26. February 2021 | 07:30 CET
GameStop, Triumph Gold, Nikola - the madness continues!
The battle continues. Good against evil. Large hedge funds bet on falling prices while Internet users of the Reddit platform hold against it. There are probably only a few winners. After GameStop's share price rose by over 1000% at the beginning of the year, it collapsed like a house of cards. However, the game goes on with GameStop and other stocks touted on Reddit in the "WallStreetBets" forum.
time to read:
ISIN: US36467W1099 , CA8968121043 , US6541101050
"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
GameStop - Back in the game
Last week, the GameStop share was replaced by Palantir Securities, a data analysis Company from the US, as the most discussed share in the forum. The comment volume on the Company co-founded by Peter Thiel was 2,535 compared to 1,465 on GameStop. Palantir's shares fell to their lowest level since late January after it reported disappointing fourth-quarter results with a loss of 2 cents per share. Analysts, on average, had expected earnings of 6 cents per share. The selloff has drawn the online crowd's attention only further excited by its association with Elon Musk, Tesla's CEO, the Wall Street Journal reported.
On Wednesday, after the close of trading, GameStop shares exploded again without news. A so-called "gamma squeeze" is said to have been to blame. As a result, massive amounts of far-out-of-the-money calls expiring Friday were bought. Shares of AMC Entertainment, another prominent Reddit stock, also shot up 18% in regular trading. After the US close, the movie theater chain's stock rose another 19%. There is no end in sight to this frenzied trading.
Triumph Gold - Time to position
The situation for the crisis metal gold is much more relaxed at the moment. The ongoing correction, which has accompanied us since August after highs of over USD 2,000, is still underway. From a chart perspective, it is likely to go down one more level to the target range of USD 1,680-1,720. However, we see good entry opportunities in the long term, both in gold and in attractive mining stocks. The Triumph Gold share has already corrected well. While the value was still at CAD 0.48 at the end of July, it is currently at CAD 0.185 on the price board. Due to the extremely favorable price, large shareholders might consider increasing Triumph Gold further. Newmont Mining with 12.8% and the Zijn Mining Fund with 9.8% are some of the largest shareholders.
The Canadians' main project is the wholly-owned Freegold mining project in Yukon. The area, which has an excellent infrastructure, is home to several deposits with great potential. The "Revenue" mine has copper-gold-moblyden-silver, the "Nucleus" mine has gold, and at "Tinta Hill," many differentiated metals are found. The results, which were published at the end of January, are promising. Last year's exploration program focused on test drilling near-surface gold targets in the Revenue-Nucleus and Mount Freegold areas. Nine holes were drilled for a total of 2,068.52 meters. All nine holes returned significant gold intercepts in underexplored or under-explored areas. The complete program for the current drill program has also been secured. Triumph Gold has just under CAD 5.0 million in its pocket at the moment.
Nikola - Light at the end of the tunnel
Last night it was exciting for the crisis-ridden electric truck maker Nikola. In a press conference, the fourth quarter and the 2020 fiscal year results were published. However, these are negligible. The self-proclaimed market leader's turnover is equal to that of a corner store in a small town in a mediocre location. The bulk of analysts expected minus USD 0.24 per share for the fourth quarter in terms of losses - Nikola announced a loss of 0.17 USD per share. For the full year, losses per share are expected to be minus USD 0.66. Much more decisive for investors is future forecasts and the Company management plans concerning production and possible cooperations. And it is precisely here that the US Company seems to have found the thread again. Nikola is receiving support from the highest levels. The new US president Joe Biden wants a 100% emission-free industry by 2050 at the latest.
The Company unveiled its latest models on Tuesday. Nikola plans to introduce an FCEV variant of the Nikola Tre Cabover and the long-range Nikola Two FCEV Sleeper, for ranges between 300-900 miles, to the North American market. The Nikola portfolio includes trucks for the full spectrum of commercial freight operations, including the metro/regional Nikola Tre BEV Cabover for trips up to 300 miles, the regional Nikola Tre FCEV for longer ranges up to 500 miles and for quick refueling/rapid turnaround, and the long-haul Nikola Two FCEV Sleeper for long-haul operations up to 900 miles. Undeniably, the stock is still in the "highly speculative" category. However, with further positive developments in collaborations and production, the stock is poised for a comeback. Many negatives are already priced into the share price. From a chart perspective, a breakout above the USD 22 mark would generate a buy signal.