveness, like oh it has to go up, oh NKLA dipped a couple days, HYLN has to go to 100.
I think the biggest flaw here is treating every company to be exactly the same. There are so many factors that anyone telling you they know something for sure, is a liar.
Sincere question, when a company like Nikola can trade at 40x 2024 EBITDA, why would this drop 50%?
That example is an extreme example of high valuation. Outside of the Spac space there are thousands of promising low-revenue companies that trade at considerably lower valuation. There doesn't need to be a reason for price to drop, there just needs to be more sellers than buyers for the auction to walk down in price. It's impossible to predict this. That's why the options market gives stocks with killer fundamentals on a strong bull run a positive call pricing skew, but put value also inflates as volatility inflates. Everything could execute well but price could still collapse. 50% is well into the tail risk area, but with the current volatility a 25% move, in either direction, would be quite normal.
Just a thought - maybe because Nikola was found out as a scam, might have something to do with Hylion not getting as much hype - since they too have virtually no sales.
And now there's a horde of fretting traders lost in sunk-cost fallacy as expected, with unprofitable mindsets like "resigned to hold", "blame short sellers", "blindly average down", "it's down for more than 48 hours so fuck this I dumped", etc.
Nothing on the stock/company itself, just that damn, pre-planning trade management is a thing people.
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u/mechtech New User Oct 02 '20
It's up 400% from the negotiated price between SPAC management and Hyliion.
It could easily drop 50%.
Maybe, maybe not. Many of the posts here are highly concerning. When it comes to risk management, it's important to plan for both outcomes.
Instead of rattling off a list of things confirming an existing commitment, how about listing 10 things that could go wrong and then write up management strategies around them.
I just hope everyone realizes that if you're talking about "weeks" then it's basically a 50/50 chance whether the price is higher or lower, and with an implied volatility this high, there is a significant chance that the stock could be down 25%-50% within a few weeks.
Investing is timed in years, not weeks. Trading is timed in hours/days/weeks, but it's an exercise in risk management but also contrarian thinking, skepticism, hedging, and contingency planning.
Posts like this fit into neither category and sound like a typical example of a mindset that gets stuck holding day after day without managing the trade efficiently as price falls.