What’s up, been a lurker on this subreddit for a while- even used to have a flair back in the day, but this is my first DD - this is not financial advice I have one too many chromosomes for that.
SPCE has announced they will be launching their next test flight in may 2021. Historically SPCE has rallied before test flights, and then plummeted back to earth faster than their shitty failed launches. The stock price has taken a beating recently, as with many other growth stocks, it is down 50% since Feb 11th.
I believe this presents a tasty opportunity, and I think it is probable the stock will rally in a similar manner as it has done in the past when a test date is announced.
The play here is to buy calls for either May if you are feeling brave, or June if you want a degree of freedom with dates. You can hold the calls through the test flight if you want to risk it for the biscuit, but the safer play is probably to sell before the test as SPCE have been fucking up their test flights.
There is a part of me that believes that this next launch is crucial for the success of SPCE as a company, and that they will be highly unwilling to allow another failed test. Therefore, I am inclined to believe the test will be a positive result- but that is more of my personal feeling not based on facts and could be a prime example of gamblers fallacy. If the launch is successful then calls could print bigly.
Bear Case: SPCE already up 91% YTD and is a growth stock which can get fucked harder then your mother by a sector rotation to value. Also, there may be low confidence in SPCE as investors are tired of failed launches, this may limit the pre test runup. Also, there has been no firm date set for the launch- if there are continued problems then the options may expire before the rally. Finally, for those of you who eat crayons, the 1YR chart does somewhat represent a head and shoulders pattern, if SPCE falls below $26 there could be problems- personally I think technical analysis has about as much merit as palm readings and I’m not too concerned about this.
Positions: 30 X JUN 18 $34 calls - will likely sell half in the run up and hold out half in the hopes the launch will be successful.
If anyone has advice on why this is a bad play, please let me know - I’m here to make money not conformation bias
SPCE is the NKLA of Space
"Maybe." That's a deep thought.
Pleas fly again.