Special purpose acquisition company (SPAC)
Stable Road Acquisition Corp. (NYSE: SRAC) stock has been on a tear in 2021, up 38% year-to-date (YTD) as of Jan. 23, 2021. Shares took a hit when the much anticipated
Virgin Galactic NYSE: SPCE second flight test mission failed on Dec. 11, 2020. Space themed stocks ended 2020 with extremely bearish sentiment as funds rushed to dump shares. Sentiment reversed sharply in mid-January 2021 with the speculated launch of a space themed exchange traded fund (ETF) launch by ARK Invest fund manager Cathy Wood.Wood became infamous for her $6,000 price target on
Tesla NASDAQ: TSLA stock in October 2019, when shares were trading under $300. Wall Street shunned her outlandish price target unaware that Wood was in front of the spawning of the electric vehicle (EV) adoption revolution that
would explode in 2020. Stable Road is reverse merging with space infrastructure services company Momentus in Q1 2021. While the company is an ambitious startup, ARK may once again be stepping in front of the next big investment trend, space. Prudent investors can watch for opportunistic pullbacks to gain exposure in a space infrastructure play.
Momentus
The target of Stable Road Acquisition is space pure-play infrastructure company Momentus. Based out of Santa Clara, California, the Company provides last-mile delivery transport services in Low Earth Orbit (up to 1,200 miles above sea level). Customers payloads include small satellites up to 750kg powered by its proprietary water plasma engine technology that is expected to be two to three times better than chemical rockets. It uses super-heated water using microwaves. The first vehicle is the Vigoride scheduled for launch in 2021 with plans to develop larger space vehicles with Ardoride in 2022 and Fervoride in 2024 capable of handling payloads over10,000kg reaching Geosynchronus Orbit (up to 22,236 miles) and Lunar Orbit (above 22,236 miles). Valoride is expected to deliver over 100 tons of payload used for water delivery, asteroid mining infrastructure, moon, and Mars exploitation resupplying. The Company doesn’t compete with SpaceX but is a customer as it requires the use of SpaceX Falcon9 rockets to provide the ride into space. Vigoride provides Uber NASDAQ: UBERrideshare-like services to its customers which include NASA, Lockheed Martin NYSE: LMT, Relativity, NuSpace, Pixxel and a number of startups. The Company claims to have contracts valued up to $90 million in “potential revenues” over several years for its Vigoride vehicle. Vigoride takes multiple satellites to their destined orbits like an Uber Pool ride into Low Earth Orbit. This makes its more efficient and cost effective for small satellite companies as SpaceX reservations are extremely expensive.
ARK Invest
ARK is arguably the hottest performing cutting edge innovative ETF managers in the nation, with triple digit returns in 2020. Cathie Wood has been a super-bull proponent of Tesla with a $6,000 price target when it was trading pre-split in the mid-$200s during October 2019. TSLA proceeded to climb to $2,213 per share prior to 5:1 stock split on Aug. 31, 2020. Shares then rose up to a $877 peak as it was added to the S&P 500 index. She had the foresight to envision the electric vehicle (EV) momentum and step in front of it. Therefore, when ARK is rumored to start a space-themed ETF, investors and fund managers react. Fast forward to the present, investors are jumping into space stocks in anticipation of stepping in ahead of the Ark Space Exploration ETF. This is why SRAC shares have skyrocketed along with other space-related companies including Virgin Galactic, Maxar Technologies NYSE: MAXR and enabling technologies like 3D Systems NYSE: DDD and Stratasys NASDAQ: SSYS.
SPAC Sell-the-News
Upon final shareholder approval of the business combination, shares of SRAC will convert to Momentus NYSE: MNTS. However, it’s important to be aware that shares of reverse merged companies tend to sell-off for the following days to weeks, often losing up to (-50%) of their share values. Several stocks come to mind including Canoo NYSE: GOEV, Fusion Fuel Green (NYSE: HTOO) and Hyliion NYSE: HYLN. The rule of thumb is to cash out of SRAC shares up to the date of the shareholder vote and repurchase shares under the new symbol after it bottoms out, usually three to eight days later.
SRAC Opportunistic Pullback Levels
We use the rifle charts on the weekly and daily time frames to provide a short-term perspective for nimble trades and only the highest-risk tolerant investors to consider trading SRAC shares. The weekly rifle chart has surged on the pup breakout overshooting its upper Bollinger Bands at $24.69. The weekly 5-period moving average (MA) is near the $19.87 Fibonacci (fib) level. The daily upper Bollinger Bands (BBs) are near the $25.33 fib. The daily rifle charts has a pup breakout that triggered a market structure low (MSL) above $16.25. The nearly parabolic upswing has caused the daily stochastic to surge through the 80-band and stall for a potential mini pup thrust towards the daily upper BBs at $28.04 or a cross down for a channel tightening to opportunistic pullback levels at the $22.50 fib, $20.88 fib, $19.87 fib, $17.99 fib, and the $16.50 fib. Keep in mind that speculation is for the ARK Space Exploration ETF to debut in 2021 and for SRAC to be in its portfolio. Anything short of that can cause sharp sell-offs. Potential upside trajectories range from the $27.61 to the $35.58 fib.
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