WTF coming to Spire Stock – SPIR?

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There is nothing quite like a free lunch. It’s the title of a book by economist Milton Friedman that business school teachers expect you to read as part of your bee school experience. It’s a terribly boring book that you can skip just by thinking about what it says on the tin. The saying “there is no free lunch” was in use long before Milton Friedman’s Horrible Book. This apparently happened when bars served free lunches with lots of salt so that patrons drank enough beer to more than make up for the free food they were offered.

This old American proverb is particularly applicable in the current era of crypto cults who believe that assets with no intrinsic value only keep going up.

Worst Financial Advice Ever – Credit: Twitter

Everyone believes that there is an easier way to get rich, so the length of time they expect to see earnings has decreased significantly. Newbie investors are particularly guilty of this sin – confusing short-term price appreciation with the quality of a business. This is only magnified by all of the get-rich-quick crypto stories.

When a stock price begins to move sharply in one direction, it’s usually because new information has become available. If you can’t find new information, submit it to the second litmus test. Is the stock moving erratically in all directions? If the answer is yes, you have probably stepped on a manipulative mine.

A short adventure with SPIR

Our catalog of technological actions contains 351 actions. Almost 18% (63) are sspecial pgoal apurchase vscompanies (SPACs), including Spire Global. This is a stock that we first discussed in our article titled Spire Global Stock offers pure nanosatellite play, and shortly after, we bought some shares. It didn’t last long once we learned that Planet was considering an IPO – unfortunately using a SPAC as well.

We sold our SPIR stock for two reasons. First, because they played Planet’s second violin. We are always looking for leaders in a particular area and that is where we place our bets. Second, because Spire Global had not completed its merger. As we discussed in our article on Why popular PSPCs are on the decline, these types of mergers are not guaranteed to end. There is always a chance that they will fail and you will take big losses. A simple rule to protect yourself: if you are going to buy a SPAC, wait for the ticker to change.

Whenever we decide not to invest in a stock, we don’t encounter any FOMO if it jumps. And that’s exactly what Spire Global action did.

Is WFT coming to Spire Stock?

Imagine you bought shares of Spire Global the day their merger was completed at $ 10 a share. They traded around this price for a number of days after the merger, so let’s assume you backed up the truck. And as you well know, once you buy a stock, you always watch the price to validate your decision. You know what we’re talking about, don’t you?

Let’s say that one day the SPIR share increased by + 20%. You would be happy, right? Well, what if SPIR increased by + 13% the next day, and + 15% the next day. You would be really happy, eh? Well what if it skyrocketed + 22% the next day then + 28% the next day? You would begin to identify yourself as the second coming of Nostradamus. During those five days, you would have seen your investment peak at a + 95% Gain. But all that excitement would have quickly faded when it happened during SPIR’s last trading session.

Spire Global Stok Chart
Credit: Yahoo Finance

Now you would feel like absolute crap. SPIR jumped + 95% and even with your keen investment sense of Baba Vanga, you didn’t have the cojones to pull the trigger and capture that alpha. Now you’re almost down -30% on your high-flying technological stock, and you question your initial decision. So you decide to sell the next trading session, only to see the share price skyrocket. + 30%. So you redeem, and it falls back, so you blah blah blah …

We’ve all been there. What you have encountered is a stock which is now being manipulated by day traders who feed off human emotions. Well, in fact, calling these people “journalists” spit in the face of all the BSD accessory traders. It’s actually a bunch of baboons on Reddit posting nonsense like this:

Reddit article
Posted three days ago – Credit: Reddit

Sure, this boy / girl might be using some sophisticated technical analysis to come to their conclusions, but the real winner here is the Renaissance AI algorithm that read this rant about 2 milliseconds after it was posted and is now twisting the Robin Hood warriors of the week who mimic any get-rich-quick deal they can find.

Let’s go back to the original story we started with – an investor who bought shares of Spire Global at $ 10 a share and is now underwater. -30%. What should this person do? It’s an easy answer. You buy more and use the average dollar cost because this bronco is going to waste time for a while.

How far can the SPIR stock go?

For whatever reason, every investor has that point in time when they think a stock will not exceed an arbitrary stock price target. “There is no way that Spire Global shares will fall below $ 7 per share,” you will hear them say emphatically. Well, that’s certainly possible, because Spire Global stocks are currently very well valued, at least by our simple valuation ratio.

  • Market capitalization / Annualized revenues
    1,827 / 36.44 = 50

We do not buy shares of companies with a ratio greater than 40, no matter how big their history is. If Spire Global were valued in the same way as Tesla – a simple valuation ratio of 16 – then the shares would trade at $ 2.26 per share. So before you save the truck, accept that there is no reason Spire Global cannot trade at these levels.

We’re now talking about 1,000 words in this article, and we haven’t once talked about Spire Global, the company. We just discussed the volatility of stock prices, which by now you should realize that this is a complete waste of time. This distracts attention from measures that long-term investors should pay attention to, such as income growth. Spire Global’s SPAC deck has promised us $ 56 million in revenue for 2021, and the first two quarters are telegraphing a trend going in the wrong direction.

Yahoo Finance Spire Global Quarterly Revenue
Credit: Yahoo Finance

As with all PSPCs, Spire Global must justify its high valuations by showing us the revenue growth they have promised. Hopefully they catch up with the distance in Q2 / Q3 2021.

SPAC and volatility

It seems like everyday we find a new reason to avoid PSPC. A recent Wall Street Journal article (we do not link to paid articles) explains how PSPCs are now the latest target for action manipulators on Reddit who direct their minions to move actions in the direction they want.

Wall Street Journal Title
Credit: WSJ

Quality stocks are not subject to such volatility as institutional investors will step in quickly and support prices. This is why Johnson & Johnson (JNJ) has a stock chart that looks like this.

Johnson & Johnson (JNJ) has a stock chart on an ascending scale
+ 6000% in 36 years

JNJ could arguably be one of the best stocks to own if you could only own one stock. Not only has JNJ increased its dividend for 59 consecutive years, it has also exhibited superior capital appreciation. Over the past 40 years, JNJ has returned + 6.958% compared to an S&P return of + 3.434% over the same period. Getting rich is about time in the market, not timing of the market. And that certainly doesn’t involve going into crypto to gain a significant edge over your peers.

Conclusion

Spire Global is one of 63 PSPCs we reviewed. Like the others, they made noble promises regarding future income growth. Short-term price volatility is no guarantee that the company will meet its revenue targets. At the moment, the trend is not our friend.

Investors who believe Spire Global offers a superior value proposition to geospatial intelligence leader Planet should be excited now. You can buy a quality business for less. At least you better hope this is some quality stock. Keep an eye out for the metrics that matter, and you’ll probably want to resume a little melatonin.

Want to know what 30 tech stocks we currently own? Want to know which ones we think are too risky to hold? Become a Nanalyze Premium member and find out today!


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