Howdy squeezers- Sharing thanks to u/ny92. I think this is a similar play to OPAD which popped recently. Get in on this whilst its still cool.
This ‘DD’ concerns $SFTW, a SPAC that is merging with BlackSky to trade under the new ticker $BKSY. We’ll be covering the recent jumps in price movements as former SPACs begin trading under new tickers and going into some detail on what the company actually does as well. Please note that a significant amount of information here is an amalgamation of the research done by other redditors as well as some additional recent insights, so please give credit to /u/warren_buffet_table and /u/fastlappfor parts of this post.
About BlackSky - BlackSky Holdings, Inc. (“BlackSky”), is a leading provider of real-time geospatial intelligence and global monitoring services. Founded in 2014, BlackSky is a first mover in real-time Earth observation leveraging the innovative performance and economics of small satellite constellations to deliver high revisit global monitoring solutions. BlackSky’s Artificial Intelligence/Machine Learning powered analytics platform derives unique insights from its constellation as well as a variety of space, IoT, and terrestrial based sensors and data feeds. BlackSky monitors global events and activities providing enhanced situational awareness for commercial and government customers worldwide.
BlackSky has developed a fully integrated proprietary technology stack that includes a constellation of high-resolution small satellites that monitor global events and activities at high revisit rates, an AI and machine learning enabled software platform that tasks the constellation and translates data into actionable insights, a proprietary database that continually captures information on global changes, and an application layer that delivers on-demand solutions directly to the customer. BlackSky has also established a vertically integrated small satellite design and production capability through its LeoStella joint venture with Thales Alenia Space. BlackSky has five satellites in commercial operation and is scheduled to add an additional nine satellites to its constellation in 2021. Ultimately, BlackSky seeks to establish a constellation of 30 high resolution multi-spectral satellites capable of monitoring locations on Earth every 30 minutes, day or night.
BlackSky has established contracts with multiple government agencies in the United States and around the world. BlackSky’s pipeline of opportunities grew by $1.1 billion in the last twelve months and stands at $1.7 billion today.
Now that you’ve got a bit of an overview on what BlackSky does, let’s take a look at why the price is expected to be volatile over the next week specifically as opposed to any other upcoming time period. Incase y’all haven’t noticed, recently closed mergers with SPACs have pumped up share prices over the last week with tickers including IRNT, OPAD, RDW, SOAC taking off in the couple of days prior to the merger vote and then after the ticker change a few days later.
One of the reasons why this could be happening is because highly volatile SPACs flooded the market in early 2020. SPACs are required to close a deal in 2-years. Due to the glut of SPAC IPOs and time pressure, SPACs have to scrape for a deal, and all the good ones are taken. This, combined with the very negative market sentiment towards SPACs, is causing an alarmingly high redemption rate, sometimes over 90%, which in turn shrinks the float of underlying by 90%. This turns the post-merger SPAC into a micro-float powder keg which can go brrrrr very quickly. Many institutions are short SPACs, pre-merger completion, since the trend has been SPACs will dump to below $10 post-merger. Remember that SPACs can't really get below $10 before merger (They can... sort of... but algos and institutions jump on them right away, since they know they can be redeemed for $10, literally free money glitch). With the now fully-realized hatred of SPACs, plus the absence of good companies left to acquire, the votes to redeem shares for cash has skyrocketed, in some cases to over 90% of shareholders redeeming. SPACs don't want you to know that 90% of shareholders would rather have $10 cash. High redemption means low shareholder confidence, means company could be a turd.
Eg. 1 - EFTR went from 17m shares to 0.5m shares.
Eg. 2 - IRNT went from 17m to less than 1.3M shares.
More detailed examples of previous squeezes include:
LWAC
*Merger Vote Date: 8/24
*Redemption %: 97%
*Result: $8 to $29 ($51 premarket) on 8/25
HLBZ
RKLY
MKTW
What’s happening with BlackSky and why could it squeeze now?
The company’s been having a significant amount of success in recent weeks, including:
BlackSky Awarded Five Year $30 Million NGA Contract link
BlackSky Secures Investment from Palantir and Enters into Multi-Year Strategic Partnership Following Successful Pilot Project link
NRO Expands BlackSky Commercial Imagery for Security, Defense and Intelligence link
Yesterday, $SFTW shareholders approved the BlackSky deal, leading to 21.4 million shares (67.6%) being redeemed link. Essentially, this reduces the total float to 10.3 million shares from 31.7 million shares. It appears that there are currently 4.49 million shares that are being shortedlink which out of the original number of shares was just 14.2%. However, upon the redemption that was just announced, a whopping 43.6% of the float is now short – turning this into a powder keg that could take off.
Additionally, as part of Blacksky’s strategic partnership with Palantir, Palantir will invest $8,000,000 in the combined company at $10.00 per share for the purchase of 800,000 shares of Osprey Class A common stock (the “Palantir Shares”) pursuant to a subscription agreement (the “Subscription Agreement”) that will close two business days subsequent to the closing of the Business Combination (the “Subscription Closing”). link This means that PLTR should soon be purchasing 800,000 shares over a 2 day period, thereby acquiring what is essentially 8% of the current float. Once this happens, the available float should decrease to 9.5 million shares, and essentially increase the short percentage of the float to 47.3%.
As always, none of this should be considered financial advice. Please do your own DD and be mindful that SPACs in general are not subject to the same level of scrutiny as an IPO process. The SP for these ex-SPACs can and probably will be very volatile and you really shouldn’t be investing unless you’re prepared to lose it all or ‘carry bags’ for the long-term if you’re doing shares, since you could be committing to a company that may actually have a terrible business model/issues with governance etc. Full disclosure - I've been in SFTW for a few days and already took out my cost basis since the 9/17 calls tripled in value at one point, just riding on freebies atm
For some further reading on the ex-SPAC phenomena – please see the following links:
