Intraday Update: SMSI, HMNY, AEHR, GAIA, FB, and China

Long-time readers should note some significant changes in how I communicate in the public domain. The primary purpose of this forum is now to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses.

Accordingly, this document should not be construed as an endorsement or recommendation of the companies or securities discussed herein. I am not an investment advisor and this is not an investment thesis. It is merely one part of the story, which I present for debate in hopes of determining all risks and upside potential. The disclosure at the end of this piece is critical to understanding the content of this document. Further, I frequently trade my positions and may buy, sell, or short the securities mentioned herein at any time, regardless of the facts or perceived implications of this article.

 

Smith Micro (SMSI) Getting Hit

I don’t know why Smith Micro (SMSI) is getting hit today (down more than 7% as I write this), especially in light of the bullish (and improving) data points. However, it’s not my job to figure out why someone is selling – it’s my job to figure out what the stock is worth (and therefore, if it’s worth buying /selling).

Today’s research, which I hope to publish within the next 24 hours, shows that the reviews and downloads (and therefore SMSI’s revenue and momentum at Sprint) are all moving in the right direction. So, with the stock down, I’m a little more bullish on the stock than I was yesterday… so I’ve bought some more. If this continues, it will soon become a 7-figure position (which is fine by me; I don’t care about where my money is allocated, as long as I’m comfortable with the risk/reward).

Based on the movement of the stocks I write about (all down today), I might assume that some folks started getting margin calls on HMNY (perhaps due to its decline under $3). As you all know, I’ve been bearish since the stock was $12, but that hasn’t stopped many readers from continuing to hold it. If that’s correct, several of them may have been forced to sell some of their HMNY, AEHR, SMSI, etc. in order to rectify their margin calls.

Generally, this sort of selling subsides around 2:30PM, so we’ll see if the stocks start to recover at that time. If so, it may be a sign that my hypothesis is correct. Of course, that’s just a trading curiosity. From a fundamental standpoint, I didn’t wait until 2:30PM to buy more because I like the price (which is hitting the bottom of my risk/reward channel) now.

SMSI Chart

We’ll see what happens after 2:30PM. Stay tuned…

 

 

GAIA: Another Insider Purchase (and Advertising On Instagram)

GAIA submitted a new filing with the SEC, disclosing that its CEO bought 25,000 shares as part of their $15 offering last week. This, on the heels of disclosing that its CFO bought 12,000 shares in the offering.

As I said earlier this week, “Before the offering was finalized, GAIA said that insiders expressed interest in participating… and they did. That’s bullish. Alongside that, B. Riley gave the stock a $23 price target. My chart supports that target, but not until year-end. So, with the stock up 12% this morning (and hitting the top of my risk/reward channel again), I sold the extra shares I bought last week at a nice profit and sold some April 17.50 calls at an average price of $0.70. I remain bullish, but think the stock just needs to breathe a little before moving substantially higher.”

The stock is down almost $2 since then, putting the stock firmly into the risk/reward middle ground. For investors who like GAIA and feel good about the market bouncing here, this feels like a good price (just 55-cents above what the CEO and CFO paid).

p.s. For anyone interested, I’ve started receiving GAIA advertisements on Instagram.

 

 

Regarding Facebook

This was sent to me by a friend/expert in the industry:

I agree with all of this. The only thing that will scare away big money is a change to the feed that drops their ROIs… https://marketingland.com/advertisers-didnt-leave-youtube-and-they-wont-leave-facebook-237063

 

 

China Tariffs

For reference, I dug up the list of 128 products on which China is imposing tariffs in response to the U.S. tariffs and put it into a spreadsheet for easier use.

 

 

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Disclosures / Disclaimers: I am long SMSI, AEHR, GAIA, and FB. However, this is not a solicitation to buy, sell, or otherwise transact any stock or its derivatives. Nor should it be construed as an endorsement of any particular investment or opinion of the stock’s current or future price. To be clear, I do not encourage or recommend for anyone to follow my lead on this or any other stocks, since I may enter, exit, or reverse a position at any time without notice, regardless of the facts or perceived implications of this article.

I am not a financial advisor. Nor am I providing any recommendations, price targets, or opinions about valuation regarding the companies discussed herein. Any disclosures regarding my holdings are true as of the time this article is written, but subject change without notice. I frequently trade my positions, often on an intraday basis. Thus, it is possible that I might be buying and/or selling the securities mentioned herein and/or its derivative at any time, regardless of (and possibly contrary to) the content of this article.

I undertake no responsibility to update my disclosures and they may therefore be inaccurate thereafter.  Likewise, any opinions are as of the date of publication, and are subject to change without notice and may not be updated. I believe that the sources of information I use are accurate but there can be no assurance that they are. All investments carry the risk of loss and the securities mentioned herein may entail a high level of risk. Investors considering an investment should perform their own research and consult with a qualified investment professional.

I wrote this article myself, and it expresses my own opinions. I am receiving no compensation for it, nor do I have a business relationship with any company whose stock is mentioned in this article. The information in this article is for informational purposes only and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

The primary purpose of this blog/forum is to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses.

23 thoughts on “Intraday Update: SMSI, HMNY, AEHR, GAIA, FB, and China

  1. Fidelity/Schwab won’t allow margin on HMNY in the first place so erase that from your above thesis. Has nothing to do with being a $3.00 stock as my broker said stock has always been too volatile – hence no margin allowed at all

    Liked by 1 person

    1. NASDAQ has a rule that no stock UNDER $3 is marginable UNLESS it was higher than dropped in which case at some point each BD can make their own risk assessment

      Liked by 1 person

    1. Agree. That’s why it’s called a hypothesis. 😂 Sorry, couldn’t resist.

      Seriously, just trying to figure out the move. The data points are getting better and better, yet the stock tanked HARD in the AM and is now coming back.

      I don’t typically concern myself with intraday moves, but the magnitude of this morning’s drop was quite curious, especially considering everything that seems to be happening there now.

      Perhaps some of the newly registered shares are/were getting sold off. That can tend to be as in discriminant as margin related selling.

      Just brainstorming…

      Like

  2. Hey Mark,

    Some more updates on my math with MP. My calculations follow your 2.3 utilization rate in Feb. I also calculated the Jan and March utlization rates: 2.1 (feb) and 1.55 (march).

    Black panther obviously played a big factor into the utilization popping, but how much did it affect it, and how much will Avengers affect the utilization rate? Thats the question at play.

    Based off January’s rate of 2.1, I actually don’t think a pop to 2.3 is terrible based on how successful the movie was.

    My argument is that while we should expect a pop in the rate due to Avengers, we will be below 2. My estimate is 1.8.

    These next few months will be interesting to note as they will show evidence on Mitch’s theory that subs slow down.

    https://docs.google.com/document/d/19UzfPRJSIJONqAUM5za7mD1xlU0dAMLRBFTSjAj_Ido/edit?usp=sharing — here’s my math on it. Got the numbers for box office from http://www.boxofficemojo.com — this time looking at the weekly revenue for each month.

    Like

    1. Be sure to use an AVERAGE number of subscribers for each period in question. Can’t use the latest subscriber figures, because some haven’t been customers for a full month to utilize it fully.

      Like

    1. Wow. I wonder why. Maybe they finally decided to slow things down ahead of the summer movie gauntlet (after talking about it, a week or two ago).

      Thanks for the heads up. The impact on their cash flow is going to be very interesting to watch… 🤔

      Like

  3. Mark or anyone else that wants to chime in – Anyone getting in on the IPO with Spotify tomorrow morning? curious to see what people’s take is on that one, especially with the down market today.

    Like

    1. 1. The down market is 100% meaningless to Spotify’s long term valuation.

      2. I haven’t read the S-1 yet, but this is a fantastic company that is only expanding from music into more video oriented content. I think the company is going to be a winner. We’ll see.

      3. If you like the company, I wouldn’t play games. Buy a bit and then dollar cost average for a long term investment. Trading is a losing game.

      Like

      1. Thanks for your thoughts. With the way they are doing the “non-traditional IPO” wasn’t sure if it would be risky getting in at the beginning, or, even more beneficial… heard it could cause lots of swings this way. I personally love Spotify and have been using their premium service for years.

        Like

  4. AEHR…….Hallum lowered their PT to $5.50. Earnings were good but the company is still in the stages of converting qualifying orders to long term wins. Future is still bright; overall market might be causing it some pain.

    Like

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