Can we get a mod to pin a SS of the section of the market cap rules.

Position: 30 GME @ 179 avg cost basis, still holding because it's not a loss until you sell. Obligatory 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀
I've been a longtime lurker on this sub since it was <1m degenerates, finally clicked the join button around Dec/Jan. It's great to see many new redditors take an interest in WSB, but for the love of Elon Musk, READ THE POSTING GUIDELINES AND STOP MAKING THINGS UP!!!
There is a case for GME, given the new CEO/CTO, console cycle, and massive short interest/short position (even at the real 42-43% SI and 21m SP). Those are factual events and numbers. What isn't the case are bagholders who have less of an understanding of the stock market than u/1r0nyman. It's one thing to hype up GME as a resurgent mecca in retail. It's another thing to not understand how certain metrics are calculated, when/how data is reported, and blatantly make up numbers because it fits a delusional reality where GME is going to be $10000/share. I'm not saying GME isn't ripe for another squeeze, but be reasonable. Think about what certain share prices mean and the odds it could ever reach such a height.

Let me put it into context:

​

GME Price	Market Cap	Comparable
$1000	69.7B	BP, Twilio, Anthem
$10000	697B	Alibaba, Visa + MC, JP Morgan + Wells Fargo
$69420	4,789,980,000,000	25% US Annual GDP, Apple + Microsoft + Amazon

When you dispute data from Bloomberg Terminal, the holy grail of Wall Street trading, you've lost the investing game. It's not even a casino-level bet, it's throwing cash into a fire pit and pouring piss martinis over it. Don't downvote someone because they disagree with your reality, challenge them. We all have opinions, and we can think the other degenerate's opinion is flat out dumb. But if your DD doesn't hold water, then it truly is dumb.

tl;dr It's great you love GME as a stock, I hope they do great and think they'll make a great turnaround. Just don't be untethered from reality, follow posting guidelines, and don't make up data

Look, I get it, newbies. You're excited, you want to earn big, you're eager to have some fun. But please, for the love of god, stop treating this like a normal investment subreddit, and stop trying to pump stocks. We are not here to make 10% gains in a year on AAPL. We are not here to pump some shitty weed stock and then dump it. Between the bots and you retards, the moderators are overwhelmed. Please, for the love of fucking god, learn the etiquette of the subreddit before you comment and post.

Edit 1: More ARKQ buying today (~50k shares). Thank you everyone for the positive feedback and discussion!
Bottom Line Up Front (BLUF) or TL;DR for the non-military types:
LMT is a good target if you want to literally go to the moon, and my PT is $690.26 in two years (more than 2x from current levels). Justification and some possible trade ideas are listed below, just CTRL-F “Trade Ideas”. I hope you guys enjoy this work and would appreciate any discussion or feedback. I hope to catch you in the comments.
Team,
We interrupt today’s regularly scheduled short squeeze coverage to discuss a traditionally boring stock, LMT (Lockheed Martin), with significant upside potential. To be clear, this is NOT a short squeeze target like many reddit posts are keying on. I hope that this piece sparks discussion, but if you are just looking for short squeeze content, all I have to say is BUY, HOLD, and GODSPEED.
The source of inspiration for me writing this piece is threefold; first, retail investors are winning, and I believe that we will continue to win if we continue to identify opportunities in the market. In my view, the stock market has always been a place for the public to shine a light on areas of innovation that real Americans are excited about and proud to be a part of. Online communities have stolen the loudspeaker from hedge fund managers and returned it to decentralized online democracies that quickly and proudly shift their weight behind ideas they believe in. In GME’s case, it was a blatant smear campaign to destroy a struggling business. I think that we should continue this campaign by identifying opportunities in the market and running with them. It may sound overly idealistic, but if reddit can take on the hedge funds, I non-ironically believe that we can quite literally take good companies researching space technology to the moon. I think LMT may be one of several stocks to help get us there.
Second, a video where the Secretary of State of Massachusetts argues that internet boards are full of a bunch of unsophisticated, thoughtless traders really ticked me off. This piece is designed to show that ‘the little guy’ is ready to get into the weeds, understand business plans, and outpace analysts that think companies like Tesla are overvalued by comparing them to Toyota. That is a big reason that I settled on an old, large, slow growth company to do a deep-dive on, and try my best to show some of the abysmal predictive analysis major ‘research firms’ do on even some of the most heavily covered stocks. LMT is making moves, and the suits on wall street are 10 steps behind. At the time of writing this piece, Analyst Estimates range from 330-460 (what an insane range).
Third, and most importantly, I am in the US military, and I think that it is fun to go deep into the financials of the defense sector. I think that it helps me understand the long-term growth plans of the DoD, and I think that I attack these deep-dives with a perspective that a lot of these finance-from-day-one cats do not understand. Even if no one ever looks at this work, I think that taking the time to write pieces like this makes me a better Soldier, and I will continue to do it in my spare time when I am feeling inspired. I wrote a piece on Raytheon Technologies (Ticker: RTX) 6 months ago, and I think it was well-received. I was most convicted about RTX in the defense sector, but I have since shifted to believing LMT is the leader in the defense space. I am long both, though. If this inspires anyone else to do similar research on other companies, or sparks discussion in the community, that is just a bonus. Special shout-out to the folks that read more than just the TL;DR, but if you do just read the TL;DR, I love you too!
Now let us get into it:
Leadership
I generally like to invest in companies that are led by people that seem to have integrity. Jim Taiclet took the reins at LMT in June of last year. While on active duty, he served as a C-141B Starlifter pilot (a retired LMT Aircraft). After getting out he went to work for the American Tower Corporation (Ticker: AMT). His first day at American Tower was September 10, 2001. The following day, AMT lost 13 employees in the World Trade Center attack. He stayed with the company, despite it being decimated by market uncertainty in the wake of 9/11. He was appointed CEO of the very same company in 2004. Over a 16 year tenure as CEO of AMT the company market cap 20x’d. He left his position as CEO of AMT in March of last year, and the stock stagnated since his departure, currently trading at roughly the same market cap as to when he left.
Jim Taiclet was also appointed to be the chairman of the board this week, replacing the previous CEO. Why is it relevant that the CEO came from a massive telecommunications company?
Rightfully, Taiclet’s focus for LMT is bringing military technology into the modern era. He wants LMT to be a first mover in the military 5G space, military application of AI space, the… space space, and the hypersonic glide vehicle (HGV) space. These areas are revolutionary for the boomer defense sector. We will discuss this in more detail later when we cover the company’s P/E multiple and why it is absolute nonsense.
It is not a surprise to me that they brought Taiclet on during the pandemic. He led AMT through adversity before, and LMT’s positioning during the pandemic is tremendous relative to the rest of the sector, thanks in large part to some strong strategic moves and good investments by current and past leadership. I think that Taiclet is the right CEO for the job.
In addition to the new CEO, the new Secretary of Defense, Secretary Lloyd Austin, has strong ties to the defense sector. He was formerly a board member for RTX. He is absolutely above reproach, and a true leader of character, but I bring this up not to suggest that he will inappropriately serve in the best interest of defense contractors, but to suggest that he speaks the language of these companies effectively. I do not anticipate that the current administration poses as significant of a risk to the defense sector as many analysts seem to believe. This will be expanded in the headwinds section below.
SPACE
Cathie Wood and the ARK Invest team brought a lot of attention to the space sector when the ARKX, The ARK Space Exploration ETF, Form N-1A was officially filed through the SEC. More recently, ARK Invest published their Big Ideas 2021 Annual Report and dedicated an entire 7-page chapter to Orbital Aerospace, a new disruptive innovation platform that the ARK Team is investigating. This may have helped energize wall street to re-look their portfolios and their investments in space technology, but it was certainly not the first catalyst that pushed the defense industry in the direction of winning the new space race.
In June 2018, then President Trump announced at the annual National Space Council that “it is not enough to merely have an American presence in space, we must have American dominance in space. So important. Therefore, I am hereby directing the Department of Defense (DoD) and Pentagon to immediately begin the process necessary to establish a Space Force as the sixth branch of the Armed Forces". Historically, Department of Defense space assets were under the control of the Air Force. By creating a separate branch of service for the United States Space Force (USSF), the DoD would allocate a Chairman of Space Operations on the Joint Chiefs of Staff and clearly define the budget for space operations dedicated directly to the USSF. At present, this budget is funneled from the USAF’s budget. The process was formalized in December of 2019, and the DoD has appropriated ~$15B to the USSF in their first full year of existence according to the FY21 budget.
Among the 77 spacecraft that are controlled by the USSF, 29 of them are Lockheed Martin GPS satellites, 6 of them are Lockheed Martin Space-Based Infrared Systems (SBIRS), and LMT had a hand in creating and/or manufacturing for several of the other USSF efforts. The Next Generation Overhead Persistent Infrared Missile Warning Satellites (also known as Next-Gen OPIR) were contracted out to both Northrup Grumman (Ticker: NOC) and LMT. LMT’s contract is currently set at $4.9B, NOC’s contract is set at $2.37B.
Tangentially related to the discussion of space is the discussion of hypersonic glide vehicles (HGVs). HGVs have exoatmospheric and atmospheric implications, but I think that their technology is extremely important to driving margins down for both space exploration and terrestrial point-to-point travel. LMT is leading the charge for military HGV research. They hold contracts with the Navy, Air Force, and Army to develop HGVs and hypersonic precision fires. The priority for HGV technology accelerated significantly when Russia launched their Avangard HGV in December of 2019. Improving the technology for HGVs is a critical next-step in maintaining US hegemony, but also maintaining leadership in both terrestrial and exoatmospheric travel.
LARGE SCALE COMBAT OPERATIONS (LSCO)
The DoD transitioning to Large-Scale Combat Operations (LSCO) as the military’s strategic focus. This is a move away from an emphasis on Counter-Insurgency operations. LSCO requires effective multi-domain operations (MDO), which means effective and integrated strategies regarding land, sea, air, space, and cyberspace. To have effective MDO, the DoD is seeking systems that both expand capabilities against peer threats and increase the ability to track enemy units and communicate internally. This requires a modernizing military strategy that relies heavily on air, missile, and sensor modernization. Put simply, the DoD has decided to start preparing for peer or near-peer adversaries (China, Russia, Iran, North Korea) rather than insurgencies. For this reason, I believe that increased Chinese and Russian tensions are, unfortunate as it may be, a boon to the defense industry. This is particularly true in the missiles/fires and space industry, as peer-to-peer conflicts are won by leveraging technological advantages.
There are too many projects to cover in detail, but some important military technologies that LMT is focusing on to support LSCO include directed energy weapons (lasers) to address enemy drone technology, machine learning / artificial intelligence (most applications fall under LMT’s classified budget, but it is easy to imagine the applications of AI in a military context), and 5G to increase battlefield connectivity. These projects are all nested within the DoD’s LSCO strategy, and position LMT as the leader in emergent military tech. NOC is the other major contractor making a heavy push in the modernization direction, but winners win, and I think a better CEO, balance sheet, and larger market cap make LMT the clear winner for aiding the DoD in a transition toward LSCO.
SECTOR COMPARISON (BACKLOG)
The discussion of LSCO transitions well into the discussion of defense contractor backlogs. Massive defense contracts are not filled overnight, so examining order backlogs is a relatively reliable way to gauge the interest of the DoD in a defense contractor’s existing or emerging products. For my sector comparison, I am using the top 6 holdings of the iShares U.S. Aerospace & Defense ETF (Ticker: ITA). I hate this ETF, and ETFs like it (DFEN) because of their massively outsized exposure to aerospace, and undersized allocation to companies like LMT. LMT is only 18% smaller than Boeing (Ticker: BA) but is only 30.4% of the exposure of BA (18.46% of the fund is BA, only 5.62% of the fund is LMT). Funds of this category are just BA / RTX hacks. I suggest building your own pie on a site like M1 Finance (although they are implicated in the trade restriction BS… please be advised of that… hoping other brokerages that are above board will offer similar UIs like the pie design… just wanted to be clear there) if you are interested in the defense sector.
The top 6 holdings of ITA are:
Boeing Company (Ticker: BA, MKT CAP $110B) at 18.46%
Raytheon Technologies (Ticker: RTX, MKT CAP $101B) at 17.84%
Lockheed Martin (Ticker: LMT, MKT CAP $90B) at 5.62%
General Dynamics Corporation (Ticker: GD, MKT CAP $42B) 4.78%
Teledyne Technologies Incorporated (Ticker: TDY, MKT CAP $13B) at 4.74%
Northrop Grumman Corporation (Ticker: NOC, MKT CAP $48B) at 4.64%
As a brief aside, please look at the breakdowns of ETFs before buying them. The fact that ITA has more exposure to TDY than NOC and L3Harris is wild. Make sector ETFs balanced how you want them to be balanced and it will be more engaging, and you will likely outperform. I digress.
Backlogs for defense companies can easily be pulled from their quarterly reports. Here are the current backlogs in the same order as before, followed by a percentage of their backlog to their current market cap. All numbers are pulled from January earning reports unless otherwise noted with an * because they are still pending.
Boeing Company backlog (Commercial: $282B, Defense: $61B, Foreign Military Sales (FMS, categorized by BA as ‘Global’): 21B, Total Backlog 364B): BA’s backlog to market cap is a ratio of 3.32, which is strong, but most of that backlog comes from the commercial, not the defense side. Airlines have been getting decimated, I am personally not interested in having much of my backlog exposed to commercial pressures when trying to invest in a defense play. Without commercial exposure, their defense only backlog ratio is .748. This is extremely low. I understand that this does not do BA justice, but I am keying in on defense exposure, and I am left thoroughly unsatisfied by that ratio. Also, we have seen several canceled contracts already on the commercial side.
Raytheon Technologies backlog (Defense backlog for all 4 subdivisions: 67.3B): Raytheon only published a defense backlog in this quarter’s report. That is further evidence to me that the commercial aerospace side of the house is getting hammered. They have a relatively week backlog to market cap as well, putting them at a ratio of .664, worse off than the BA defense backlog.
Lockheed Martin backlog (Total Backlog: $147B): This backlog blows our first two defense backlogs out of the water with a current market cap to backlog ratio of 1.63.
General Dynamics Corporation backlog (Total Backlog: $89.5B, $11.6B is primarily business jets, but it is difficult to determine how much of their aerospace business is commercial): Solid 2.13 ratio, still great 1.85 if you do not consider their aerospace business. The curveball here for me is that GD published a consolidated operating profit of $4.1B including commercial aerospace, whereas LMT published a consolidated operating profit of $9.1B. This makes the LMT ratio of profit/market cap slightly in favor of LMT without accounting for the GD commercial aerospace exposure. This research surprised me; I may like GD more than I originally assumed I would. Still prefer LMT.
Teledyne Technologies Incorporated backlog (Found in the earnings transcript, $1.7B): This stock is not quite in the same league as the other major contractors. This is an odd curveball that a lot of the defense ETFs seem to have too much exposure to. They have a weak backlog, but they are a smaller growing company. I am not interested in this at all. It has a backlog ratio of .129.
Northrop Grumman Corporation backlog ($81B): Strong numbers here. I see NOC and LMT as the two front-runners in the defense sector. I like LMT more because I like their exposure to AI, 5G, and HGVs more than NOC, but I think this is a great alternative to LMT if you like the defense sector. Has a ratio of 1.69, slightly edging out LMT on this metric. LMT edges out NOC on margins by ~.9%, though, which has significant implications when considering the depth of the LMT backlog.
The winners here are LMT, GD, and NOC. BA is attractive if you think anyone will have enough money to buy new planes. BA and RTX are both getting hammered by commercial aerospace exposure right now and are much more positioned as recovery plays. That said, LMT and NOC both make money now, and will regardless of the impact of the pandemic. LMT is growing at a slightly faster rate than NOC. Both are profit machines, but I like LMT’s product portfolio and leadership a lot more.
FREE CASH FLOW
Despite the pandemic, LMT had the free cash flow to be able to pay a $2.60 per share dividend. This maintains their ~3% yearly dividend rate. They had a free cash flow of $6.4B. They spent $3.9 of that in share repurchases and dividend payouts. That leaves 40% of that cash to continue to strengthen one of the most stalwart balance sheets outside of big tech on the street. Having this free cash flow allowed them to purchase Aerojet Rocketdyne for $4.4B in December. They seem flexible and willing to expand and take advantage of their relative position during the pandemic. This is a stock that has little downside risk and significant upside potential. It is always reassuring to me to know that at the end of the day, a company is using its profit to continue to grow.
HEADWINDS
New Administration – This is more of an unknown than a headwind. The Obama Administration was not light on military spending, and the newly appointed SecDef is unlikely to shy away from modernizing the force. Military defense budgets may get lost in the political shuffle, but nothing right now suggests that defense budgets are on the chopping block.
Macroeconomic pressure – The markets are tumultuous in the wake of GME. Hedgies are shaking in their boots, and scared money weighed on markets the past week. If scared money continues to exert pressure on the broader equity markets, all boomer stocks are likely weighed down by slumping markets.
Non-meme Status – The stocks that are impervious to macroeconomic pressures in the above paragraph are the stonks that we, the people, have decided to support. From GME to IPOE, there is a slew of stonks that are watching and laughing from the green zone as the broader markets slip deeper into the red zone. Unless sentiment about LMT changes, I see no evidence that LMT will remain unaffected by a broader economic downturn (despite showing growth YoY during a pandemic).
TAILWINDS
Aerojet Rocketdyne to the Moon – Cathie Wood opened up a $39mil position in LMT a few weeks ago, and this was near the announcement of ARKX. The big ideas 2021 article focuses heavily on satellite technology, deep learning, and HGVs. I think that the AR acquisition suggests that vertical integration is a priority for LMT. They even fielded a question in their earnings call about whether they were concerned about being perceived as a monopoly. Their answer was spot on—the USFG and DoD have a vested interest in the success of defense companies. Why would they discourage a defense contractor from vertical integration to optimize margins?
International Tensions – SolarWinds has escalated US-Russia tensions. President Biden wants to look tough on China. LSCO is a DoD-wide priority.
5G.Mil – We still do not have a lot of fidelity on what this looks like, but the military would benefit in a lot of ways if we had world-wide access to the rapid transfer of encrypted data. Many units still rely on Vietnam-era technology signal technology with abysmal data rates. There are a lot of implications if the code can be cracked to win a DoD 5G contract.
TRADE IDEAS
Price Target: LMT is currently at a P/E of ~14. Verizon has roughly the same. LMT’s 5-year P/E ratio average is ~17. NOC is currently at a P/E of ~20. TSLA has a P/E Ratio of 1339 (disappointingly not 1337). P/E is a useless metric because no one seems to care about it. My point is that LMT makes a lot of money, and other companies that are valued at much higher multiples do not make any money at all. LMT’s P/E ratio is that of a boomer stock that has no growth potential. LMT’s P/E is exactly in line with the Aerospace and Defense Industry P/E ratio standard. LMT’s new CEO is pushing the industry in a new direction. I will arbitrarily choose a P/E ratio of 30, because it is half of the software industry average, and it is a nice round number. Plus, stock values are speculative and nonsense anyway.
Share price today: $321.82
Share price based on LMT average 5-year P/E: $384.08 (I see this as a short term PT, reversion to the mean)
Share price with a P/E of 30: $690.26
Buy and Hold: Simple. Doesn’t take much thought. Come back in a year or two and be happy with your tendies (and a few dividends to boot).
LEAPS Call Debit Spread (Based on last trade prices): Buy $375 C 20 JAN 23 for $26.5, Sell $450 C 20 JAN 23 for $12. Total Cost $14.5 for a spread width of $75. Max gain 517% per spread. Higher risk strategy.
LEAPS: Buy $500 C 20 JAN 23 for $7.20. Very high-risk strat. If the price target is hit within two years, these would be in the money $183 per contract for a gain of 2500%. This is the casino strat.
SOURCES
https://www.lockheedmartin.com/en-us/news/features/2020/james-taiclet-from-military-pilot-to-successful-ceo.html
https://www.warren.senate.gov/newsroom/press-releases/in-response-to-senator-warrens-questions-secretary-of-defense-nominee-general-lloyd-austin-commits-to-recusing-himself-from-raytheon-decisions-for-four-years
https://news.lockheedmartin.com/2019-08-30-Lockheed-Martins-Expertise-in-Hypersonic-Flight-Wins-New-Army-Work
https://www.lockheedmartin.com/en-us/capabilities/hypersonics.html
https://research.ark-invest.com/hubfs/1_Download_Files_ARK-Invest/White_Papers/ARK%E2%80%93Invest_BigIdeas_2021.pdf?hsCtaTracking=4e1a031b-7ed7-4fb2-929c-072267eda5fc%7Cee55057a-bc7b-441e-8b96-452ec1efe34c
https://www.deseret.com/2018/6/19/20647309/twitter-reacts-to-trump-s-call-for-a-space-force
https://comptroller.defense.gov/Portals/45/Documents/defbudget/fy2021/fy2021_Budget_Request_Overview_Book.pdf
https://www.airforcemag.com/lockheed-receives-up-to-4-9-billion-for-next-gen-opir-satellites/
https://spacenews.com/northrop-grumman-gets-2-3-billion-space-force-contract-to-develop-missile-warning-satellites/
https://www.lockheedmartin.com/en-us/capabilities/directed-energy/laser-weapon-systems.html
https://emerj.com/ai-sector-overviews/lockheed-martins-ai-applications-for-the-military/
https://www.defenseone.com/business/2020/07/new-ceo-wants-lockheed-become-5g-playe167072/
https://www.wsj.com/articles/defense-firms-expect-higher-spending-11548783988
https://www.etf.com/ITA#efficiency
https://s2.q4cdn.com/661678649/files/doc_financials/2020/q4/4Q20-Presentation.pdf
https://investors.rtx.com/static-files/dfd94ff7-4cca-4540-bc4b-4e3ba92fc646
https://investors.lockheedmartin.com/static-files/64e5aa03-9023-423a-8908-2aae8c7015ac
https://s22.q4cdn.com/891946778/files/doc_financials/2020/q4/GD_4Q20_Earnings_Highlights-Outlook-Final.pdf
https://www.fool.com/earnings/call-transcripts/2021/01/27/teledyne-technologies-inc-tdy-q4-2020-earnings-cal/
https://investor.northropgrumman.com/static-files/6e6e117f-f656-4c68-ba7f-3dc53c2dd13a

Alright you smooth brain degenerates, here’s some shit I’ve learned along the way which probably wont help you but if it even remotely helps one of you, then I have achieved the goal of this post.
To quote that old guy: price is what you pay, value is what you get. But how do I value a company? I’ve seen it posted a bunch of times. Its more of an art than science, so let’s discuss this dark art.
It constantly boggles my mind at how many cunts dive into buying shares but do not even attempt at trying to think of a realistic valuation, backed up by some sort of financial measure. “What price should I exit at” is almost the equivalent of setting off on a road trip before you have decided on a destination. I accept this view could, and should, evolve over time so asking the question in itself is not unreasonable provided you have your own view. I know this is a casino and this shit is irrelevant for gambling but I’ll continue regardless.
One thing I also see a lot of which I’d like to debunk is the concept of a $5 share price being “cheaper” than a $6 one. Companies, at IPO or any time afterwards, can make their share price whatever they want. A market cap of $100m with 100m shares gives a SP of $1. If they issue less shares, the share price goes up, and the company’s equity value has not changed. Likewise when you do a stock split / consolidation you can adjust the per share price without changing the market cap. If this doesn’t make sense, get off this sub and do not invest in anything until you grasp this, seriously. The concept of “cheapness” comes from the amount of cashflows you expect to receive for a given price. As Wu-Tang told us; C.R.E.A.M. literally all we care about is cashflow, so keep that in mind when you’re thinking about future value as well.
Before I launch into valuation, there needs to be a high-level understanding of the difference between equity value (share price, market cap) and firm/enterprise value (market cap + net debt). You should also adjust firm value for minorities and associates, but let’s keep this as simple as possible. This is relevant when looking at ratios.
The other thing to understand is: valuation (and therefore share price) is a forward-looking beast. If you imagine the hypothetical situation where a company announces a record earnings year in conjunction with a plan to cease all operations, share price would obviously tank – no one gives two fucks that they had a record year if they are closing next year.
Let’s dive in. Broadly, there are two valuation methods: fundamental and relative.
Fundamental:
Few of ways to do this, but main one you’ll see finance cucks talk about is a DCF. This is all about calculating the NPV of future expected cashflows. People shy away from these because they think they are hard. DCFs aren’t complicated, but there are a shitload of subjective assumptions that go into them which, unless you’re prepared to think at a highly granular level about, these aren’t worth the paper they are written on. IRR is just the discount rate required to achieve a NPV of 0.
There’s other ways like dividend discount models but they require stable AF dividends to work.
Relative:
This is referring to multiples like P/E, EV/EBITDA, PEG, EV/FCF, P/sales etc etc. These are quick and dirty and will give an answer in seconds. They’re only truly useful when comparing similar companies. i.e “is afterpay good value compared to zip?”. Rarely will using one in isolation give you an accurate or useful view of a company.
Again, no one gives a flying fuck about what historical multiples are. So, the slightly nuanced thing here is ideally you need a forward-looking number. Historical numbers usually do provide the best guide/context available for future numbers, so we can’t say they are completely irrelevant, but always have your eyes on the road ahead, not in the rear vision.
Examining the P/E multiple, I touched on why historical ‘E’ could be irrelevant for major changes in operations (acquisitions, divestments etc.), but as the capital structure changes this can also impact ‘E’, so you would also need to adjust for any permanent changes in that regard. Point is, be wary of the traps in historical numbers, they’re the easiest to find but not always the most useful.
Generally speaking, people aim to use a denominator as low down on the income statement as possible, as its closest to what you receive as a shareholder. EBIT and EBITDA are sometimes used as a proxy for cash. Equity markets most commonly look to NPAT (P/E), however if its loss making you might need to go to EV/EBITDA, if its capital intensive you should look at EV/EBIT. Note that you use EV as the numerator for EBIT and EBITDA for capital structure neutrality. If it’s a meme stock with no EBITDA then maybe you are looking at a sales multiple, if no sales, well, you have to have a compelling thesis as to what you are buying if they can’t sell their products to anyone else. Some are industry specific (e.g you can’t use EV/EBITDA on a bank, and you wouldn’t value BHP on a P/sales or you’ll look like an idiot pretty quickly).
The higher the multiple, the more growth the company has to deliver on to justify the price. If two identical companies had different multiples, you could (sort of) fairly say that the higher one was “more expensive”. Given multiples change depending on growth (i.e in a company with positive growth, multiples decline the further you look into the future), it’s easy to then understand that these must be time sensitive. If you are comparing a multiple in 12 months time, it should only be compared with other multiples in with the same time frame.
Sometimes, if you can’t be fucked doing a heap of work it can be useful to reverse the question and ask, “what do I actually need to believe for a valuation of $x to be true?”.
Doubt anyone is reading by now so I’ll stop there. If there’s any interest in diving further into these concepts, shout out and I will gladly help. If all the fundamental shit gets you excited there’s a bunch of better resource out there, don’t trust reddit and go read Damoderan or something. This is a very brief intro, so before someone comments “you forgot to include bullshit method xyz that my great grandad used when he was doing a leveraged buyout of Dildos Anonymous Pty Ltd in 1969”, I’ll get in first and highlight it is not even close to being exhaustive.
Peace out and stay retarded. Here’s a rocket 🚀
TLDR; boring valuation shit discussed above. Not relevant to gambling.

Positions: $RSI 30 03/19 30C
Proof: https://imgur.com/a/swCCMjz
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*This post is for informational purposes only, you should not construe any such information or other material as investment, financial, or other advice.*
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TLDR: Rush Street Interactive ($RSI) is the #1 nationwide online casino company and the #3 or #4 sports book depending on the state. Short selling, unwarranted institutional wariness of share dilution and the general market focus on sports book instead of online casino has left $RSI grossly undervalued. A massive blow out at Q4 earnings will result in analyst upgrades and a rapid repricing by market makers and institutions seeking exposure to the emerging sector.
​
**Overview**
"Sports book is really just kind of a warm up in a lot of ways for an online casino where the real money is made" - Niccolo De Masi, CEO dMY technologies
​
Rush Street Interactive ($RSI) operates the BetRivers.com online casino and sports book. They are now fully licensed and operating in New Jersey, Pennsylvania, Michigan, Illinois, Indiana, Colorado, Iowa, and Virginia. They own and operate a casino in New York and already have a New York license making them well positioned for liberalization there. They merged with a dMY Technology Group SPAC on Dec. 31st 2020 with 240 million on the balance sheet to spend on growth.
The online casino business is fundamentally more profitable than sports betting because the average value of a casino player is estimated at $600 while a sports book player could be as little as $20. Estimates put the online casino market at DOUBLE the size of the online sports book market and the online casino industry is really just getting started as more states liberalize.
$RSI is expert at new market entry; they have been first to market in Pennsylvania, Illinois, Indiana, and Colorado and even when they aren't first they are capable of capturing market share in competitive markets such as New Jersey. They also have products which women play which accounts for at least half of the market in online casino. The female market is one that the pure sports book plays miss out on.
Also for some fucking reason they operate a casino and sports book in Colombia (rushbet.co) and may make large expansions into other parts of south America as legalization continues. This means they have the expertise necessary for global expansion in the future although the states remains their primary focus and growth driver.
​
**The Financials and Strategy**
Unlike other companies in the space Rush Street is already profitable in 2020 and has a strong focus on Return On Invested Capital (ROIC). Q3 gross revenue was $71.9 Million. Q4 revenue is going to be a blow out. Combing through state gambling revenue data and breaking that down by market share my estimate is that Q4 revenue could be as high as $120 Million.
Paired with this blow out will be a **guidance raise to $500 Million for 2021**, which is 2/3 of DraftKings 2021 guidance of $750M.
https://imgur.com/a/xkfcayC
​
What is striking when compared to $DKNG is that their advertising spend was only a quarter of revenue in Q3 while $DKNG spent 155% of their revenue. This will change as they begin to focus on growth, but it shows they are very good at getting return on ad spend. This company should actually be valued close to $DKNG based on growth potential once guidance is raised.
https://imgur.com/a/RQQXtGg
​
Their focus on attracting **female gamers** is also important to their long term growth potential. The sports book plays with cross sells to casino such as $DKNG will not be able to grow through the female demographic in the same way. **This cannot be understated** as one of the major strategic advantages of $RSI.
https://imgur.com/a/xzJj26n
​
As I said before I expect their trend of rapid growth to continue for Q4 earnings, certainly going to be a blow out based on looking at state gambling revenue numbers. My estimate is that their revenue will be around 110M for Q4. I also expect guidance to be raised to 500M for 2021 due to strong performance in existing markets and the recently opened Michigan market as well as their sports book launch in Virginia.
https://imgur.com/a/ckTqHhh
​
**Short sellers have entered the chat**
The short interest on $RSI sits at 5.08 M shares as of 01/14/21 representing a 30% increase. Now why would a company already valued at 2.8 Billion and with a comparative valuation of 8-10 Billion compared with $DKNG and $PENN be so heavily shorted at such a low market cap? My conclusion is that an institution with 10s of millions to throw at shorting this stock wants to take advantage of fear of share dilution from warrant calling or to establish a better entry prior to earnings.
​
**Commander in GILF Cathie Wood is Bullish on the sector**
On Feb. 2nd ARK disclosed that they had purchased 620,300 shares of $DKNG. This is extremely bullish for the sector. I am highly confident that after Q4 earnings ARK will be purchasing shares in $RSI as well due its strategic advantages relative to $DKNG and exposure to the female demographic. For such a small market cap company this will be a major catalyst.
​
**Institutions are bullish**
Fidelity has increased their holdings to 14% as of today: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001793659/8f10b0d8-a3d2-447c-bc75-87587d0a4670.pdf
Alliance Bernstein holds a 6% position reported today: http://d18rn0p25nwr6d.cloudfront.net/CIK-0001793659/e883778d-e759-4a85-91c1-3242ed110720.pdf
​
**Final notes**
Jerome "The Bus" Bettis, Steelers legend and hall of fame running back, is their brand ambassador... This company knows their target audience and how to appeal to them, likely more 'classic' ambassadors to come to attract even more boomer and Gen X degenerates. Keep in mind these are the gamblers with big money to spend, the average age of an online casino gambler is 42.
This stock has been grossly underpriced due to short selling. The terms of the SPAC deal were not unfavorable and all the insiders held their shares through the merger banking on growth in the market - **management owns 77% of the company**. This is a true value play on a well managed company in an emerging industry with a market size in the hundreds of billions. I plan to hold shares long term.
​
I will post a part 2 breaking down their latest S-1 filing and Q4 revenue by state when they release their Q4 earnings date.
​
Do your own research.
References:
https://www.legalsportsreport.com/sports-betting/revenue/
https://fintel.io/doc/sec-rush-street-interactive-inc-ex991-2021-january-05-18632-947
https://s26.q4cdn.com/794539746/files/doc_presentations/2020/RSI-Investor-Presentation-15-Oct-2020.pdf
https://ir.rushstreetinteractive.com/news/news-details/2020/RUSH-STREET-INTERACTIVE-ANNOUNCES-THIRD-QUARTER-2020-RESULTS-AND-RAISES-FULL-YEAR-GUIDANCE/default.aspx
https://www.youtube.com/watch?v=SQWEhWuPmzU
https://www.thestreet.com/investing/draftkings-surges-as-stake-bought-by-ark-next-generation
​
Positions: $RSI 30 03/19 30C
I will be adding 04/16 25cs each week until earnings.
Exit strategy: "What's an exit strategy?" - u/deepfuckingvalue
Update 021321: IMPORTANT after a commenter pointed out that technically they could report as late as April 2nd I AM RECOMMENDING THAT EVERYONE ROLL OUT TO APRIL 16TH 35Cs

You guys are nuts BB market cap 8B but holding a billion cash and won the FB settlement. This thing is a goddamn steal don’t ever be scared hold until the financials are released in March and watch this shit hit 30 a share. NO THIS ISNT A SHORT SQUEEZE WE KNOW THAT, everyone on wsb longer then 2 weeks knows the DD on BB this is the real deal.
Holding 3000 shares @ 13.25 PT is 30 by April not 300$$$$ in a week this is casino but I’d rather have BB then cash

Deep Dive #1 (Part 2 of 2) – DraftKings, bringing sports to life (Is it a 10
TL:DR

• This is Part 2 of my two part deep dive on DraftKings (Ticker: DKNG, I will refer to the company as “DK”).
• This second part walks you through my framework of trying to figure out if the stock can 10x from here: (1) Leadership (2) Risks (3) Price and (4) Growth.
• DK is an exciting, disruptive company working to change how we experience watching sports and make it better.
• I am not a financial advisor and this is not investment advice. These are just my opinions to help facilitate learning and discussion.

Hi everyone, thanks for coming back for Part 2. If you missed Part 1, you can read it here. I’m excited to bring you the rest of my research on DraftKings (NASDAQ: DKNG). Let’s dive in.
Can we 10X from here?
For someone like me that is on the younger side and with a longer investment time horizon, and probably you if you are reading this, an important question to ask yourself is “Do I think this investment could 10x from here?”. In other words, could this investment one day be 10 times what it is worth today? To try to answer this question, I will work through a pre-determined framework that I believe gives us the best path to find out.
The framework includes:

1. Leadership – Desire, Purpose and Ownership
2. Risk Considerations
3. Price Considerations
4. Explosive Business Growth

1. Leadership – Desire, Purpose, Ownership
For a company to do something as spectacular as 10x, we are going to need to see really strong and talented leadership. In Chris Mayer’s excellent book “100 Baggers”, he dedicates a part of the book to talk about the importance of what he calls “Owner Operators”. By this he means that the CEO of the company owns a substantial amount of stock in the company themselves. Why is this important? If the CEO has their own personal wealth at stake in the company’s stock (just like we do as shareholders) their interests are more aligned with shareholders and maximizing returns for shareholders than they would be if that CEO had no skin in the game. It’s also better in my opinion if the CEO of the company was also the founder of the company. For these founder-CEO’s that have money invested in their own company, it really is like their baby. Would you rather have your money invested with someone who views the company as their baby or with someone who was just hired to watch this kid (the company)?
Having one founder in leadership is good, but how about three? You have to love that. These guys worked together to start this company 8 years ago, and today they hold the three highest positions within the company. Jason, Matt, and Paul were all co-workers at Vistaprint in 2012. Vistaprint is a global e-commerce company that produces physical and digital marketing products for small and micro businesses. All three of them studied computer science/engineering in college with Matt and Jason picking up an additional majors in business/economics. This makes sense as Matt and Jason are CEO and President while Paul is head of Global Technology and Product. At Vistaprint, they worked in various analytics and marketing roles and became good friends. They had a passion for fantasy sports. They liked season long fantasy sports, but saw a big opportunity in daily fantasy sports. They went to work right away on building a digital platform for daily fantasy sports from a spare bedroom in Paul’s Watertown, Massachusetts apartment. Talk about humble beginnings.
I think that FoundeCEO Jason Robins has really shown that he can take care of his baby and lead it to big wins. Over the past 8 years, he has successfully lobbied in multiple US states for legalization of DFS and sports betting. He has helped DK obtain key partnerships with major sports leagues including becoming the official DFS partner of the NFL in 2019. At the time of the deal, Jason was quoted in an article in the Legal Sports Report by Eric Ramsey as saying:
“Throughout our discussions with the League, it was evident we share a common vision around the future of fan engagement, and we are excited to continue on this unique journey with the NFL as our ‘Official Daily Fantasy Partner” and calling it “a defining moment” for the industry.
It’s very important that the CEO of a company like this, trying to essentially create a new industry in the United States, is tactful at getting deals done with key business partners and lobbying for change with the government. I believe this bodes well for DK’s future.
Also, Jason is very respected and admired by his employees. On Glassdoor, he has a 99% approval rate. I’ve honestly never seen a CEO with an approval rating that high. I think this strongly corroborates my thesis that he is a great leader.
Also, DraftKings has very happy customers. Using Net Promoter Score (NPS) which is one of the most reliable and unbiased ways to find out what a customers true experience with a business is and how likely they would be to recommend it to a friend. For DK, their NPS is extremely high and is substantially better than their main competitor – FanDuel. On a scale of -100 to 100, DK has a 71 NPS, while FanDuel has a 54. This is a testament to leadership’s commitment to creating a great user experience. It really shows that company leadership can follow up on their word and deliver what they promise.
In terms of leadership, owning their company, Jason owns about 4.3% of the company worth about $880 million at the time of this writing. Fellow co-founders Matthew Kalish and Paul Liberman both own about 1.8% of the company, with their stakes each worth about $350 million. I think it’s fair to say that these guys are invested in the success of the company that they started and are motivated to grow their company’s worth for themselves and shareholders.
2. Risk Considerations
My investing strategy is to buy companies of high quality, that are growing at a rapid pace, and then hold my position in those companies for a long time (5, 10, 15 years or longer) as long as I continue to stay satisfied with that companies’ ability to execute their business plan and have productive quarters that meet or exceed expectations. It’s not “Buy and Hold”. It’s “Buy and Continuously Verify”. If you are going to take this strategy, you have to understand the difference between risk and volatility.
To me, risk is the possibility that I can lose my entire investment. As long as I am not trading on margin (I don’t) or short selling (I don’t) the most I can possibly lose when I buy stock in a company is 100% of my money. The risk I’m taking on is 100%. But what is my upside? Is my upside limited to 100%? Of course not. I can invest $10,000 into a company and it can grow to $100,000 (1,000%) or it can grow to $1,000,000 (10,000%). There’s really no limit. Volatility is a natural side effect of being a rapidly growing, disruptive company, that at times the public may struggle throwing a valuation on. It’s your ability to sit through these wild price swings while maintaining conviction in the company’s long term prospects that will allow you to possibly experience a 10x or maybe even a 100 Bagger.
Can we completely eliminate risk? No. But I do think there’s ways we can go about reducing it with our investments. Before considering a company for investment, I have a list of a few questions I go through to see if there’s any red flags that I think could make the investment too risky for me.
Question 1: Is the market cap under $1B?
No. DK’s market cap is $20.5B. Companies under $1B market cap are small/micro cap companies. Penny stocks fall in this category. To me, companies this small are riskier because they haven’t built up enough credibility to get big time financial backing, they’re less known by the public, and less scrutinized by the public than larger companies.
Question 2: Is there one customer that accounts for over 10% of revenue?
No. DK had 1,021,000 Monthly Unique Players (“MUPs”) during Q3 2020, which is up 64% YoY compared to Q3 2019. I seek to avoid customer concentration because if something goes wrong with that one customer or they lose them, it could have a materially negative impact on the business. Luckily, with DK we don’t have to worry about this.
Question 3: Is the company a turnaround story that was recently struggling?
No. DK was founded 8 years ago (2012) and has been on an upward trajectory ever since. As a matter of fact, DK was founded 3 years after FanDuel (2009) and did a great job of not only catching up to them but surpassing them on many metrics. I’ve used both and can honestly say I enjoy DK a lot more. Since they were listed on the NASDAQ on April 24, 2020 the stock is already up 160% from around $19.
Question 4: Is the company in an industry that is set to decline?
No. I don’t think I need to write too much about this. Ultimately, DK is a digital entertainment platform. Common sense should tell you that’s a good industry to be in right now.
3. Price Considerations to 10x
In this part of the framework, I want to focus on the price and the path to 10x from the current price. As of this writing (11/30/20), the market capitalization (market cap) of DK is $20.5B. For those of you that are new investors, I’ll give you a quick breakdown of what this means.
Market cap = Shares outstanding * Price per share
So if Company X has issued 1,000,000 shares, and each share is trading at $50, the Market cap of Company X would be $50M. For reference, this would be a very small company (a micro-cap) that you or I have probably never heard of.
The market cap tells you the total value of the company as a whole on the stock market today.
To achieve 10x in 10 years, a stock will need to have a Compound Annual Growth Rate (CAGR) of approximately 26% per year on average for each of those 10 years. This would obliterate the S&P 500 which has averaged roughly 13.5% per year the past 10 years.
Now back to DK. In order for DK to 10x in 10 years from this current point ($20.5B) it will have to reach a market cap of roughly $205B by the year 2030. For reference, Disney (DIS), has a market cap of $268B as of today. Disney might be a good investment, but they’re not going to be worth $2.68 trillion dollars in the next 10 years. Size of the company matters when trying to 10x. For reference, the highest valued company in the world right now is Apple (AAPL) at $2 trillion.
Disney is considered the gold standard of the entertainment industry. But keep in mind, Disney’s position in entertainment is well established and if anything, would really be declining in the current macro environment if not for their Disney+ streaming service. Even one of the oldest leaders in entertainment like Disney realizes the value of having a digital entertainment platform. However, with the Disney story being very mature and in it’s golden years, the DK story is in the early innings. Better yet, to quote DK CEO, Jason Robbins from the Q3 earnings call, the sports betting part of DK’s business is “in spring training”. For those of you who don’t follow baseball, “spring training” means that the season has not even started yet. The entire premise of DK as a company in my mind is that they are a digital entertainment platform. With the current world macro environment including the immediate and long term impacts of the COVID-19 pandemic, I believe digital entertainment platforms (especially ones where you can win money) are primed for success. I know it’s a bold prediction to say a stock is going to 10x in 10 years but I believe DK does have a long enough runway for that type of growth to occur. Speaking of growth, let’s talk about that a little more.
4. Explosive Business Growth
We’ve talked about the path for the stock price to 10x, but a necessary ingredient for that to possibly happen is explosive growth. I like to see that top-line revenue is expected to grow at least 20% for the next five years. It’s this type of growth that makes companies that appear very expensive today, actually not as expensive as they look. Personally, when I’m evaluating a growth stock, the first thing I look at is the Price to Sales ratio (P/S). The formula for this is simple:
Price to Sales Ratio (P/S) = Market cap / Last 12 months of Revenue
For DK, the current P/S ratio is $20.5B / $550M* = 37*
*To get $550M, I took Pro Forma Jan 1 – Sep 30 Revenue of $320M and added projected Q4 revenue of $230M from the Q3 earnings call.
To be fair, a P/S ratio of 37 is quite high. It means that as a shareholder, you are paying $37 for every $1 of revenue the company generates. And that’s before considering expenses. You might be saying, “Mark, that’s outrageous, why the heck would I pay $37 just to make $1 of sales?”. The answer is one word – growth. By taking a stake in DK today for the long term, you’re essentially banking on two things.
​

1. Revenue will grow rapidly over the next few years to make this ratio more reasonable
2. Investors in the future will still be willing to pay a premium to have a stake in DK (maybe not a premium as high as $37 for $1 of sales, but a premium nonetheless).

In terms of explosive growth, it has been so far, so good for DK. In the most recent quarter (Q3) ending 9/30/20, revenue was $133M which is up 42% from the same quarter in the prior year. Analysts are expecting a similar trend to continue over the next five years, they forecast at least 20% growth each of the next 5 years.
If the market cap stays exactly the same as it is today ($20.5B), then the P/S ratio by the end of 2025 will be roughly 7. That is a lot more reasonable than what you see today at 37. However, the market cap is not going to be exactly $20.5B by the end of 2025. Too many things will have happened by then (hopefully mostly good things) for the company’s worth to be exactly what it is today. With all the runway for growth here, if management can execute, and actualize these impressive projected growth rates (or maybe exceed them?) I think investors will still be paying a high premium to have a stake in a company like DK.
Will investors still be paying a 37 P/S ratio five years from now? Probably not, but it’s interesting to look at what the company’s value would be if that were the case.
37 * $2.8B sales = $104B.
I don’t think it’s realistic to think investors will still be paying that high of a premium, but maybe the premium will be somewhere between what it is today (37), and what it would be with no price change (7). This is me just speculating and guessing for fun, but lets take the mid-point of that range (22) and see where it gets us.
22 * $2.8B sales = $62B.
This would be roughly a 300% return in 5 years under these assumptions with a CAGR of 25% per year. Not too bad! Again, take this part of the write up with a grain of salt as I am making a lot of assumptions and doing a lot of speculation here.
This concludes Part 2 of my DraftKings deep dive. Hope you enjoyed and be sure to stay tuned for the next pick and for any updates about this one!
***POST-EDIT: Thank you all for the positive feedback! Please comment below what ticker you think I should do my next deep dive on? One with a similar runway for long term growth would be preferred!***
Disclosure: I am/we are long DKNG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Positions: $RSI 03/19 30C
Proof: https://imgur.com/a/swCCMjz
This post is for informational purposes only, you should not construe any such information or other material as investment, financial, or other advice.
TLDR: Rush Street Interactive ($RSI) is the #1 nationwide online casino company and the #3 or #4 sports book depending on the state. Short selling, unwarranted institutional wariness of share dilution and the general market focus on sports book instead of online casino has left $RSI grossly undervalued. A massive blow out at Q4 earnings will result in analyst upgrades and a rapid repricing by market makers and institutions seeking exposure to the emerging sector.
Overview
"Sports book is really just kind of a warm up in a lot of ways for an online casino where the real money is made" - Niccolo De Masi, CEO dMY technologies
Rush Street Interactive ($RSI) operates the BetRivers.com online casino and sports book. They are now fully licensed and operating in New Jersey, Pennsylvania, Michigan, Illinois, Indiana, Colorado, Iowa, and Virginia. They own and operate a casino in New York and already have a New York license making them well positioned for liberalization there. They merged with a dMY Technology Group SPAC on Dec. 31st 2020 with 240 million on the balance sheet to spend on growth.
The online casino business is fundamentally more profitable than sports betting because the average value of a casino player is estimated at $600 while a sports book player could be as little as $20. Estimates put the online casino market at DOUBLE the size of the online sports book market and the online casino industry is really just getting started as more states liberalize.
$RSI is expert at new market entry; they have been first to market in Pennsylvania, Illinois, Indiana, and Colorado and even when they aren't first they are capable of capturing market share in competitive markets such as New Jersey. They also have products which women play which accounts for at least half of the market in online casino. The female market is one that the pure sports book plays miss out on.
Also for some fucking reason they operate a casino and sports book in Colombia (rushbet.co) and may make large expansions into other parts of south America as legalization continues. This means they have the expertise necessary for global expansion in the future although the states remains their primary focus and growth driver.
The Financials and Strategy
Unlike other companies in the space Rush Street is already profitable in 2020 and has a strong focus on Return On Invested Capital (ROIC). Q3 gross revenue was $71.9 Million. Q4 revenue is going to be a blow out. Combing through state gambling revenue data and breaking that down by market share my estimate is that Q4 revenue could be as high as $120 Million.
Paired with this blow out will be a **guidance raise to $500 Million for 2021**, which is 2/3 of DraftKings 2021 guidance of $750M.
https://imgur.com/a/xkfcayC
What is striking when compared to $DKNG is that their advertising spend was only a quarter of revenue in Q3 while $DKNG spent 155% of their revenue. This will change as they begin to focus on growth, but it shows they are very good at getting return on ad spend. This company should actually be valued close to $DKNG based on growth potential once guidance is raised.
https://imgur.com/a/RQQXtGg
Their focus on attracting **female gamers** is also important to their long term growth potential. The sports book plays with cross sells to casino such as $DKNG will not be able to grow through the female demographic in the same way. **This cannot be understated** as one of the major strategic advantages of $RSI.
https://imgur.com/a/xzJj26n
As I said before I expect their trend of rapid growth to continue for Q4 earnings, certainly going to be a blow out based on looking at state gambling revenue numbers. My estimate is that their revenue will be around 110M for Q4. I also expect guidance to be raised to 500M for 2021 due to strong performance in existing markets and the recently opened Michigan market as well as their sports book launch in Virginia.
https://imgur.com/a/ckTqHhh
Short sellers have entered the chat
The short interest on $RSI sits at 5.08 M shares as of 01/14/21 representing a 30% increase. Now why would a company already valued at 2.8 Billion and with a comparative valuation of 8-10 Billion compared with $DKNG and $PENN be so heavily shorted at such a low market cap? My conclusion is that an institution with 10s of millions to throw at shorting this stock wants to take advantage of fear of share dilution from warrant calling or to establish a better entry prior to earnings.
Cathie Wood is Bullish on the sector
On Feb. 2nd ARK disclosed that they had purchased 620,300 shares of $DKNG. This is extremely bullish for the sector. I am highly confident that after Q4 earnings ARK will be purchasing shares in $RSI as well due its strategic advantages relative to $DKNG and exposure to the female demographic. For such a small market cap company this will be a major catalyst.
Final notes
Jerome "The Bus" Bettis, Steelers legend and hall of fame running back, is their brand ambassador... This company knows their target audience and how to appeal to them, likely more 'classic' ambassadors to come to attract even more boomer and Gen X degenerates. Keep in mind these are the gamblers with big money to spend, the average age of an online casino gambler is 42.
This stock has been grossly underpriced due to short selling. The terms of the SPAC deal were not unfavorable and all the insiders held their shares through the merger banking on growth in the market - **management owns 77% of the company**. This is a true value play on a well managed company in an emerging industry with a market size in the hundreds of billions. I plan to hold shares long term.
I will post a part 2 breaking down their latest S-1 filing and Q4 revenue by state when they release their Q4 earnings date.
Do your own research.
References:
https://www.legalsportsreport.com/sports-betting/revenue/
https://fintel.io/doc/sec-rush-street-interactive-inc-ex991-2021-january-05-18632-947
https://s26.q4cdn.com/794539746/files/doc_presentations/2020/RSI-Investor-Presentation-15-Oct-2020.pdf
https://ir.rushstreetinteractive.com/news/news-details/2020/RUSH-STREET-INTERACTIVE-ANNOUNCES-THIRD-QUARTER-2020-RESULTS-AND-RAISES-FULL-YEAR-GUIDANCE/default.aspx
https://www.youtube.com/watch?v=SQWEhWuPmzU
https://www.thestreet.com/investing/draftkings-surges-as-stake-bought-by-ark-next-generation
Positions: $RSI 03/19 30C
I will be adding 04/16 25Cs each week until earnings
Exit strategy: "What's an exit strategy?" - u/deepfuckingvalue
Forgot to add: http://d18rn0p25nwr6d.cloudfront.net/CIK-0001793659/8f10b0d8-a3d2-447c-bc75-87587d0a4670.pdf Fidelity just doubled their position to almost 15%
Update 021221: Everyone that went in on my initial entry is down 40% right now. As I said I plan to continue to buy 03/19 25Cs each week until earnings. If you’re worried about further losses wait until the day before earnings to load up, you may miss a run up though.
Update 021321: IMPORTANT after a commenter pointed out that technically they could report as late as April 2nd I AM RECOMMENDING THAT EVERYONE ROLL OUT TO APRIL 16TH 35Cs

I've read a lot of comments of people panicking and starting to sell due to the drop in price during market hours today, from the 0.080 peak of last night. I'm hear to assure you that this is normal and I have some data to back me up. Please do take this post with a grain of salt as I am still new to this and don't bet your life on it holding up. Please remember this is gambling and not investing. This is a DOGE casino. Only bet what you can afford to lose.

Comparison with GME

First off, I noticed that our takeoffs have been after hours. The big spike yesterday started at 3:00 PM, right when market closed. It then really took off when AH on stocks closed, this is mostly due to the Elon tweet. The big point though is that it took off when market closed. When did it really start to drop? Around 7:00 AM this morning when the East Coast woke up and sold their DOGE to invest in GME. It further dropped when market opened. I'd like to direct your attention to the graph below, where the green line is GME and white is DOGE. This is a quick overlay I made from Robinhood and the scale of the market is wrong, but you can still see the general idea of what I'm going for, it is from market open to 1 PM EST.
https://i.imgur.com/Yrba7rU.png
What we see here is a seemingly inverse relationship. When DOGE rises, GME drops. When GME rises, DOGE drops. This is not perfect relation, but there's a reason behind it.
This is because of people going in and using DOGE to make a profit then putting the profit into GME since people are expecting the big squeeze today. The effect of one dropping or rising is usually delayed, this is partially due to brokerage servers being overloaded. When GME closes today, it will be the weekend and since DOGE is a crypto, it never closes. This will bring floods of people into DOGE who were late to the GME train who are trying to turn their profits from GME into the values they were reading in the upwards of $50k+. There will be nothing to compete with DOGE tonight, if people grab ahold of what's going on DOGE will absolutely soar. Do not get discouraged by the drops into the 0.03 range. Buy it cheap. People want in on the DOGE casino and will be desperate to get more as they can't trade GME until Monday. This weekend is our time to shine.

Metcalfe's Law

Metcalfe's Law is essentially the law that the value of a network is a function of the number of pairs transactions possible. Think of it like this, two telephones can make only 1 connection, five can make 10 connections, and twelve can make 66 connections. See where I'm going with this? When more people join in, market cap will adjust with it. It was true with Bitcoin and every other major crypto. You can see the transactions vs market map visualized below for Bitcoin
https://i.imgur.com/Sk9qCvk.png
That means that Metcalfe's Law will eventually take over and the prices will rise.

What this means

This means that you all should not be panicking. Do not have paper paws, keep your diamond paws strong and hold the line. We can only be successful and get to $1 if we all work together. $1 is the first stop, we will then go higher. Only sell part of your DOGE at $1 and then we can skyrocket from there. If we all abandon each other, this won't take off and we'll sink down. DOGE isn't trending on Twitter anymore under the trending tab, we have to get that trending again. We have to get a post to the front page of Reddit so that everyone can buy in. It's at 0.04 cents right now, that is still up roughly 400%! Get your friends to drop just $10 on DOGE. Every little bit helps.
Edit: As others have mentioned, brokerages have restricted sales and are down for maintenance is part of the drop as well. This is mostly due to load on servers. Crypto does not follow the same rules as stocks and DOGE being successful does not hurt the hedge funds. It is 100% a casino that's taking off because of the meme. We want it to continue that way because memes (and money) are great and we need all the laughs and jokes and bright spots we can get in these dark times.
Also worth noting that it seems that SatoshiStreetBets will be doing a coordinated push at 3 PM EST when the market closes for DOGE so if you can afford to dump $10 more in, that would help with that effort

Walt Disney Company
Ticker: $DIS
Market Cap: 341.8 Billion
Assets: 201.5 Billion
Subsidiaries: Disney +, Pixar, Hulu, ESPN, FX, ABC, etc
First, Disney is a safe as fuck investment. It’s a blue chip and should be a part of your portfolio. But fuck portfolios, this is a casino, so why will Disney moon? Why the fuck does Disney need a DD? Well, I'm Long $DIS, but today will also make for a good earnings play.
Disney Plus. Have you heard about it? Well, millennials with kids sure have. As the millenials start pumping out babies after 12 months of social distancing, they’ll quickly learn kids get bored easily, and fast. Disney Plus will be as big as Netflix in a few years, and will probably eclipse it for multiple reasons. They have a huge library that they own themselves, and the ability to have streaming premiers, etc. Not to mention the package with Hulu and ESPN. Netflix has a market cap of around 250 billion with only 40 billion in assets and 1.5 Debt-to-Equity vs Disney 0.7
Don’t get me wrong, I’m long Netflix too, but clearly $DIS is the better deal here when you consider their other revenue streams. The fucking rocketship that Disney Plus is has only just started getting priced in, and is where Netflix was 6-7 years ago, but with an accelerated course to get there since people already adopted streaming. They also own their own content and have been producing since their inception, and have a better moat than Netflix. Even if the revenue from Disney+ doesn't match Netflix, they'll be able to pull a bigger profit and recycle old IP.
Oh, let's not get into sports. ESPN, Cricket, etc. Mickey already has his dirty paws in everything. More independent services to charge for.
Their earnings have taken a hit from their parks and experiences being limited from COVID. But the vaccine is rolling out, and their peak profit from this is in the Summer, where COVID transmissibility tends to be low, and partying tends to be high. This will have a much less effect on earnings than predicted the parks get busier this year with vaccinated people ready to go HAM from a year of isolation. Their parks are operating at 35% capacity, but they aren't at capacity for the bulk of the year. Even if the parks take a significant hit this year, it won’t even be noticed as $DIS tears through hyperspace. Fuck the moon. We’re talking Star Wars^TM type intergalactic travel. 🚀
Revenue Streams
Media Networks: 28.4 Billion
Parks/Experiences: 16.5 Billion
Studio Entertainment: 9.64 Billion
Other: 17 Billion
Earnings Play
As for an earnings play, they report today. This is a casino. They’re still holding low considering the uncertainty with their parks, but park travel is low in the winter, and should have a low effect on earnings. But while kids were home, not in school, and causing a ruckus, Disney + subs increased dramatically over the Fall. Look at Google Trends and notice the clear increase over Q4, probably fueled by the Mandalorian and the holiday classics people go nuts for.
TLDR (and for those of you that can't read)
$DIS 🚀🚀🚀
Positions:
10c 2/12 $190
10c 3/29 $200
5c 6/17/22 $250
95 shares at $113
AH Edit #1: Get fucked bears
Edit #2: this stock is a bargain below $250. We'll be trading at $300 by EOY

My wife and I have each decided to take $100 and see what we can do with it in the stock market. We are going about this kind of like how we do with a casino, once it's gone thats it and if either of us do well then thats a huge bonus. Let me preface what I am about to post and say I am by no means an expert and I am not meaning this as advice in any way. I would really just like everyone's thoughts on if I am going about this at least rationally and if there is anything I have missed that may help me make a better informed decision.
I have been going over a lot of posts on this subreddit and trying to do my own DD on everything I look up. Here are the 3 I am going to buy into tomorrow when eTrade finally releases my transfer for use. (3 day hold is a bit to long eTrade, my bank released the funds Tuesday)

1. 200 Shares of POVERTY DIGNIFIED INC COM (PVDG). I have been looking over this and while they don't have a lot of news worthy activity I think what they do have going for the is going to continue to do well in the days to come, especially with the potential for the new strain of Covid supposedly coming this way. https://finance.yahoo.com/news/poverty-dignified-inc-closes-transaction-140000968.html They have also done very well with a steady climb over the last month with a much steeper increase in the last few days going from sub 1 cent to almost 3 cents a share. My only concern is their outstanding shares of 2.3B. That seems huge to me and I am a little hesitant that they are a pump and dump almost at the peak of the pump.
2. 200 Shares of BRAZIL MINERALS INC COM NEW (BMIX). This one a came across in another post early after joining this subreddit and have been following ever since. They just sealed the deal on 2 new Lithium exploration contracts in Brazil. The soon to be focus in the US on clean energy ramping up with the new administration this seems like a great bet. They had been steady flat sub 1 cent until inauguration day and then have been on a steady climb to almost 5 cents a share. Even spiking at one point to 8 cents a share. Just like PVDG though they have an outstanding share amount of 2B and a market cap of $96M. They at least have legit news though that may be pushing their stock price up.
3. 2 Shares of SPINNAKER ETF (THCX). I know its not a lot but this ETF covers quite a few cannabis players, 2 of which, are about to make a major merge to be the largest of their kind in the world TLRY and APHA. This also goes back to the new US administrations more pro stance on cannabis as a whole and a lot more states looking to legalize, especially for medicinal purposes. Their top ten holdings are GRWG VFF WEED APHA CRON GWPH SMG TLRY AMRS FAF . One of these, forgive me I can't remember which one, is the largest player in cannabis product packaging. All of the ones I have looked into are headed on the way up.

Thank you all and thank you for any additional info.
​
TLDR: I am buying PVDG, BMIX and THCX and just wanted to see if there in anything I have missed about these.
​
Edit 1: As a result of al the replies to this thread I have changed up my strategy considerably. I bought 10shares this morning to a non-otc stock TTOO and am doing ok. Have already seen a little gain and a little loss but as a whole am pretty happy. I have a buy request for tptw but as of yet it hasn't dipped enough to meet my limit. I'm ok with this and it is only set for 1 day. If i get it cool if I don't that ok too. Thank you to all of you for all your support and information. This sub is awesome and hopefully I can post in the future the gains I have made with my purchases.

I’ve been a firm believer that time in the market beats day trading and other get rick quick schemes; that said, when markets are broken, decisive action is required. Action is now required. Markets are currently priced for perfection and there are a lot signals suggesting that we are due for a significant mean reversion. Think 50%+ correction.
For starters, the Shiller PE Ratio is at 35.66 which was only surpassed once previously in December 1999 when it hit 44. The Nasdaq lost 80% and the S&P was cut in almost ½ during the ensuring brutal bear market. Secondly, S&P price to sales is currently at 2.87 – an all-time high. Thirdly, S&P dividend yield is a puny 1.49%, just a tad bit above the all-time low set in 2000 at 1.11%. Fourthly, the Buffet indicator – the total market cap divided by GDP is at 190%! Buffet said anything above 100% means the market is overvalued. Fifthly, the ratio of margin debt to GDP is at an all-time high. That’s right, people are using max leverage to participate in this circus. I could go on, but you get the point.
What makes this particular bull-market dangerous is that the retail crowd is pouring in at record numbers. They are engaging in casino like behaviour – OTM option calls on meme stocks, yolo trades on companies with no earnings, buying shitcoins with the hope of flipping it to another fool etc etc. This should sound alarm bells for any serious investor.
Almost all bubbles end with craziness from the masses and I think there is sufficient evidence of that today. SPACs, garbage IPOs, Gamestop, Tesla, FAANG, pot stocks (again), real-estate, crypto currencies are just some recent examples of the retail crowd collectively losing their minds in the hopes of reaching financial nirvana. I’ve seen this story before, most recently in 1999/2000 when the retail crowd piled into tech stocks and exchanged stock tips on Yahoo message boards (the original WSB forum). Most of the stocks they traded lost 90-100%. Remember Puma Technologies or JDS Uniphase?
I know what you’re thinking – it’s impossible to time the market and most who have tried have failed. I get it. Time in the market trumps timing the market. It’s what makes my decision and even writing this so difficult. But I cannot, in good faith, buy equities and even bonds when the market has become manic and the odds of a negative return 10 years from now are almost guaranteed. Passive investors will not be immune. This is one of those rare events in one’s investing career where decisive action is required to avoid permanent capital losses or a very long winded mean reversion period. As such, I will be going mostly cash. The option value of cash has never been higher and great opportunities will await those with patience.
Good luck fellow PFC members.

This writing was copied from my blog https://nope-its-lily.medium.com/. I write about the NOPE and other options and market things there and on my twitter https://twitter.com/nope_its_lily. Cheers!
Check out Part 1 first about my thoughts on the short squeeze thesis. To clarify — I do think shorts are being squeezed in Gamestop, although this is auxiliary to the main driver of the stock’s momentum (and not, in my opinion, the primary driver of Friday’s exponential rise).
So okay, let’s go to the obvious question — if hedge fund tears didn’t cause Gamestop to rocket, what did cause it?
Wew laddy, +71.25% at the peak.
Gamestop in many ways is an extraordinary story, and has all the properties of a successful meme stock (salience):

1. Personal name recognition/Nostalgia-For better or worse, we all know/remember Gamestop (primarily from childhood), which is similarly why Hertez performed so well in the afterlife while Mallinckrodt hasn’t.
2. A hero and a villain — Much like Tesla, Ryan Cohen represents the hero in the Gamestop narrative, where investors can paint whatever picture of the future they want and justify whatever price tag they pay. Similarly, Melvin and Citron (I mean, even the name Melvin) and the hedge fund industry are (perhaps well-deserved) villains in the arc, helping obfuscate feelings of greed or risk by presenting it as a righteous cause.
3. A cataly-ish — For obvious reasons Gamestop is benefiting from the console cycle, but perhaps to a lesser degree than before (its massive real world presence during a pandemic doesn’t help much).
4. Humor-What could be more funny than investing in a relic of the early 2000s? Except maybe investing billions into 3d renderings of hydrogen powered cars.

So it isn’t a surprise Gamestop captivated the attention of the internet; despite common belief, the legend of Gamestop extended far outside wallstreetbets (although the saga of DeepFuckingValue/RoaringKitty there helped bring substantial energy to the cause).
And how does the internet show some love?
Well, it buys calls.
For better or worse, most new investors have absolutely no concept outside of simple long call/put positions (probably for the best, from experience). In general, most new market positions view long options (and, let’s face it, mostly calls) as a highly leveraged bet on the underlying akin to a lotto ticket, which works beautifully for the following reasons:

1. Long options have asymmetric risk-reward, assuming risk-loving participants.

While in prior posts I’ve touched on the expected profit of options being zero, this is only true (it’s never actually true, due to seller’s, variance risk premium, and a host of other factors) under risk-neutral measure. In the real world, investors (especially on indices) tend to be risk-averse (weighting losses more heavily than chance of gain)… at least historically. The new class of retail investors, on the other hand, partly engendered by Robinhood’s extremely gamified UI tends to be risk-loving (“yolos”), favoring chance of gain over (higher) chance of loss.
For that type of an investor, options are akin to a casino due to convexity, or in layman’s terms, “the potential to go up a lot really fast” in value. This is of course true for stocks too (albeit less so, due to the implied leverage of options), but when an individual purchases a stock they have a rather large downside (the entire stock can become worthless). This isn’t the case for a call option, which only represents a portion of the total cost of the stock, but represents the entire upside.
2. Options have to be hedged… often in the underlying.
Before I get 1000 responses telling me this isn’t always true (especially on indices, where you have futures and all sorts of nice things) — it’s more or less true on a meme stock, which basically has no beta or correlation to any other stock (except perhaps other meme stocks). In general, one can anticipate that an option written by a market maker and sold to a retail investor (who owns a long position from that transaction) is hedged in the underlying stock, which obeys the same rules of buying and selling pressure. This is even more apparent in stocks with low float, which tend to move in price substantially with relatively low volume traded. You can imagine how few option contracts it similarly takes (given the implied leverage up to 100 shares worth of delta) to actually move the price (I’ve seen call options move the spot in real time, for instance, on Del Taco stock before earnings).
3. Option buying begets option buying.
What happens when a few individuals buy options on a stock? It moves up slightly (usually in proportion to how many options were bought, what time period they were bought in, and how large the underlying’s float is). This triggers the happy centers in peoples’ brains (yay, we’re making money) and triggers more buying of calls.
More interestingly, option convexity is largely due to the Greek gamma, which simply refers to the rate delta changes in response to changes in the underlying’s spot price. Delta more formally measures how much we expect the option price to change as the spot price changes, but more usefully for this example can represent how many shares equivalent the option contract controls at the given price. This is why delta represents the hedge ratio — if you, for instance, write a 100 delta (ITM) call option and sell it, you need to equivalently own 100 shares of that stock to neutralize your risk.
Delta is interesting (my favorite Greek) because it is heavily non-linear, and changes in response to:

1. Spot price (gamma)
2. Time to expiration of the option (charm)
3. Volatility of the underlying (vanna)

These are all second order derivatives, so you probably are lost by now if you didn’t take calculus at some point.
So why is gamma important here?
Source: quantik.org
Unlike controlling the equivalent delta’s worth of shares, the value of an option contract increases at a faster rate as it gets closer to in-the-money. This is (one of the reasons) why options have convexity — the value of an OTM call option contract goes up faster as it gets closer to ITM, with a potential for (5,10,100,200+)**-**baggers (multiples of how much you paid for the initial) if you play it right.
What’s even more interesting though than gamma alone, however, is pairing it with theta, the decay of an option’s value as the time-to-expiration draws closer. This tends to have a strong relationship to the implied volatility — theta represents the time value of the option (extrinsic), and implied volatility is largely the market consensus of the potential for the underlying to move in the time remaining on the option. However, as the days tick down, the time for that move to actually happen diminishes, and therefore the value of the option similarly goes down with it.
As IV increases, theta usually does (especially on short term options), and vice versa. (Helpful video by the tastytrade crew — https://www.tastytrade.com/shows/market-measures/episodes/theta-and-iv-05-17-2019)
So, given my tendency to ramble, the question is — why is this important? Let’s look at gamma and theta in the context of 0-day-to-expiration (0dte) options, and try to piece together what happened to Gamestop on January 22, 2021.

0 Days to Live

0dte options have long been a mainstay of the dopamine addicted day-trader community (including me, sometimes) given they represent the purest form of lottery ticket:

1. They expire at the end of the day — You don’t need to go to bed and worry about your position, because it’s either closed or worthless.
2. They’re cheap, generally-Theta in particular becomes exponential for 0dte options, and you can quickly buy positions on sale just to gamble as the end of the day grows closer.
3. They still represent implied leverage and have that tasty convexity-Like their more respectable brethren, 0dte options still represent the underlying and have all the neat Greeks (gamma, delta, vanna, pajamas, etc.) which make their payouts non-linear and fun.

In general, the optimal strategy to capitalize on 0dte long options is to buy as late as possible in the day, to allow theta to provide as much leverage to you as cheaply as possible.

Let’s Imagine a Scenario Here

Let’s imagine you have a high implied volatility stock that has been stable/slightly declining in price for multiple days. During that time period, theta is aggressively destroying the value of long options, while IV is similarly dropping (both due to theta and due to relative lack of movement). As we get to the final day (this is a weekly, for example), much of the option’s value has now disappeared.
This impacts both put and calls open, though. And let’s say a mean orange decided to start a war on your stock in the days before, causing a flood of short-term puts to hit the market during that week, which had minimal effect (largely due to continual call buying of longer-dated options coupled with actual shares buying pressure due to belief of a short squeeze/Ryan Cohen being the second coming of Christ).
What happens when those puts start to expire? As the days and then hours tick down, the hedges of those put positions (shorted shares) start to unwind, and buying pressure picks up.
Similarly, this buying pressure is noticed by market participants, who start to capitalize on the momentum by buying 0dte call options. These at first have minimal impact, largely because the inflow and outflow of call delta are roughly equivalent (somewhat of a bias towards inflow, pushing price up alongside share buying).
But towards the middle of the day, two interesting things happen:

1. Theta and charm become more and more prominent in both making new option positions cheaper and unwinding existing put and call positions.
2. Gamma starts to become more dominant due to the high implied leverage versus cost of 0dtes, leading to the virtuous cycle (option buying begets option buying).

These two effects tend to be complementary — as the hedges unwind (given the weekly puts from Citron/the short seller attack) for existing option positions, new 0dte positions can be bought and bought, each time pushing up the underlying as well as increasing the value and delta of other 0dte positions.
This can be neatly observed in the option volume versus open interest for the 1/22 series on GME:
This is fine.
Although more puts traded, the delta (for obvious reasons) of calls is much higher.
As the price of the stock goes higher and higher, this continues to attract more and more speculation, hoping to capitalize on the continued momentum. This continues in a loop:

1. The price of the underlying continues to increase as put hedges unwind, volatility spikes, and call options are bought (the initial delta hedge).
2. The increase in price leads to gamma of existing contracts increasing the delta of those contracts.
3. This leads to more shares being bought to hedge those increasingly higher delta positions.
4. This leads to more speculation and momentum.

An interesting property of $GME from Friday you can neatly observe is the highest strike in the series is $60, meaning that at Friday’s close, every single call option expiring 1/22 expired ITM. More interestingly is the relationship with gamma, again observable below:
Source: quantik.org
As a contract moves further and further ITM (at one point, GME hit $76 intraday), the gamma of the contract decreases as delta hits 100 on the position. This implies a cap on the momentum from the virtuous cycle described above — while continued call buying can of course drive up the price further, not only does the cost become prohibitive (given that a deep-ITM position is basically equivalent to buying 100 shares in payout), it becomes linear (and therefore boring). Once 100 delta is reached, there is no more cycle of increasing spot price causing increasing share buying, only normal share buying.
And that’s when it drops.
It’s hard to say whether the halt caused the drop (given the mental association halts have to pump and dumps for most investors). In this case the drop assuredly coincided with the halt, but more importantly, we can observe where the drop ended:
​
57.99 is such a pretty number.
In this case, we can observe the drop in price stabilized at $58, before rapidly jumping above $60. This is largely due to gamma and continued 0dte call buying buttressing the fall — as the positions fell farther OTM, shares used to hedge those positions are sold off, further driving the price down (in this scenario, the dealers are almost assuredly short gamma). However, similarly those positions-now closeOTM and close to expiry-become cheaper at a fairly exponential rate (due to theta and charm).
Speculators again gain conviction, pushing the price up above the highest strike (to the point where gamma provides no real extra push versus the clock ticking down).
This is what we call a gamma squeeze, and isn’t a terribly uncommon phenomenon. It largely follows similar patterns:

1. In general, gamma squeezes tend to happen closer to OPEX, due to both hedge unwinding (in the case of a previous put skew, for instance) and due to the 0dte effects mentioned.
2. In general, there is both a rapid rise (due to gamma looping and speculators joining) with a similarly steep cliff (especially if the available strikes is exhausted, like what happened to $GME).

Can it be continued forever, though?

In general, the answer unfortunately is yes.
Gamma squeezes in generally power meme stocks, and require a few elements to be true:

1. Continued supply of strikes and promise of convexity — Put gamma squeezes rarely happen because well, the maximum value of a put option occurs when the underlying hits 0. Calls, however, have an infinite potential payoff and strikes similarly can be added indefinitely. This allows continued creation of OTM options, which due to cheap premium and asymmetric risk-reward on longs power the gamma squeeze.
2. Continued momentum-In general, meme stocks follow the greater fool theory, despite promise of rocket emojis. When they drop, they drop hard.

​
Oopsies.
This is because, as previously mentioned, meme stocks are powered by long calls sold by market makers, who are chronically short gamma. Any selling begets more selling. Even periods of quiescence are dangerous, because without continued inflow of call delta, hedges unwind, and the selling pressure begins.

1. Continued attention-This is where salience shines. The major reason Tesla (the OG gamma squeeze) continued to rocket throughout 2020 was largely due to Elon Musk’s charisma and Tesla’s promise of a better world. It becomes a lot easier to stomach risk for an investor when following a strong personality with a killer story. This role was largely played in Gamestop’s saga by Ryan Cohen, and fed into (potentially unwittingly) by the battle with Citron and the mystique of DeepFuckingValue. It remains, however, to be seen if this will continue.

The moral of the story here is retail, for better or for worse, finally learned how to weaponize options. We’ll see what happens next.

Back in december I came across a small project called Prosper.
#Prosper is a prediction market project, just like augur, only much, much better.
First of all i'll precise that I am not a member of the project. I'm just smone who does his homeworks and likes to help :)
I looked into it superficially and it seemed there was potential so I kept an eye on it until public sale. That is until they canceled public sale to replace it with a mining event, essentially putting their prediction platform to live testing. I decided to participate and mine $PROS. That's when I got convinced this had tremendous potential.
I’ll let you hop onto their platform at beta.prosper.so to check by yourself how predictions work, it’s pretty straightforward. You choose a pool amongst the proposed (currently BNB and ETH, many more to come) and predict whether the price will be above or below the ticker displayed. There you go, 2 clicks and you’re in. The predictions are currently closed until next event, which should happen soon.
So what makes me think it’s just a wonder in the making? here is what:

1. The team:

- The team is composed of some of the guys from Prometeus labs (which is a backer of the project btw). Their LinkedIn and twitters are public, they make AMAs etc. We’re dealing with some serious guys, settled in the crypto industry for years.
- More importantly, their mindset is what convinced me. They’re very focused on delivering their roadmap and more, seem to have a clear picture of where they want their product to go, and how to get there. They also have a good understanding of the tokenomics mechanisms of 2021 cryptos and understand the interest of creation and retention of value in the $PROS token.

2. The investors and backers:

You’ll find a list on the website, but the project seems to have very strong backing, from Prom labs ofc, but also from all the other projects they are working with such as chainlink, Polkadot, Matic etc. And then there is Binance, which is not officially listed, but it is clear to me that they are supporting as a part of the BSC ecosystem. I mean, what project gets listed on Binance when it’s like 3 weeks old ? because yeah , Prosper is listed on Binance already. Also the team is connected through Prometeus labs that has had its own token $PROM listed for years.
I would also highlight that their TG (https://t.me/prosperfi) has already 5k+ people and a growing engaged community. That just does not happen with shitcoin projects.

3. The project:

- The project is at the exact spot I’m seeing this bullrun hit:
- Crosschain on many altchains, and mainly BSC which is rocketing atm, but also Polygon (matic) and Polkadot.
- DEFI: although prediction markets are still a niche in the DEFI, someone you may know thinks they're deemed to take their share of this run (hint: he created Ethereum).
- Non Custodial: You make your predictions and claim your gains straight from / to you own metamask wallet (walletconnect will be implemented). Your keys, your money. Best thing? BSC will let you do that for a few pennies of fees.
- The DAO: team will let holders and community participate in the project governance. Will become pretty standard in the future of crypto projects, but we have here a DAO that took a huge decision in the very first week of its existence (see tokenomics section), and that is telling a lot about the strength of the project.
- It is alive and kicking: the platform has been launched and ran for several days as a beta. It saw tremendous volume (over 18.5 M USD) and generated over 355k USD in fees in less than 10 days. This is absolutely huge, espetially considering those fees are going back to the treasury, feeding the whole project as well as holders pockets.
-The UI is miles ahead of the competition. Let’s you literally place a prediction in two clicks.
- It has an open road to capture a good chunck of the Prediciton market: competition is either old news and outdated in technology (augur etc.), or just announced and very far from hitting the market (polkamarket etc.).
- It has many features on the roadmap, with the main being a mobile app (coming out soon), and sports bets. The team already leaked in an AMA (https://www.youtube.com/watch?v=9IB8s6GtVww) that they have secured a partnership with a huge sports betting site. Its is also developing a unique system of bet insurance, and the possibility for holders to open their own custom pools (i.e. be the casino).
- The platform is already ported in Chinese. The fact that china is a gambling addict and bet lover country is news to no one.
- Last but not least, they just announced that they will keep making mining events every time the project is ported to a new Blockchain, giving the opportunity to users to get the BC’s native token + to pro holders to pocket even more Pros. When does this stop getting better ??

4. The $PROS tokenomics:

- The Max supply is 100M $PROS. The circulating supply is currently about 4.5M.
Here is the repartition and unvesting schedule of the supply:
Investors: 4.57M Strategic + 3.4M Seed + 0.25M Presale + 2.01M Private :
½ released on UNI listing in Jan.2021
Seed round: 9 months of linear vesting (0,35% / day), starting from April 14th; Strategic round: 6 months of linear vesting, starting from April 14th; Private round: 8 months of linear vesting, starting from April 14th; Presale round: 3 months of linear vesting, starting from April 14th.
Marketing: 10M - 3 months lock-up, after — 10% per month.
Community funds: 5M - 6 months lock-up, after — 10% per month.
Reserves: 15M - Locked for urgent situations, the community will be notified in advance before unlock;
Ecosystem: 12M - 6 months lock-up, after — 25% every 3rd month.
Team: 13.38M - 1 year lock-up, 1 year linear vesting period;
Staking Rewards: 30M - Remain locked until the binary liquidity program an on-chain aggregation launch.
As you can see, we’re not having a cliff release, the team actually changed their initial plans to adopt linear unvesting and help protect the price of the token, and avoid dumps. Equally, DAO voted in the very first week to delay the start of unvesting by 2 full months in order to give time for product and features roll out. With a total of 99% yeses on the vote, it means that even investors probably voted to vest their own tokens longer, which means they’re in to support the project on the long term.

5. Use of the Token:

This is a very important part. As already said, team has taken good measures to increase the value and rewards of holding $PROS.
Amongst them are mainly the staking (team leaked: very very soon) and Liquidity providing. We don’t have announcement on that yet so I can’t tell more, but I’m feeling it will be huge as part of the fees collected by the platform will be redistributed to the stakers.
Another very interesting use is the DAO vote of course, and the future possibility for the holders to create their own prediction pools and earn fees from them. This is just one of the best use case I’ve ever seen for a token.
These are just the first and announced reasons to hold PROS, and with such low circulating tokens I’m expecting the demand to ramp up pretty fast.
​
So these were all the infos on Prosper and $Pros I have, feel free to DYOR :
Website : https://prosper.so/
Prediciton platform : https://beta.prosper.so/
Medium : https://medium.com/pooler
Main telegram channel: https://t.me/prosperfi
Buy $PROS on Binance https://www.binance.com/en/trade/PROS_ETH
And
UNISWAP https://info.uniswap.org/token/0x8642a849d0dcb7a15a974794668adcfbe4794b56
Before you go I’ll try and help you with one last thing: lets say you saw the value in the project, here is an interesting last info :
#Prosper is currently below 10M market cap.
Which is ridiculously low for such project.
Main competitor is at 160M, and is way behind on pretty much all topics.
It is currently one of the very lowest cap listed on Binance.
As for the price ? Although it keeps going up at a reasonable pace, i would say that it has a lot of room to grow upward from the consolidation phase it has had for 2 weeks now. The team announced some staking news for as soon as this week-end, and i'm expecting it to move the price considerably.