Tag: steemleo

I talked about the DAX most recently, three weeks ago,

Where Is The Dax Headed Next???

The DAX is a blue chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange.  And Germany, the biggest economy in Europe is stalling.   Germany is an export country and so they have been hit hard by the trade tariff between China and the US and the all the uncertainty surrounding Brexit.

You put all these issues in a pot and the finish product is an inevitable recession.  An inevitable recession was further supported by the recent ZEW Survey.  ZEW Indicator of Economic Sentiment is a leading indicator for the German economy. The recent ZEW Survey showed sentiment among investors fell to -44.1 from -24.5 in July, its lowest since Dec. 2011.

Source

Since price broke the 12200 level and formed a “M” pattern, also known as a reversal pattern,

I’m not sure if price will get back to the 12220 level for a short,

so lets see if price to push to the downside and pull back for a short.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Back in late March Lyft made their debut on the stock exchanged and opened at $72 per share. Lyft is now down 18% since its IPO.  Despite the positive earnings last week, which included raising their full-year outlook, Lyft has further downside.  There have been countless questions and discussions surrounding Lyft’s business model.

 In fiscal 2019, Lyft expects to generate revenue of at least $3.47 billion with an adjusted EBITDA loss of $850 million to $875 million. In 2018, Lyft’s EBITDA’s loss was around $850 million.  Thus, Lyft may never make a profit, nor do they have a clear path to profitability.

But here is why I think Lyft is a short now.  During their earnings announcement last week, where they reported raised their full-year outlook, Lyft said they are cutting down their lock-out period from late Sept. to Aug 19^th.

“The lock-up period is scheduled to end on September 24, 2019, which falls within the Company’s quarterly blackout period that commences at the end of the day on August 31, 2019,” the company said in the filing. “Therefore, in accordance with the lock-up agreements with the underwriters, the lock-up period will end at the open of trading on August 19, 2019, which is ten trading days prior to the commencement of the Company’s quarterly blackout period. The Company will also release the market standoff agreements when the lock-up period expires.”

Lyft expects that about 257.6 million shares of Class A common stock may become eligible for sale in the public market beginning August 19. This includes about 12.8 million of Class B shares of common stock converted into Class A stock.

Newly public companies are typically subject to a lock-up period preventing insiders including founders, directors and other employees from selling their shares for a designated period of time. The restriction is intended in large part to prevent these investors from injecting large numbers of shares into the market, which could send stock prices lower by quickly increasing supply.

Source

So there are about 274 million shares outstanding.  The founders, institutions that bought a stake in the company before going public want to cash out.  We are talking about potentially diluting the float (float is the number of shares actually available for trading) by almost 100%.

August 19^th simply becomes a supply and demand issues, very similar to the supply and demand issues on Steem.  It’s way too expensive to short the stock by borrowing shares due to the borrowing rates, which was once 100%.  Thus, the best way to short Lyft is through options.  But give yourself so time for the trade to work.  The leap options, January 2012 options are too illiquid.  But the January 2020 put options gives one plenty of time for the trade to work, which also includes time for an additional two earnings report (which may not meet expectations).

So if you think Lyft will at least test the lows within the next five months,

Consider buying some January 2020 put options with a strike price at $50, but first ensure its liquid enough.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

This is my third and
might be my last post on Box, not sure if they are worth discussing any
more.  So let me catch you up on things.

I first spoke about Box five months ago,

Box Got Crushed

In 2005, Box was founded
and ten short years later, the company went public and now serves 70% of the
Fortune 500 companies.   Box began as an enterprise-focused cloud
storage company, but it’s been increasingly building out a platform on top of
its cloud-storage product.  I was never
high on the company because one of their biggest competitors is Microsoft
Corp’s OneDrive and SharePoint, who based on their size, sold the same
commodity type storage for cheaper.

Needless to say, earlier this year when they announced fourth quarter earnings, the results were below expectation.

I personally saw further declines and the chart suggested price would head down to the monthly demand at $14.

Lets fast forward to June,

Box Got Crushed – Part 2

Box announced their first quarter earnings report. Box’s revenue in the quarter increased 16% from a year earlier, but the lowered their forecast for the rest of the year leading to a sell off in the stock. Needless to say price hit and bounced off the the monthly demand zone at $14. As the zone indicated, there were unfilled buy orders which cause the bounce in price.

So the question at the time became there more unfilled orders at the demand zone or did they get all used up after the bounce in price?

Box isn’t scheduled to announce earnings until late Aug, but their direct competitor Dropbox Inc announce their second quarter earnings this past Thursday.  Dropbox reported a slight increase in the number of users who are paying for its file sharing services but they also reported a wider second-quarter net loss.  Again, since Box is in the same line of business as Dropbox, Box sold off as well.

So now we can answer the question of were there more unfilled buy orders at the demand zone or did they get all used up after the bounce in price in June? I’m sure there were more unfilled buy orders below the pivot highlight by the purple circle, but the sellers absorbed them all and pushed prices higher.

I expect price to bounce from current levels, but then head lower, eventually to the weekly demand at $10.50.

This post is my personal opinion. I’m not a financial advisor. Do your own research before making investment decisions. By reading this post, you acknowledge and accept full responsibility of any gains or losses.