NFT – Non Fungible Tokens, Moderna (MRNA) and IPO’s

Podcast Transcript

Hey, this is Jeffrey with another edition of Stock Smart for March 3^rd, 2021 edition. Hope you’re all doing well. We’re oversold on the S&P 500 oscillator, the market continues to try to find its footing and we’re trending down a bit. This morning was sold off heavily. Now It’s kind of stabilized, bounced back off some key numbers. We are still going to be down for the day likely but we are oversold. So we’re getting into places where you should be buying a little bit, buying on the dips essentially. 10-year note again, a big factor, up to 1.45%. So more concerned there for equities.

[00:00:34]
The VIX again is positive today, meaning it’s negative for investing, it’s up about one to two percent, up about two and a half percent at the high today, now up about 1% as the market buys itself back a little bit after being sold off early. Going to do a show in the near future, getting some research on NFT, which is a new asset class of another bitcoin or blockchain type of technology, non-fungible tokens. We’re going to do a series on this because people are buying this art which is becoming a new kind of asset. This digital art that people are buying, very interesting kind of area. Artists are making millions of dollars and lots of entrepreneurial type people like Mark Cuban are buying and have interest in this art.

[00:01:20]
So we’re going to take some look at it too because it is an asset, something that people who are investors need to know about and want to be on the cutting edge here talking about all kinds of cryptocurrency. Again, we’re seeing that bitcoin does trade with the S&P 500. So it is positively correlated and we’re going to update that in the next week or so. Because as we’re doing we had at one point we had updated it. We were about 70% of positive correlation between bitcoin and the S&P 500, need to update those stats and see how it’s trended, but having watched it over the last week and a half since we did the original report.

[00:01:56]
It has been positively correlated meaning when the S&P 500 has been up bitcoin has been up when the S&P 500 has been down bitcoin has been down and we’re continuing to see more and more talk about large Fortune 500-type companies investing in bitcoin and adding it to their balance sheet. Yeah, the Reddit traders GameStop is maybe a little too boring for them now. They decided to go after rocket companies, RKT. It was short about 40% had a positive catalyst on earnings. So the short squeeze got played heavily yesterday. The stock went up about 70%, trading was halted many different times during the day if you made money yesterday, hopefully you sold the position. We had clients in it. I like the company. I want it to be back in the 25 to 26 range. Not the $40 range.

[00:02:45]
We sold a bunch of it because it’s way over valued too quickly and literally a 70% move for a stock at someone established. It still was IPOed recently. But the point is this stock should not move 70%, the shorts were only going to propel it nowhere near like what GameStop, this was only 35-40% short. So if the shorts have to get out, they had to sell today and they did sell today. Stocks down about $8-9 today on the selling and so, you know, you have to be really careful in these shorts, they’re not all going to the moon. Rocket is down 20% today after bouncing up huge yesterday to about $42, down to $33 today. Probably going to settle in somewhere around 31, 29-31 and that’ll be a buying opportunity again for Rocket, which I think is a great company.

[00:03:31]
You got to be careful when you get in these shorts, if you’re going to make money, you can’t be afraid to get out of them and you have to know what’s going on. People who held, you know, you lost today, but it’s a good stock, it’s a great company, well run, the insiders or the owners own most of the company which is always a positive sign, meaning they have a lot to do with the outcome of the company.

STOCK WATCH

A stock we’re watching and we’re going to do the marketing language here. We engage in the development of transformative medicines based on messenger ribonucleic acid, I probably did not say that right. Who are they? They are Moderna, MRNA. We’re going to talk about a problem that people don’t realize that can happen to a stock, you realize and maybe you don’t and a lot of people are listening.

[00:04:15]
They follow stocks but they don’t understand how the game works a little bit. One of the problems with stocks sometimes, 8000 companies or so that trade in the stock market, something like that and about 3,100 companies or about 35% of all the companies traded are followed by at least one analyst. Okay, so that means 65% of the publicly traded companies in the United States are not followed by an analyst and so they’re not covered. Essentially, no one is endorsing them. You don’t have an objective, you know third party looking at the company, creating reports and analyzing it and saying hey, this is a good company. We see this, we see the price targets here and here and so when analysts are not covering stocks, it becomes a problem because institutional buyers, people who work at Morgan Stanley, want to be backed by analysts.

[00:05:06]
So they look when they add something to their portfolios for their clients, they want to have something in writing from an analyst that says hey, this is a great company. We need to invest in it. So that’s something that I don’t think that a retail investor really understands, that it’s a big part of the ball game in these huge institutions and a lot of it, there’s a lot of money in these institutions billions of dollars at companies like JP Morgan and Morgan Stanley, they need coverage from analysts to want to be in those stocks. And so if you have 65% of the companyies not covered by analysts, you know, there’s going to be a problem having those stocks reach kind of a critical mass of a surety, so a company that we like, Moderna, MRNA, is under cover, about 10 or so analysts cover this stock.

[00:05:53]
Stock is highly undervalued, it is one of the leading vaccines for coronavirus that MRNA technology that they have which is not new for this. It’s always been looked at but it became very important. Essentially this is a technology that tells your cells to actually look and be ready for the coronavirus and then it tells them and alerts them in your body, it’s very interesting to be active against it. It’s way more scientifically described than that, but amazing technology. There’s the company MRNA Moderna that’s working on a vaccine and vaccines for cancer. It’s just kind of an interesting point and I think when you can find a gem like this and it’s something that we think is going to be a very good stock for the future.

[00:06:37]
Need to be an investor here not a trader and investor meaning you’re going to hold on to the position and watch it grow over time. Moderna again getting sold off again today, falling into support probably in the 120ish range, down to 136, down about 7% for no reason. I mean the market is getting sold off. These are kind of high-growth, you know, biotechs are expensive 40% of their bottom line is generally in R&D research and development. So these companies are companies that need a lot of cash and as interest rates go up, these are like the freak out companies, maybe don’t take a huge position but maybe take a position in this company, it’s getting the support anyway, and it’s getting grossly oversold.

[00:07:15]
So in the $120 range, you may want to be a buyer as it hits there. It’s coming into it,  at about 136 today down about $10.21. So we’d be a buyer if it continues to drop, we’ll probably add a little bit more, dollar cost average in and continue to look for more good news from this company.

THE AVERAGE INVESTOR

So I got a question from Frank. By the way, keep the questions coming, really appreciate it. Appreciate all of you that are signing up for the YouTube channel and signing up for the feeds all over, really appreciate it. You can send any of the questions to Jeffrey@JeffreyKamys.com and Frank wants to know, he says there’s an IPO I’m interested in, Instacart, and he wants to know if you should invest.

[00:07:57]
So Instacart is going to go public in the near future, I don’t know if you know the service, the service has grown dramatically during Covid, I use it. I love it actually. I was a later adopter, probably about halfway through Covid. I decided to start using it, I think it’s an unbelievable service. They get things wrong all the time when they do your order, but they try to update you with a text message. So essentially, Instacart, what do they do? Instacart goes and shops for you. So you go and put your order online, to Safeway or your local grocery store and they will deliver it to you. When they have an issue with the order or something is not available, they will send you updates. I like the service, it’s very quick, it’s efficient, when there’s been anything wrong with the order, they generally refund the money back. They text you when there’s something not in stock, now you can’t pick out your own vegetables, you can’t pick your own cuts of meat, but if you’re buying generics, if I’m buying a can of soup, which is the same anytime I buy it, so I like the stock and I like the idea that they’re going to be a publicly traded company. They’re going to have a lot of interest because everyday consumers use it. So should you invest in this IPO? Well generally IPOs don’t do that well. And you go through a couple different phases of with the IPO. So the price, when it hits the market, there will be an IPO price. Before the market makers start making the book on the opening day.

[00:09:23]
It’s going to generally like for Instacart, that price whatever the initial price is, the book price on Instacart, when the market hits, it’s going to be way higher because it’s going to have a lot of interest, everybody knows this stock, or a lot of people know what Instacart is. If they haven’t used it, they know what it is. Price on Instacart is going to be very high. You’re going to get insiders who got the offering and again Goldman Sachs is taking Instacart public. It’s going to be a huge deal for them, so Goldman Sachs is taking it public.

[00:09:50]
All their insiders, or are preferred customers are going to get the IPO price, not the IPO price when it opens that day, because that’s going to be way higher, the book price set by the market makers is going to be way higher than the IPO price, before you can even bid on it, it’s going to be probably 25% higher than the IPO price and you’re going to get what you’re going to get that first day is it’ll get bit up but it’ll probably stay pretty close to that first opening book price. And then what you’re going to get is the next few days, you’ll get selling because the insiders will kick out and get out of it. Unless there’s a lock up period. If there is going to be a lockup period for insiders of the company, it’s usually six months. So you’re going to face two hurdles.

[00:10:26]
One, you’re going to face the Insiders who got it from Goldman Sachs and they can probably get rid of those shares within a period of time. So that’ll take the stock down. Then you’re going to have the six-month lock up period. Which will be the people who work for Instacart and then that’ll take the stock down, at some point the stock will stabilize and get to a you know, support level that’s worth buying so generally I would say No don’t buy IPOs. Wait, let the stock stabilize and then as it builds and builds the support levels, that’s a good time to enter in to the position. But before that, you’re going to go through all that up and down and up and down and consternation until the stock finds its way.

[00:11:03]
So generally IPOs not a great investment for retail investors or any investors, better to get in a little bit later once it’s established. So hey, thanks for listening, another great show and we’ll see you again next time on Stock Smart.