Last week, Fisker ( FSR) filed a registration for its post-merger shares. It's the same head-scratching repeat of virtually every other special purpose acquisition company: Following through with this standard procedure, shares dropped.
Every time this happens, I see Twitter flooded with messages about the company doing an offering. Questions on why would they do that to shareholders so quickly after the merger or how people thought they didn't need money.
The filing, however, shouldn't come as a surprise. It's outlined in painstaking detail in the merger docs. It's known before any merger even takes place, even from the original documents of the SPAC that this will happen.
And yet, the companies gap down time and time again. Yes, there is some dilution that will come once the registration goes live. In theory, it should already be priced into shares. Maybe the gap lower means Wall Street remain blissfully unaware of the dilution?
Yeah, Wall Street isn't that dumb.
I find it to be an opportunity once the dust settles to buy into the stock. Fisker has plenty of options trading around it if you want to go that direction. For some, it may be easier to be a buyer of shares.
The chart has made the $14.40 level a clear area of support. We have the 50-day simple moving average (SMA) intersecting with Friday's low. We're also staring at a gap fill a dollar-plus higher from the levels on these charts. Unfortunately, we haven't seen any flip on the MACD, Full Stochastics, or parabolic stop-and-reverse (PSAR) yet. I believe they will be coming soon, but the huge price spike from last November has create some wonky secondary indicators.
I'm not one for easily casting those aside, but this is where I'll rely more on the experience of trading SPACs actively this year and the observations I've acquired. This is the time to take the shot on the long side. Given I have a clear stop area, a clear target to the upside, and the knowledge the gap lower was cause by the filing, I'll take the short around $15.55 knowing my upside target exceeds my downside stop with history on my side. And when those indicators do trigger in another day or two, it won't hurt either. I should say, if they trigger, but I feel confident they will.
I'm a long of FSR here.
