Mudrick Capital Acquisition Corp II (MUDS) is taking it on the chin today. It's not a great look or feel for me. I've been long the stock and bullish on the name. The question comes down to why are folks selling. There are several possible reasons, one of which I do see as a short-term negative but long-term positive. The other reason I view as a non-event.
First, the non-event. Mudrick buying AMC Entertainment (AMC) is a non-event for MUDS, the SPAC buying Topps. I'm not overly concerned with what the main company is doing when it has no impact on the underlying trading of the hedge. Ironically, Bloomberg is reporting Mudrick has already flipped out of their AMC shares for a profit.
The bigger hit likely comes from the news that Candy Digital signed an exclusive long-term agreement with Major League Baseball (MLB). What exactly the exclusivity is we don't yet know, but I doubt Topps will be out of the game. The first NFT from Candy is slated to be the NFT of the Lou Gehrig 'Luckiest Man' speech from 1939. That's some cool IP but not somewhere I anticipated Topps/MUDS would go. I view Topps staying with what Topps knows, which are products with the look and feel of trading cards. Candy may be moving more towards the historical moment, arts, and entertainment side of the playing field.
In the short-term, this is likely a sentimental blow for MUDS/Topps. From a longer-term view, the stronger the MLB community and more acceptance we see of NFTs, the more potential for Topps. Additionally, NFTs are only a small portion of Topps' revenue. I continue to view it as a bonus to the already attractive numbers on the company at current valuations.
There is no getting around the terrible technical damage on the chart from today's action. The potential breakout from last week is dead. Support in the $11.50 range could get tested. It's unlikely to see this one fall much below the $10 NAV, but possible. Every secondary indicator is now bearish or poised to turn bearish. If that wasn't enough, now I'm seeing AMC holders on social media get mad at Mudrick for selling AMC, so they are calling on people to short MUDS.
You can't make this stuff up. 2021 is turning out to be crazier than 2020!