• The original author's account was deleted, so unfortunately I can't credit them. Regardless, full credit to them. This post was included in the deletion, so it took a decent amount of digging to find and save. Shoutout to u/adamfixeseverything. Enjoy. -

Hey guys,
I thought I’d post about my thoughts on MMED. First of all, please do your own due diligence and do not fall victim to the pump, hype and euphoria. These are highly speculative investments and have significant risk associated. All that said, there have been many requests for fundamental analysis and MMED projections so I wanted to provide my thoughts.
*All figures in USD (market cap, sales) except for my investment holdings. I purchased MMED.NE shares. Source data available as well, but got messy with all the 10-k filings and links in the table.
Entry Point
First and foremost, I want to address the most commonly raised question on this thread: “Is it too late to buy MMED?” Any investment is subject to the risk / reward paradigm. Those that got in at $0.3 deserve every penny they earned as MMED was by definition a penny stock and one of the most risky investments you could own. Since then, it has grown tremendously due to scientific milestones which have pointed to significant progress in the industry.
The milestones MMED has achieved have DERISKED MMED from a penny stock to a small cap biotech company with a very large drug portfolio and numerous future catalysts. I do not expect to make 10x my investment in a week, nor should you. Is there still tremendous upside even at the current valuation of ~$1.5bn? I strongly believe so and will let my position reinforce that.
I entered this space with an average cost of ~$4.9 CAD, holding 311,206 shares, and a book value of ~1.5MM. Yes you read that correctly. Do I panic every day and check the ticker? No. Does my heart beat thinking of the time I evaporated ~$500,000 in unrealized loss when the stock was at $3.4? No. In fact, I continue to pick up shares at what I believe is a discounted valuation. There will be many that look at $4.9 entry point and think that even I got in at the bottom. It’s all relative.
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OP's Original Investment
I only invested what I could afford to lose and although $1.5MM is a large sum of money, it is not my entire portfolio, nor would it impact my daily life. If I lost it all it would not impact my ability to service my mortgage, pay my bills, impact my other investments, nor prohibit me from doing the things I love. I continue to hold dry powder and monitor my investment on a monthly basis, while continuing to buy following successful milestones.
This is a very long term play that could fundamentally change the way we treat the body’s most important organ. We are just getting started. I have a very strong conviction on the future outcome of this industry and that is the reason I couldn’t be bothered about short term fluctuations. An important question to ask yourself is whether you believe MMED can reach its next scientific milestone. Take things one step at a time and is there a probability the next scientific update will be positive? Emphasis on science, ignoring NASDAQ, candlesticks, and capital structure (for now).
Institutional Capital
I work in finance (albeit project finance / private equity, and don’t value stocks for a living, so don’t consider me an expert here) but already know of a few moderately capitalized asset managers that are now participating in MMED. The recent bought deals are evidence of sophisticated capital flowing into this industry. I personally qualify as an ‘accredited investor’ and am having conversations constantly with folks in my circles who are investing heavily into these stocks. As more institutional capital flows in, the more stable these stocks become. Of course, this is all relative.
Access to liquidity
As with all brand new industries, the capital requirement is immense in order to bring products to market. What drew me into the space was the fact that MMED did raise capital. Biotech stocks do not have cashflow, thus their only path to fund operations is through equity raises. The fact that MMED was able to raise over $237MM CAD since May 2019 is a positive for this company. Yes it is dilutive, and good job for paying attention in finance 101 class, but bootstrapping a biotech company is not possible, nor is servicing debt.
The path to commercialization of will be full of obstacles, however a strong balance sheet with sufficient capital gives MMED the resources to get there. The current valuation has tremendous upside following scientific milestones and future equity raises and dilutions are a good thing, as it will be at an increased valuation.
There are definitely smaller cap companies out there that may double overnight, however for the risk / reward, I do not feel comfortable owning companies that don’t have a large balance sheet, nor a diversified drug portfolio.
Believe in the Science
I do not feel I am in a position to write original content on the efficacy of these drugs. I have done my research and read a fair number of published studies but anything that I write would simply be regurgitating what others have said.
The biggest investors in this space are those with personal experiences with psychedelics because you have first-hand experience of the profound meaning extracted from one treatment. The ability to dissolve your ego enables you to deal with the root cause of so many problems ranging from depression, PTSD and addition, without approaching the problem by numbing symptoms. Herein lies the inherent value of this industry and will simply take time to prove it through trails. I have the conviction to continue to invest because I believe in the science. The data to reinforce this is on its way, and I personally want to invest now, knowing that the likelihood of very significant catalysts are probable.
Forecasts
This of course is the elephant in the room for early investors, later[er] investors and bears alike. Is a $1.5bn market cap pricing in all of the upside already? Is this a $100bn stock? This company has zero revenues, shouldn’t it be worth zero?
The truth is, no one knows. There is tremendous risk with this company. However, I will not be selling unless we see some significant negative scientific outcomes. Again, less emphasis on stock price, NASDAQ, more emphasis on the science. Everything else will follow.
The various ways to value a company (DCF, sales / earnings multiples, liquidation value etc) all have their issues with an early stage company of this nature. Any sort of bottoms up DCF analysis is just guessing because variables such as patient count, dosage, pricing, market share, market penetration, amongst other have far too much variation to come up with a reliable figure. Discount rates and time horizon can favour your outcome depending on how aggressive / conservative you are.
Thus, the way I like to look at this market is a best case scenario for a single drug, based off historical sales data from one company and one drug. This implicitly takes into account patient dosage, competition, market share, market penetration etc, because one drug from one company has already proven its ability to capture such sales data.
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Data
I have broken out annual sales data for various comparable drugs according to MMED’s current pipeline offering. This is the inherent benefit of MMED, is that it has a diverse portfolio covering many underserved issues. Like many of you, I believe MMED’s biggest blockbuster will be Layla, given the problem of Opioid addition plus MMED’s IP rights on 18-MC to corner sales. Suboxone is the current drug on the market due to delayed onset effects ranging from 24-36 hours, compared to someone in withdrawal uses fast acting opioids 3-4 times a day. Suboxone itself however is still addictive and has a long list of negative side effects. Furthermore, it does not correct dopamine dysregulation in patients.
The sales of Suboxone alone are growing at an ~9% CAGR, with sales expected to reach ~$4bn in 2028
https://www.globenewswire.com/news-release/2020/08/18/2079779/0/en/Opioid-Use-Disorder-OUD-in-8-Major-Markets-2018-2028-Reformulations-of-Buprenorphine-Will-Drive-Growth.html.
The use case for 18-MC however, does not stop at Opioid addiction, and can be applied to alcohol dependency and smoking dependency among others. This means the TAM for 18-MC could be significantly larger than the existing market captured by Suboxone given its smaller demographics relative to 18-MC. Could Layla exhibit sales greater than Suboxone one day? Who knows. Sticking with comp sales for the analysis for now.
Various anxiety, depression and ADHD medication is also shown in the table to show sales potential of Lucy, Albert and the micro dose programmes.
Is there a possibility of a LSD, 18-MC, or LSD compound or derivative achieving blockbuster drug status? Do you think there is an inherent benefit to a psychedelic compared to an antidepressant sedative with side effects such as nausea, weight gain etc?
Your perceived probability and sales outcomes depends on whether you believe in the science. Those that don’t can easily be skeptical of a $1.5bn market cap many years away from profitability.
Those that do, look at the next half a dozen clinical trial outcomes as very probable and thus have applied a less punitive discount to the stock valuation. I have rationalized my decision to invest at $1.5MM because of my own perceived discount rate and confidence in the next 12 months of positive catalysts.
Valuation Multiples
Now, as many of you know, investors pay a multiple for the future earnings of a company, today. If a drug makes $1bn annually, investors will pay a multiple of future earnings expected over the drugs lifetime, discounted by various factors.
There are various metrics to use here, ranging from Enterprise Value / Sales or various types of earnings metrics. MMED is years away from having a real operating company, anything to sell, or even the corporate infrastructure to get it to market. However, the question has always been, how big do you think this company could get?
This is where things can get tricky. We used peak annual sales in the last section to forecast comparable estimates for MMED revenues. Thus, I believe it is appropriate to use mature, large cap trading multiples instead of early stage bio techs, as our revenue estimates were mature figures with stabilized growth. If we were to use companies / drugs earlier in their lifecycle or clinical phases, the trading multiples would be much higher because the market is buying potential future sales. Can’t have it both ways.
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Chart
All of the chart data in the graph is specific to the pharma industry. However, there are various subsectors to the industry such as Contract Development Manufacturing and Contract Research Organization. MMED would likely have to partner with each of these types of firms to scale its business, better assess market size etc, but wouldn’t trade at similar multiples given a different business model. Same goes for Packaging and Distribution.
The graph also shows S&P average which is a good rule of thumb.
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Other chart
Although the chart gives a good reference point for pharma multiples, I wanted to look at valuation from a more company specific perspective. The chart above shows large cap specialty pharma companies that are publically traded. This will give you an approximate median value of what the market is willing to pay for a company that has a certain amount of sales. As you can see in the green box, industry multiples of EV/EBIITDA or EV/Sales will basically get you to the same place. Median pharma industry EBITDA margins are in the 40% range with EV/Sales at ~4x vs EV/EBITDA of 10x.
Note that the above list of trading comps is stale data, as of Sept ’19. I only want to use public data and have refrained from using Bloomberg, Cap IQ etc. Thus the information I’m posting is merely reposts of info available on Google. As you can see, Allergan is listed in this table as a live trading comp, and has since been acquired by AbbVie. Accordingly, I want to highlight some notable M+A activity:
Amgen acquires Celgne’s plaque psoriasis drug, Otezla $13.4bn: EV / LTM Sales = 7.6x Thermo Fisher acquires Qiagen for $11.5bn: EV / LTM Sales = 7.3x Abbvie acquires Allergan for $84.2bn: EV / LTM Sales = 5.4x Elanco acquires Bayer’s animal health unit for $7.6bn: EV / LTM Sales = 4.5x As you can see, companies are willing to pay a premium in M&A to acquire competitors and drugs, due to synergies, reduction in SG&A etc.
This is a very long winded way of showing that if one of MMED’s compounds hits, and exhibits sales in line with any sort of comparable drug from the table above, this could be a $20-30 billion dollar company (~4bn*5-7x). If several of these drugs reach commercialization, this is potentially a $100 billion dollar company.
Now I agree that these projections are completely outlandish right now. I’m simply doing the exercise you all wanted.
Feel free to guess at your own forecast sales and multiply out enterprise value using the above metrics. Before you rip me apart for the extreme optimism, I understand that I’m using multiples for stable, reputable, large cap pharma. I understand that there is an extreme amount of stigma attached to psychedelics and achieving ubiquity for these treatments is a large uphill battle. There is an enormous amount of work, luck and time from now until sales and this is not to be under estimated.
Do I think MMED is worth $30-$100bn today? No.
Do I think MMED is worth somewhere in between today’s valuation and $30-$100bn?
Depends whether you believe in the science. If you’re reading this, odds are you do. I invested because I believe it too.
So instead, let’s take a lazy man’s approach to valuation and take things one step at a time.
Simpler Approach to Valuation
The exercise above is to show you all the immense potential of MMED’s drug portfolio. Do I think MMED is the next Pfizer, Abbie Vie or Eli Lilly? No. This is not a $500bn dollar company. However, I do genuinely think there is tremendous upside not factored into the pricing for this stock.
Fundamental analysis aside, I think the simplest way to approach valuation is from a catalyst + efficient market hypothesis perspective. Markets are not fully efficient, nor even semi-efficient, but there is some sort of reasoning in believing what the market is willing to pay. The obvious flaws in this are that the market right is riddled with irrational investors and a market of 300m financially illiterate traders isn’t more efficient than an illiquid market of 10 rational ones. As of today’s post there is a discount to the $4.40 price. To me, that’s just more opportunity to continue to scoop up more shares.
I have stayed out of the industry in the early days because truthfully I did not know which stocks to pick. Since then, much smarter people than me have done their diligence and allocated their capital to the companies that they believe are winners. This is part of an efficient market hypothesis.
Sophisticated capital flowed into MMED @ 4.40 / share, with the expectation to make a profit. I also, invested in this company at $4.9/share, with the expectation to make a profit. If we establish this as a baseline, do we believe there will be more positive than negative catalysts in the next year and in the future, such that we will see accretion in the share price? Conversely, if we see negative outcomes in future catalysts, it will cause erosion in the stock valuation. Below are near term events which should have a significant impact on share price:
Project Lucy
Phase 2 readout– Q1 2021 Open IND w/ FDA for Phase 2b – Q3 2021 Project Layla
Phase 2a study– Second half of 2021 Strategic Pharma Partner Potential – Late 2021 Various
Combined MDMA LSD Phase 1 trail – Q1 2021 IV DMT Phase 1 trail – Q1 2021 First ever Phase 2a clinical trial Microdose LSD – Q3 2021 Patent filed for neutralizer technology for LSD to shortestop hallucinogenic effects Game changer for safe, regulated environment for clinical administration Given that Phase 1 studies are focused on safety, what are the odds clinically developed LSD / MDMA fails a safety test?
Given that Phase 2 studies are focused on proof of concept and method, what are the odds the clinically designed process fails the test?
Believe in the science.
Each one of these incremental catalysts derisks MMED, and will bring the valuation closer to ‘blockbuster drug’ status, albeit inches at a time. Just as the bought deal derisked this company for me to participate, achievements in clinical trials will be evidence for more investors to jump in as well. Let’s not get ahead of ourselves and guess at how large this company can get. Just think of what is the next step and do your own evaluation as to whether achieving it is realistic. Once we get through the above list, there will be more milestones to pass such as Phase 2bs and 3s. If we establish $4.40 as the baseline currently and MMED has a successful outcome in any of the previously listed catalysts, there should be a significant accretion in valuation.
There is a noticeable omission for most of you, in that I’ve left out the NASDAQ up listing, future dilutions and general capital structuring events. To me, a NASDAQ uplisting is irrelevant. This will add liquidity, although probably more volatility, but changes zero fundamentals about the stock. It should however, add more weight to the efficient market hypothesis and erase the discount I believe this stock is trading at. We’ll see some analyst coverage with price targets that will attract more investors, but the fundamentals of the stock do not change.
With respect to stock price, it is impossible to forecast this because the capital structure of this company is completely unknown. IF we can even get to revenue generation, and this becomes a $30-100bn company, how much dilution will there be from now until then to back out a share price? The point is that there is so much runway in share price accretion from now until then, that I’m not bothered with anything finance related for this company. There is potential for 50-70x accretion in the value of this company. The focus needs to be on the science. MMED has raised enough money to get though its next set of obstacles and fund operations, thus insolvency risk has fallen away for now which is really the only important financial point for early stage biotech.
Let’s take things one step at a time, believe in the science and be patient.
Cash position & Expenditures
As you can see below, the quarterly burn payroll burn rate is quite low for MMED relative to its cash position. It’s hard to discern which items under their historical expenditures are one off versus recurring, thus difficult to calculate their exact run rate. However, the huge positive here the low ratio of payroll relative to its cash.
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Data table
Next up we have the projected use of proceeds from their latest raise, net of underwriter expenses. Now that the Over-Allotment has been exercised, MMED has additional capital that it has further allocated to Albert, Lucy, Layla and the Microdose LSD program.
​ Proceeds Table
General takeaway is that MMED is well enough capitalized to get through its next phase of milestones. I will be keeping an eye on news surrounding the Microdose LSD program. Estimates at this stage for Phase 2a are $3-4m and the results of which will inform capital expenditures required for future phases. A positive milestone in Q3 ’21 should be an incredibly positive catalyst for this company.
Proving that you’ve raised capital and have enough cashflow to get to the next step doesn’t guarantee we’ve picked the winner in the industry. It does however give me confidence that MMED will continue to be a going concern for at least the short term and get to a point when new investors can come in at a much higher valuation. This is a real risk for the penny stocks out there without capital or IP, and that is the reason I chose MMED.
Edit: Did some re-formatting to make it easier to read cause it's pretty lengthy and there's a lot of details. Hopefully it helps.
Edit #2: I went back into the trash compacter and salvaged the original data and charts since some people were asking. The resolution may be questionable, so apologies for that, you might have to zoom in.

Build your opponent a golden bridge to retreat across.
Sun Tzu, Art of War
Everything was for tomorrow, but tomorrow never came. The present was only a bridge and on this bridge they are still groaning, as the world groans, and not one idiot ever thinks of blowing up the bridge.
Henry Miller, Tropic of Capricorn
I was wrong! Blow the bridge! Blow the fucking bridge!
Tugg Speedman, Tropic Thunder
Hello again GME Gang! It’s been a while since I last ranted at you, but I know we’ve been in some very good hands here at WSB with all the great DD folks have posted over the past few weeks. So no need for CPT Hubbard to go for 11 again on the Thumbscroll Dial (until today, that is). I’ve enjoyed a lot of these posts very much, so thank you on behalf of myself and the attention-deficient Rocket Children for continuing to deliver that 100% Chaff-Free GME-grade Wheat at such a feverish clip.
Now, I am going to get to Hong Kong’s Lamest Outlaw and his disconcertingly vacant eyes here shortly. But first I want to take you on a journey back to Christmas Eve, in the year of our lord 2020—a heady time in all our lives. We were all so young and innocent then, weren’t we? Fresh off the run up to 22. Blissfully oblivious that we were living in the last moments where the question What is The War of 1812? was the only acceptable Jeopardy question for the answer: The Last Time the Goddamn U.S. Capitol Was Stormed. This was also before we all became irresponsibly overleveraged in Cathie Wood’s Ornamental Gourds ETF. It was a wondrous, confusing time.
But before we get too off topic, let’s all hop in my 1985 DeLorean (purchased with proceeds from my Jan 15 calls – thanks RC!), fire up the ol’ Flux Capacitor, and get that shit to 88 because something happened that evening that is Worth Pondering—particularly in light of recent events. And just as a friendly reminder: even though you’re going back in time in a DeLorean, no one here has to deviate funds away from GME shares to Save the Clock Tower and you are under no obligation to fulfill a scenario where you wind up making out with your Mom (unless your Mom is Cathie Wood like mine—in which case maybe just some quick over-the-clothes stuff).
On the Subject of How It Once ‘Twas The Night Before Christmas
So what in the holy fuck happened on the night before Christmas, Captain? Well, while all you Gentiles were sleeping soundly after lying to your children about benign home intruders and before gorging yourself on the teat of late-stage capitalism, me and the rest of the Chosen People were up late eating Chinese food and thinking about tendies (self-hating Jew Joke! Ba-zing!). But then: when out on the electric twitter machine there arose such a clatter, I sprang to my phone to see what was the matter. And what to my wondering eyes did appear, a mysterious tweet from a Rich-Ass Viking who had a lot of fucking interesting things to say about this whole GME situation that’s what.
This tweet, buried as a reply to a tweet sent by Mr. Rod Alzmann (@RodAlzmann or u/Uberkikz11), simply said: “Merry Christmas. Shhh.” But it included this screen shot:
[**Image Deleted Due to the Mods - check the link below where someone transcribed it - I'll try to add later**]
Now, this tweet to Rod, sent late at night and likely after a strong Mead or three, was very promptly deleted. But your intrepid cub reporter saw this here tweet that night with his own two eyes—seeing as I am a degenerate GME addict and devoted follower of Mr. Rod Alzmann (Hi Rod!). And I took screenshots, of course, like any responsible records custodian might. And so did the dude who wrote a somewhat-overlooked WSB post on this, which included the most pertinent text of the message if you are having trouble reading it here:
https://www.reddit.com/wallstreetbets/comments/kk0omp/christmas_miracle_gamergate_2020_gme_shorts/
Now, what are we to make of this? At the time, I thought it was very interesting. But I did not give it too much attention seeing as how the internet is overcrowded with anonymous weirdos claiming to know more than they do about all sorts of subjects (and now I feel your judging eyes…). Also, there was some very good commentary in that WSB post from some sharp folks about the screenshot author’s questionable use of the shorthand PE/IB—given that private equity and investment banks wouldn’t apparently be involved in a behind-the-scenes transaction with the short funds like what was being discussed there (don’t ask me, I just string together silly words here). But maybe you poke around his Twitter a bit and see for yourself.
Still, plausibility assessments based on preferred nomenclature aside, it seemed to me that some version of that conversation had to be taking place behind the scenes in a situation like this—given the batshit insane short interest, the funds supposedly involved, and the rapid rise in SP coinciding with RC’s share accumulation, December 21st amended 13D filing, and new status as a GME Insider and Board member (just love saying all that in a row, don’t you?).
So the Viking’s screenshot tweet, and the very likely possibility that shorts are in so deep that they’re attempting to negotiate peace with large shareholders behind the scenes, stuck in my tiny little baby brain as a pretty plausible set of scenarios. And from the look of it, it seems like some funds were at least willing to discuss offering these shorts a Golden Bridge away from Certain Fucking Destruction on the open market. And if the words on the screenshot are at all aligned with reality, these short funds have no good options.
Yet it seems like they are still playing hardball to negotiate the carat on this generous bridge offer they’re getting. Why? Maybe they’ve been getting high on their own supply for so long and they don’t know how to see this situation for what it is. Who knows? Maybe there is no Ryan Cohen and we’re all living in a simulation. But if the recent low-rent anti-GME articles and market manipulation efforts we’re seeing are any indication, these overleveraged short fuckers seem to think they’re going to be able to spin out of this hold and drive the SP back down to even smaller peanuts than it’s at now by sheer force of will (and some deployment of well-honed tricks of the trade amirite?) to emerge unscathed. Or even victorious? I dunno—it’s their delusional fantasy sequence.
But do you know what this scenario reminds me of? And this is just coming to me so please bear with me as I’m not showing this to my editor before we print (I haven’t seen this movie in ages – don’t know what made me think of this!). Fuck it, I’m just gonna start riffing here. The shorts trying to thread this needle, against all odds and logic and common sense, reminds me of that hilarious scene in Dumb and Dumber where haplessly delusional Jim Carrey thinks he has a chance with Mary Samsonite Swanson. But the scene is funny because he really doesn’t. Have any chance. At all.
Now, I know this is a 1990s movie originally released on VHS that we haven’t seen it or even seen it referenced in ages. But now that you’re thinking of it again after all this time, doesn’t it remind you of this too? I know, I get it: You’d have to have fucking peanuts for brains for it not to.
(https://twitter.com/ryancohen/status/1350877969816956934?s=20)
On the Subject of the Continued Internet Bumbling of Mr. Justin Dopierala
Now that screenshot came to mind this past week when something kind of weird happened while we were all enjoying our quick rocket ship ride. And yes, we are briefly going to talk again about Seeking Alpha’s second finest pro-GME author (always been more of a Dmitriy man myself) and recurring CPT Hubbard character, Justin Dopierala (and no, Angela, I do not want to have like 10,000 of his babies).
Last Thursday, after we were all virtually high-fiving one another and counting our future Lambos, Mr. Justin Dopierala, head of Domo Capital and longstanding uber-bull GME shareholder and author at Seeking Alpha (last seen arguing pithily with our own Rod Alzmann about the conservative nature of Rod’s holiday earnings projections. Hi again Rod!), made it known that he sold all of Domo Capital’s 500,000 shares for around $42.50—at the very top of the run up last Thursday morning.
Now, Domo Capital’s business decisions are none of my goddamn business. And there are plenty of market opportunities right now. Shit, I hear there is even a new Cathie Wood Gourd ETF coming online soon that people are really excited about and that I’m sure Justin’s clients would find intriguing. But Domo’s decision to sell seemed curious given a few things: (1) on Wednesday, when the rocket is mid-flight, he got a twitter follow from Gabe Plotkin, head of Melvin Capital, which he promptly tweeted about with a “get a load of this fuckin’ guy” vibe (oh the sweet, intoxicating arrogance of tendie victory, I too love it so); (2) he had also tweeted that day comparing GME’s rise to Apron’s short squeeze that lasted 4 days—where he also stressed to his followers that Apron had a much lower SI than GME; and (3) he then promptly deleted all of these tweets and almost everything else GME-related on Thursday after apparently introducing 500,000 shares of liquidity into the height of a stressed market up and through the Thursday reversal and down into his own personal tendie town.
Now, after seeing all this, I mouthed off a bit to Justin on the electric twitter machine because that’s kind of my thing. And if you are familiar with my prior ramblings, you know that he and I go way back. In response, Justin talked a bit of shit about your intrepid cub reporter here in a comment on Dimitry Kozin’s October 21, 2020 article about a possible sony revenue share deal or something, the comment section of which has become the preferred SA water cooler over there. (And I can’t link that because Thems The Rulez). And Justin hurt my little feelings a bit with his very sharp denial. And by all means have at it over there to check out his comment about why he sold if you give a shit. That is if Justin hasn’t deleted it yet. Free country and all.
But to summarize, on the subject of treacherous coordination with Melvin Capital, Justin said he would not could not in a boat and he would not could not with a goat. And I for one believe him. And do you know why? Because even though Justin seems like a very smart guy in some ways, he’s also a well-known internet bumbler who blurts out things to his internet friends that a person with better self-control would keep to themselves. And so I do not think he is capable of pulling that off or keeping a secret like that. Also: he said he didn’t so I am more than willing to give someone the benefit of any doubt in that area and you should too. I think we keep Hanlon’s razor firmly in mind here about never attributing to malice that which is explained by stupidity. That is unless, of course, you’re Andrew Left and you’re actually trying to convince people that you didn’t realize there was a US presidential inauguration planned for the same time you announced your Super Important TeeVee Yammerfest ‘21 about GME not being a good candidate for an imminent short squeeze no way no how not if my name isn’t Andrew Left short seller expert extraordinaire and Hong Kong’s Most Misunderstood Ethically-Minded Businessman. You can ascribe the fuck out of malice to that one.
No, even though I really have no idea, I think the most likely thing that happened there was that Gabe Plotkin, Master of the Universe, Head of Melvin Capital, and Acolyte of Perennial Most Ethical Business Man MVP candidate, Steven Cohen—got into Justin’s head when Plotkin followed him on twitter during the 57% (at one point 94%) day last Wednesday and then Justin got a bit chippy about it.
And this is the real reason I’m bringing this up.
Because I honestly care very little about the Nervous Investing Habits of the Wisconsin hedge fund voted most likely to prompt a Mr. Roboto reference. No: I think that Gabe Plotkin sent a message with that follow. Without even ever having to say it directly. And I think that after GME’s huge run and getting a little overexcited while working the twitter machine, Justin maybe had a chance to relax with a warm glass of milk that night and reflect on that message. Which I believe was: I’m watching you, motherfucker. And the only reason I’m paying any attention to some shitstain Wisconsin pseudo-fund on a day like today when I am getting my ass fucking torched is because I want you to know that if this GME shit blows up on me, I’m going to fuck your ass up. I will remember the name Domo Capital forevermore. And when you least expect me, I’ll be there. Now: your move, motherfucker.
And once I realized what might have happened there, that made me feel kinda bad for Justin if he felt that way. Definitely a puss move because fuck you Plotkin I drink your fucking milkshake, right? But bad because that’s a mean message for a business colleague to send, Gabriel. Shame on you if that's how you roll like a big New York bully and scaring our poor Justin like that. And if you just wanted to follow him to shoot the shit or swap listicles and Star Wars Prequel memes with a respected contemporary—even in the very midst of getting fucking annihilated while short GME—well Justin has a totally different account for that and he’s not allowed to access it during work hours.
On The Likelihood That The Most Heavily Shorted Stock in History Is Not Being Subject to Continued Market Manipulation When A Steve Cohen Acolyte Is Losing His Fucking Shirt
Have you heard about Steve Fucking Cohen? The guy who looks like he’s tip top of the list of the premier Hollywood casting agency’s rolodex for Saddest Dipshit Still At the Strip Club After Everyone Else Has Already Gone Home? I’m sorry, that’s mean and my mother told me to always be kind to the truly hideous looking because they’re probably still beautiful on the inside (spoiler alert: he’s not!).
Get a load of this guy:
https://www.bloomberg.com/news/articles/2014-01-02/why-sac-capitals-steven-cohen-isnt-in-jail
https://www.latimes.com/entertainment-arts/business/story/2020-09-02/controversial-hedge-fund-billionaire-steven-cohen-takes-on-hollywood
https://www.marketwatch.com/story/steven-a-cohen-among-the-million-dollar-donors-to-trump-inauguration-2017-04-19
https://www.vanityfair.com/news/2016/11/steve-cohen-trump
https://nypost.com/2015/06/17/billionaire-steve-cohen-bros-out-with-guy-fieri/
Are you back? I’ve missed you. That was scary, wasn’t it? But allow me to TL/DR all that for you who decided to avoid all that unpleasantness: the dude just has all this bad luck and keeps finding himself into these really awkward situations where someone could potentially question his commitment to ethical business and life practices as well as adherence to the laws of the United States and it’s just not fair and nothing’s fair and Nice Guy Steve Cohen Is The Victim Here So Just Stop Right There Mister I See What You’re Doing. He's also bros with Guy Fieri. Cool.
But why am I talking about a guy who would so clearly pass Billy Madison’s Final Question about Business Ethics without even breaking a sweat?
Because Steve Cohen once had a young Ace Protegee that he loved very much. With the name of an Archangel, so tender and pure. And one day this young man decided he wanted to Prove Himself and Leave Steve’s Nest. And thus was born Melvin Capital, seeded financially by Steve Cohen but named after famed Crooner Melvin H. Tormé, which Gabe’s esteemed mentor Steve would play in his office, over and over, all those years ago.
Now let’s fast forward a bit because I’m boring myself with all that fucking Cohen reading (the bad Cohen—don’t you dare get anyone confused here). As I was saying: Gabe Plotkin, head of Melvin Capital, has by all accounts gotten himself into a bit of a pickle here being so deeply short GME. Lots of people have analyzed and overanalyzed it, and I’m not going to do it again here; that dead horse is well and truly beaten. But to bottom line it: we’re all just staring down what is essentially an unprecedented math problem that will, at some point, resolve itself. And if it revolves itself in favor of the Good Guys, then the Bad Guys will lose a Fuck-ton of Money. That’s your money block quote, WSJ, so fuck off and stop calling me.
Now: picture yourself as a Steve Cohen acolyte that just bought a $44M Miami Compound and who cannot stop talking about how co-owning the Charlotte Hornets is worth it just for the courtsides alone bro once basketball is a thing again and so what if Michael Jordan keeps calling him Gary it’s close enough. Are you feeling the most financially secure that you have ever felt in your young rich life right about now? Or might you be a wee bit worried that you’ve pursued an investment thesis so reckless, so irrationally and intentionally destructive of equity, that even Melvin H. Tormé himself must be rolling in his fucking grave that you would ever dare put at risk your ability to continue being Michael Jordan’s Gary?
And so here is when I again link my good buddy Jim Cramer’s Great Unveiling of the Tactics Deployed by Short Sellers hoping to change the narrative and construct a “new truth” to suppress the SP in the face of, oh, let’s just say: a very promising turnaround story in a high-growth industry by an e-Commerce Canadian Genius who does not fuck around and who knows what he’s fucking doing and aims to sell more and better video games experiences to crackhead video gamers and there’s a million things he wants to do but just you wait, just you wait.
Is this plot that hard to follow?
And I’ll also say this: I know fuck-all about monitoring order flows or how funds continue to create synthetic shares to short shit into oblivion. But I’m just stepping back and thinking of the broader narrative and tactics on this. Spit-balling here again—bear with me. Now, if you were massively short a security while paying out your ass in borrowing fees for the privilege of entering the most crowded short trade in the market and you’re now opposite a massive business turnaround story, Ryan Cohen, numerous institutions, funds, retail whales, Norwegian HNW Freemason Consortiums, and the energy behind the Finest Rocket Children Ever to Grace Planet Fucking Earth—and you’re taking it in the ass week after week here—Do you then play this straight? Do you set aside all of these illegal and deceptive short tactics Jim Cramer candidly outlines in that video even though they’re impossible to enforce and are in fact not enforced? That Jim basically says you’d be professionally negligent if you were short and didn’t do this shit because fuck it whosgonnastopyou? And now you fucked up and that steamroller is barreling down upon you and there are all these things you could theoretically do try to get yourself out of this jam if you were That Kind of Person? Do you set this all aside and, at least in Jim’s view, tie one hand behind your precious ethical back? On the most heavily shorted stock off all time where you are bleeding Real Life Big-Boy Money? Just buying and selling you know, just a job, honest living, nothing much to it, sometimes you win, sometimes you lose, can't get too carried away with it.
Or is it something a little bit fucking different than that?
I don’t know. I’m not in the industry myself. And I would never accuse anyone of doing anything so clearly contrary to the values upon which their professional career as Master of the Universe was built. So Gabe: chill. Don’t follow me or something on twitter man, since for all I know that’s Plotkinese for I Hope You Don’t Mind Sleeping With This Severed Horse Head in Your Bed Motherfucker. It’s just money, dude. You seem pretty well taken care of. But man would I be sweating if I were short right now staring down the barrel of your new neighbor Ryan Cohen’s whims and patience and polite Canadian manners and ambiguous emojis that we all lose our shit for. I mean, fuck man: are you ok? Don’t forget to exercise and eat well during all this. Maybe switch to green tea or something. And remember: you’ll always—always—be Michael Jordan’s Gary.
But here is where we return to our good friend Andrew Left from Citron Research.
Do you remember the excitement you felt this past weekend? I’ve never seen WSB so jacked. People were coming out hot on Tuesday—an uptick day! The new phone book’s here! The new phone book's here! What luck to be free of Gary’s tomfoolery for one fine day. And then GME spiked right away—reaching a high of over $45 that morning.
But then something happened. We all know what it was. But here is where any SEC lookie-loos need to close those Pornhub links and pay closer attention. Because in the moments before the Citron tweet that morning about Andy’s upcoming BuzzFeed Listicle call on Why GME is Scary Investment GRRRR, total short shares available dropped from 1.2M to 0. And a $300K put bet was placed on a weekly with a strike price well over 10% out of the money at the very moment that GME’s price was accelerating rapidly. (H/t u/FatAspirations). That’s some WSB-level shit right there.
And yet they pull it off! GME immediately shoots down nearly 30% intraday, and eventually climbing abck up above 10%, making us all feel a little weird and like ungrateful millennial brats for feeling so shitty about a 10% day. But we all know what fucking happened, now don’t we?
So what can we say about ol’ Andy? Now, many of you know Andy as the dumbshit who shorted TSLA until he was ground into little bits of dumb dumb dust and made to look ever so foolish over and over again until he finally cried drunk uncle and flipped to being long TSLA and now he’s cool to you or whatever. Or you might know him as the guy who puts out really shoddy research that often, by pure happenstance, drives a new narrative to control the orderflow and SP on a WSB-beloved security like PLTR? You know the guy I’m talking about. Once in hot pursuit by Hong Kong fuzz, an International Man of Obviousness with a face that says: why yes, I will have another vodka tonic thankyouverymuch. That’s him.
Well, just like future call-back candidate for the role of Frightened Inmate #2, Mr. Steve Cohen, Andy is also but a Caveman—frightened and confused by your modern concepts of “ethics” and “rules.” No! No!—He’s a straight shooter! Devoted to rooting out obvious frauds, like Lukin Coffee and TSLA (Do not fuck with Elon or my Hot Mom’s ETF, Andy). And like the aspirations of Antoine Bugle Boy when he entered the blue jeans market, Andy saw an overcrowded short trade here based on an overly simplistic and obsolete short thesis about GME and said: “Me Too!” And as this thing is ripping to the stratosphere, Andy starts ringing his dumb dumb twitter bell and saying hear ye, hear ye—Inauguration Day and time it shall be for all my Big Brain thoughts about GME!
Nothing weird about that. No sir.
So Andy Citron or whatever the fuck his name is will be putting out some dumbshit video or something today in what seems to be a pretty clear attempt to scare my poor Rocket Children and get those pesky computers to high frequency this shit to drive the SP down to more acceptable loss levels (cause let’s be honest: they’re still taking a fucking bath here) for Mel Tormé’s namesake hedgefund and all the other cretins that are dug into short position here. And they’re gonna try to scare ya’ with the color red! And they know that no one here likes the color red.
But do see what’s going on here and who we’re dealing with. This really ain’t rocket science, Rocket Children. The dude actually tried to claim he forgot about the Inauguration. In 2021. He has not been in a coma, to the best of my knowledge. But you do look a little bleary eyed, Andy. Must have been all that staying up super late working on those last few bullet points to fill out the powerpoint on that GME listicle of yours, eh sport?
Conclusion: On the Subject of Patience and The Arc of The Universe Bending Toward Ryan Fucking Cohen
In my youth there was a period of time where I went out on boats that would drop crates into the waters of the Arctic. Bundled inside them were raw pieces of meat. In the coming days the boats would head back out to the frigid seas, hook the floats bobbing upon the waters, and pull the crates up. Packed inside would be many crabs. They were so delicious & made a good price at market. The difference between the crate that was empty and the create full of bounty was a mystery even the great physicist Erwin Schrödinger pondered at much length.
But the hearty fishermen of my youth already knew the answer long ago. Why did the trap fill up? Time. In time, all traps fill. In time, all things pondered shall be revealed.
--The Fucking Viking, That’s Who
Now look, you all know I have a soft spot for Ryan Cohen. Hell, we all do. He’s a good dude. And the man has played this flawlessly so far. He really has. The fact that we are all sitting here with Ryan Cohen having successfully negotiated three seats on the Board—a bloodless coup as my man Rod Alzmann says—here in January? It’s amazing. His vision for GME is dialed-the-fuck in and extremely exciting. This misunderstood business is on the threshold of an exciting turnaround with Ryan Cohen at the helm. And though I was very much looking forward to the potential repercussions of a vote being called at the annual meeting and what that might mean for the short-term share price, this result is infinitely better. Whatever their motivations, that Board and George Sherman saw the writing on the wall here and accepted the Golden Bridge that Ryan offered them. And Ryan Cohen has done everything he’s set out to do here. And he’s clearly been having fun while doing it. Read up on the guy at some point if you haven’t–there’s lots of good DD out there on him, obviously. And while you’re reading and thinking about Ryan Cohen, think also about guys like Steve Cohen (no fucking relation) and Gabe Plotkin and Andy Left and how lucky we are that we get to roll with RC against that motley crew of fuckwads.
And do you know what? I’m guessing that RC, and maybe even the funds being discussed in that screenshot, have been very patient with Mr. Plotkin et al in recent weeks. You don’t go around bankrupting hedge funds willy nilly, you know--bad form and all that old chap. People tend to remember that. And guys like Steve Cohen and Gabe Plotkin seem like they play for keeps. So now you try to build them a Golden Bridge to cross—maybe not their preferred route of travel, but could be worse and all that, right guys? But for whatever reason it seems like the natural instinct here on the short side is fight over flight. And these short FUD tactics are getting increasingly ridiculous to help slow down the inevitable march toward the detonator right next to that bridge. So relax everyone! And let’s not fool ourselves: All those Masters of the Universes are well aware of the math problem they’re all facing here and they must have a vague grasp of the odds that this goes off in one direction over the other. And what that could mean for the size of their money pits and how many sports teams they can buy this year. Shit, I assume Steve Cohen is counseling his young acolyte about how many sads he himself felt deep down in his man heart on that fateful day in 2008 when he lost $250M on a short when Volkswagon squeezed to infinity—a sadness that he will continue to draw on when his agent finally finds him a role that calls for it.
But my point is: the longs here can afford to be patient and let this play out. When this thing moves, the Viking’s Schrödinger crabs will only be in one pot. And I’m guessing that pot is the one being held by the guy who is actually in total control here: Ryan Goddamn Cohen.
So enjoy the show today. If you’re anything like me, you’re feeling relaxed after gorging yourself on lucky space peanuts all week.(https://solarsystem.nasa.gov/news/10022/lucky-peanuts/)
And though these silly wabbits with their cumbersome FUD efforts can get a bit tiresome, I’m still very much enjoying this GME show at this point and almost do not want it to end—what with all these Sorkin-esque twists and turns and my Cohen Tweet Decorder Ring getting all this sweet action.
But just remember who Ryan Cohen is, what he cares about, and what, so far, he has told us he intends to do here. And then you might realize, as I have, that Ryan Cohen has had the Gray’s Sports Almanac here all along. This story has already been written. He’s already won. And Melvin Capital’s Schrödinger-ass crabs are dead as fuck. The only question now is: what causes that Golden Bridge to blow? I, for one, am content to wait on RC while counting my good fortune that I can continue to accumulate until whatever happens here happens. So pass the rocket peanuts.
It’s just money after all. Right Gabe?
TL/DR: Psst: a Mysterious Viking once told me about behind-the-scenes Golden Bridge negotiations that are likely taking place that give shorts no chance but the shorts seem to think they’re saying there’s a chance but there really is no chance; Gabe Plotkin, Steve Cohen and Andy Left are misunderstood Straight Shooters who probably answer typical interview questions about their own perceived weaknesses by saying “Sometimes I just care too much about doing the right thing”; and Ryan Cohen is the Goddamn Man so we can all relax and not worry so much about all this dumb short FUD bullshit, ok? OK. 🚀🚀🚀
**If you construe any of the above as investment advice without doing your own DD or at least Googling Ryan Cohen then you are a fucking idiot and may God have mercy on your soul. You too, Andy.

Come gather ‘round GME management wherever you roam. And admit that the waters around you have grown and accept it that soon you’ll be drenched to the bone. If your time to you is worth saving, then you better start swimming or you’ll sink like a stone, for the times they are a-changin’.
Story time for the GME crew. All those who are certain tHis iS bLoCkBusTer or the paper hands that sold yesterday can just keep scrolling. We wish you the best of luck in the best of all possible worlds: this one, dear Pangloss.
**I’ve tried to submit this three times now and the moderators keep rejecting it. Maybe because I use too many naughty words? I guess I’ll try to clean that up a bit, which runs counter to all my instincts.
Did we have a good day Wednesday after that Q3 call? No, we did not. Do you know who lost over $20M (at least on paper) yesterday? Mr. Ryan Cohen. How do you think he felt about that CC and that inexplicable shelf registration that is, as one stocktwits commentator put it, a “poor man’s poison pill” and as obvious of a FU to Cohen and shareholders that the Board could have possibly designed? Do you think he was happy to see that?
I think he was thrilled to see it.
And now I’m going to tell you why.
This is a long post, so I’m going to give the TL/DR sum up for you Paste Eating Rocket Kids, and this will serve as a warning that there are, in fact, a lot of words that you may choose to read or not. So if I still see one goddamn comment about this being a lot of words and where’s the rockets maaaaan, I might just transport myself through this internet connection and [removed to satisfy the delicate sensibilities of the robot moderators].
So here’s the TL/DR: I believe that Cohen is executing a plan to take out the GME Board. And I think that Sherman just walked right into Cohen’s trap because he’s a dumb, selfish Boomer with a huge ego and a Broken Brain. And Cohen is going to be a legend because of it after he executes this plan, triggers the MOASS, and takes control of GME to convert it to a tech-first gaming juggernaut.
Now, if you’re in on this GME shit, you likely know the outlines of the story here. But here’s a good link to refresh your memory about why we’re all here:
https://www.reddit.com/wallstreetbets/comments/k4csaa/the_real_greatest_short_burn_of_the_century_part/
And for further background, my recent post about the battle here between George Sherman, out-of-touch Hired Gun B&M Boomer CEO with the Boomer-est of all possible Boomer names, and Ryan Cohen, Boy Genius, Actual Good Guy, and Man With The Chewy-fication Plan: https://www.reddit.com/wallstreetbets/comments/k9apx5/gme_q3_call_thoughts_on_the_clash_between_cohen/
So: are we ready to start READING and THINKING, children? Good.
Now what were you doing in the summer of 2020? I don’t give a shit what you were doing. But I do give a shit about what Ryan Cohen was doing. And there is a decent amount of evidence that Ryan Cohen spent the summer of 2020 hiring a bad ass lawyer and crafting a pretty solid plan to wrest control of a struggling Mall-based gaming retailer from its out of touch Boomer Board and CEO so he can turn it into an ecommerce juggernaut like his baby Chewy. And I think we are about to enter the next phase of that plan here shortly.
But before we get ahead of ourselves, let’s first all get acquainted with Christopher P. Davis, Esquire, the attorney listed on each of the 13Ds filed by RC Ventures.
Chris Davis, Activist Attorney Extraordinaire and His Successful Use of the Consent Solicitation to Remove Dipshit Boards/CEOs
To cut to the chase, Chris Davis (who is definitely NOT the same dude playing first base for the Orioles) is a badass NYC attorney recently recognized as one of the nation’s premier shareholder activist lawyers. https://www.prnewswire.com/news-releases/kleinberg-kaplan-partner-chris-davis-recognized-by-chambers-usa-as-leading-shareholder-activist-lawyer-301090571.html.
So what was Chris Davis doing in the summer of 2020? So glad you asked. He was celebrating a major win he helped engineer on behalf of a “first time activist Michael Gorzynski” for a wholesale replacement of the sitting Board at HC2 Holdings, Inc (sounds fancy). He helped engineer this takeover via a “high stakes consent solicitation rather than the more typical proxy contest.”
Learn more about this here: https://www.kkwc.com/insights/kleinberg-kaplan-advises-mg-capital-management-in-its-consent-solicitation-and-successful-settlement-with-hc2-holdings/
Here’s a few more links if you care to learn more about that and how it all went down (spoiler alert: the activists settled for two seats on the Board and then the new Board very quickly ousted the dipshit Boomer CEO, Phil Falcone)
http://www.shareholderforum.com/shfk/Library/20200611_II.htm
http://www.shareholderforum.com/access/Library/20200219_Deal.htm
In sum: if you look into Chris Davis, you can see that this guy is dialed the fuck in and knows how to get activist shareholders a win—even in very challenging circumstances.
The Summer of ’20 Out-of-the-Blue Boy Genius Media Campaign and Cohen’s 13D Filing in August
I’m going to return to the “consent solicitation” thing at the bottom and why I think it matters here, but I don’t want to lose momentum on the timeline and evidence. And the consent solicitation is Advanced Level Shit that I barely understand anyway. But I think it’s likely to be goddamn important so I’ll get to it.
Now, where were we? Oh yes, the inexplicable media campaign.
RC Ventures files its 13D on August 18th announcing that Ryan Cohen is now the proud owner of 5.8M shares or 9% (later increased to 9.8%) of That Cluttered Video Game Geekery You Used to Pass on Your Way to Jamba Juice or Wherever People Go in Malls. Uh, ok man. But then this is when the SP of this Future Blockbuster™ starts its real run as more catch on that Cohen has taken a huge stake and that is also part of the portfolio of Mr. Big Short himself and a bunch of institutions and they actually have cash and are definitely not going bankrupt and oh have you heard about the insane short percentage of float and the upcoming console cycle that invariably corresponds to a sharp spike in SP? Well have you? But to return to the point: RC was and is the largest shareholder.
But prior to the date Cohen filed his 13D, there is a renewed media campaign focused on Ryan Cohen, Ecommerce Billionaire Genius who built Chewy, kicked Amazon’s ass, and then sold it for $3.35B way back in the heady mask-free days of ‘17. Why the sudden re-emergence of Mr. Cohen in the summer of 2020 in such a prominent way with this glowing media campaign about a guy who sold a very successful pet supply business over three years ago? Fawning media exposure like that doesn’t just happen (or not usually). It’s engineered. Or, more charitably, helped along by people who know people and can introduce those people to Interesting Topics to Write About. And my guess is that Chris Davis, bad ass activist attorney based in New York City, Knows People and had a little something to do with it.
Here are the links to all of the glowing media pieces starting in the summer of 2020 (all absolutely worth a read to get to know who this guy is and what makes him tick):
June 5 (Bloomberg) https://www.bloomberg.com/news/articles/2020-06-05/chewy-founder-cashes-out-bets-on-apple-wells-fargo
August 4 (CNBC) https://www.cnbc.com/2020/08/04/chewy-co-founder-ryan-cohen-this-is-the-side-hustle-id-start-now.html
August 16 (Forbes) https://www.forbes.com/sites/zackfriedman/2020/08/16/entrepreneur-chewy-founder-ryan-cohen-shares-his-best-advice/?sh=41e1370e5840
October 15 (Business Insider) https://www.businessinsider.com/chewy-ryan-cohen-warren-buffett-lessons-apple-investment-2020-10
And a lot of the speculation I’m wheeling and dealing here was introduced by our man Justin Dopierala at Seeking Alpha way back in a September article not too long after the 13D filings: https://seekingalpha.com/article/4373819-gamestop-chewys-founder-ryan-cohen-finds-whats-next
But for now let’s “put a pin” on Mr. Dopierala, as George Sherman or some other Corporate Robot Dipshit might say, as he will be important to the story here again soon.
The November 16th “F U Old Man” Letter
If you haven’t read this ballsy letter Cohen wrote to the Board last month, you really should. We’ll wait for you. https://s.wsj.net/public/resources/documents/RC_Ventures_Letter_to_GameStop.pdf
OK, ready again?
I don’t want to question Cohen’s possible writing abilities or give away too many tricks of the lawyer trade here (AI should take care of that in about a decade), but that letter was 100% written by Chris Davis. I’d literally bet my entire portfolio on that fact alone. That’s why you hire gunners like him. The letter has that has deliciously direct and aggressive lawyerly tone—the kind you use when you want to send a very clear message to some asshole without spelling it all out. I fucking love this letter. It was one of the main reasons I put the rest of my chips into the GME basket. I doubt I’m alone there.
And what did we learn from this letter? Well: a lot. But I’m going to focus on a few quick things. First, we learned that over the Summer, Cohen had “private conversations” with the Board and Sherman about the need to pivot toward becoming a technology-driven business with a new strategic vision. And he calls out Sherman and the Board directly for lacking this vision, using Mainstreet-Friendly pejoratives like “c-suite” and “boardroom.” He takes a direct shot at Hired Gun Sherman’s Boomer-Ass Business Record (Advanced Auto Parts! Cool!) and his obvious bent towards what he knows: Boring Ass Low Margin B&M Bullshit Companies and straight-up calls him a dumb-ass old man (“twentieth-century focus!”) who Just Doesn’t Fucking Get It. He alleges that he and the Board have presided over “massive value destruction” (almost makes it sound intentional, or at least grossly negligent) and have never taken “full accountability” for all their fuck-ups and intransigence.
Some folks have suggested that, sure, Cohen wants change and yeah he seemed like he had a bit of a bee in his bonnet, but if he doesn’t get some good movement in those areas, he’ll just sell his 6.5M shares to tank the stock and take his ball and go home to play with his dog, who loves him No Matter What. In this interpretation, the letter is just Cohen Asking To Speak To The Manager and then if the response is not to his liking, well then, He Will Just Take His Business Elsewhere, thankyouverymuch.
I do not think that is what is going on here. Not with Ryan Cohen and Chris Davis. This letter is Ryan Cohen Crossing The Fucking Rubicon.
He did the honorable thing and took his vision to the Board and Sherman. How genuine he was in that effort, I have no idea, as my thesis is that he has had a takeover plan in place since he hired Chris Davis. But whatever the initial motivations, it was the honorable thing to do to discuss his vision with Sherman and the Board before he and Chris Davis eventually rip their fucking hearts out (which, spoiler: I believe he is getting ready to do as we speak).
Reasonable minds can disagree here, but I do not think you write a letter like that unless you have a plan to handle all possible responses to it. He just torched his collegial relationship, such as there ever was or could have been, with that CEO and that Board. He flaunts Chewy’s world-class infrastructure and market cap versus their lame ass sub-$1B Dying Mall Store Bullshit. And he makes a very public rejection of a seat on the board (and the reason given: because you fuckheads would just ignore me and drive me nuts while you continue doing Dumb Boomer Shit with my money all goddamn day), which made it 100% clear to me that this is Cohen Serving Goddamn Notice that unless they get serious about the scope of their turnaround and start listening to him and convey this new direction to shareholders asap, that he’s coming for them. He even alludes to his own turnaround plan but then tells them to do their jobs like the Big Capable Adults they are.
And then Cohen attaches this letter to an amended 13D to ensure that all shareholders see it and also see that he still holds all of his shares. Within hours, the WSJ had an article on this: https://www.wsj.com/articles/gamestops-new-billionaire-investor-calls-for-tech-centric-makeover-11605565458?mod=hp_lista_pos5.
And guess what’s neat? If you are an interested shareholder or a habitual reader of the Wall Street Journal (I, sir, am not) and you saw that article, you might have wondered what this Cohen guy is all about? You know, Mortimer, the dog guy—made billions. And thanks to the recent out-of-the-blue marketing campaign that was definitely NOT engineered by Chris Davis as part of a takeover plan, your subsequent Google searches, and the recent articles they produced, likely made you think: this guy is a fucking whiz kid and I like the cut of his jib.
Cohen Quietly Meets With Funds/Investors
In the weeks leading up to earnings, sharp observers also notice something: Ryan Cohen is meeting with various large shareholders for some reason. There were several reports of this on stocktwits (links are lost to eternity in that cluttered hellhole unless some astute commentator can find and link in the comments), so some salt is a necessary accompaniment here (I like to cite my evidence), but we have at least one confirmed meeting with the head of DOMO Capital: Mr. Justin Dopierala. Now, Justin happens to be a pro-GME writer (and a sharp one at that) at Seeking Alpha. You know, that paywall website where people purporting to know what they’re talking about get paid peanuts to write purposefully inane articles for maximum clicks from other idiots? That one. Well Justin is one of the good ones there, and DOMO Capital is also a large shareholder of GME. (Conflict of interest, you say? Shut yo’ mouth!).
On November 30, at 9:19 AM (the payin’ for inanity crew can go see this – the comment is still there), Dopierala made the following comment on another SA article:
***
“I've recently had the pleasure of having a 1 on 1 video meeting with Ryan Cohen that lasted over an hour.
Going forward, I no longer feel comfortable commenting on the topic (of Ryan Cohen), so please understand when I do not respond to any of your questions on this specific topic.
Ryan is a very intelligent man, and I remain as bullish as ever on GameStop's future."
***
So what can we extrapolate from this?
Ryan Cohen likely reached out to DOMO Capital/Dopierala to discuss his strategic vision. I do not know if he announced his plans directly, or what the purpose of the call was (see the very below on how I think this all could relate to a consent solicitation to recall the board) but I’m sure, at the very least, the text, if not the subtext, was heavy as fuck on that Zoom call. And why do I think Cohen contacted him and not the other way around? Because Dopierala, a writer for SA that I’m sure would love to publish even an anodyne Q&A with Ryan Cohen to Get Him All the Clicks, didn’t get an on-the-record interview. Not even some softball about whether his dog prefers his Apple investment decision or his Wells Fargo one. No: he got the concession (assuming he did) to simply acknowledge that a discussion took place (buried in a comment on some other dude’s SA article), but he explicitly says he’s not going to talk about anything related to Cohen going forward. No sir, no how. But if Cohen is just a regular old fellow shareholder (Cue Ryan: “And Justin, please: the pleasure is all mine”), then why the fuck are you making a cagy comment and acting like you Have A Big Fucking Secret and Oh God I Wish I Could Tell You Something But I Just Cant! with that comment, Justin? The Man Doth Protesting and Shit, I say.
Here’s the article link for you Seeking Alpha Super Sleuths: https://seekingalpha.com/article/4380313-gamestop-likely-already-digital-revenue-sharing-sony-up-to-10
And even yesterday, Dopierala can’t help himself. In a discussion about Cohen’s tweet yesterday (you saw the tweet right? What kind of GME-to-da-moon! investor are you anyway? https://twitter.com/ryancohen/status/1336775515101949963), Dopierala gets all Jim Carey As The Riddler on us in a response to “EricinPDX,” (some dude living in the Portland Airport) who writes:
EricInPDX
I take his tweet as a total negative .. the Jim Cramer thing.
I have no position at the moment.
Our man Dopierala then responds “then you are wrong yet right.”
https://seekingalpha.com/article/4393394-gamestop-cohen-right-to-downplay-ps5-xbox-series-mistakes-core-digital-problem
So I think he’s having a little fun talking like a slightly less backwardsy Yoda saying: yeah, that Cohen tweet was obviously negative because he’s highlighting how fucked GME seems after that Q3 call (and also, check out how Chewy’s doin’ in that clip!). But it’s also not negative because it means Cohen is about to rip Sherman’s still-beating heart out and Shock And Awe our asses with a vote. And I, Justin Dopierala, head of DOMO Capital, can be a little wink winky about this because, oh I don’t know, on our hour long call Cohen maybe used puppetry to act out “Bryan Flohen’s” plan to call a vote and supplant the Bad Man “Gerald Shorman” while asking “Would You Theoretically Be With Bryan Flohen?” with a few well-timed arch of the eyebrows. Or he got his explicit consent to his plan (see below re consent solicitations). We just do not know.
In conclusion: We know that Cohen met with shareholders in the period between the day he sent that letter and the date of the Q3 call. We just do not know what was said. But we do know that Dopierella, either out of a sense of journalistic ethics (Stop laughing you guys! Seriously!) or out of concern about possible SEC lookie-loos, decides to be up-front about his inability to even utter the name Ryan Cohen from now on.
General George “Custard” Sherman’s Lame-Ass Empire Striking Back
Let’s recall the letter now. I’m guessing a rich, egotistical pampered-ass hired gun Boomer CEO named George goddamn Sherman didn’t like someone who reminds him of his asshole kids talking to him like that.
We all know what happened next: the Q3 “Say Omnichannel One More Time Motherfucker!” call. As I mentioned in my prior post on this (link above if you care), Sherman pulled the boomer-ist of boomer moves in an act of self-sabotage that is likely to be studied in business courses once this whole story plays out. You see, that letter that Cohen/Davis sent was a trap. And Sherman and the Board and their Big Fucking Corporate Brains clearly lack an inner Admiral Ackbar.
Cohen sent that letter three weeks before the earnings call. And demanded that they conduct *another* strategic review and present a plan to shareholders outlining how they are going to fully pivot into a new technology focused company. Cohen knows they have no intention of doing this. He’s apparently been hectoring them all summer about it. And I’m guessing he talked to Sherman enough to know that the dude is just not on the level (as all of us who listened to that fumbling bland-ass corporate caveat-speak on that call got to experience as well). So he knows, like we all did, that Q3 earnings are likely to be middling at best. But unlike me, who clearly thought that the one way out of this for Sherman and the Board was to give some exciting guidance on Q4, maybe even a share buyback (as they are authorized to do) and some more info on the Microsoft deal, likely revenue, other possible similar deals with Nintendo and Sony. I don’t know, but Something. No, Cohen and Davis are way smarter than me and know Sherman a bit better and probably assumed that Sherman is likely to whiff on a response to his letter. And lo and behold, whiff he does. Nothing. We get no response to the letter and no real plan to transform GME into a tech-driven gaming company (Sherman: “but, but…I said Omnichannel you guys! What do you want from me beyond bland corporate robot speak!?”).
But what else happens? Sherman and the Board inexplicably authorize a shelf registration for up to $100M worth of ATM shares. This from a company that just bought back shares, is authorized to buy back more, paid down debt early—and now is about to be flush with Sweet, Sweet New Console Cash. What in the everlasting fuck?
And in case you were inclined to give Sherman and the Board the benefit of the doubt here, the reason was simple and straightforward and included within the S3 filing itself. And that is: “Hey Cohen: Fuck Off. And if we have to dilute our shareholders to get you to fuck off, by God that’s the kind of shortsighted ME-first move that got George Sherman where he is today! So go find another company to hassle you ungrateful Millennial Start Up Dog Store Bro and let the adults handle this.”
Here is the provision in the S-3 (under the heading: Anti-Takeover Provisions):
Authorized But Unissued Shares
The authorized but unissued shares of common stock and preferred stock are available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
So instead of crushing the call and giving some dope guidance about Q4 and trigger the MOASS so we all revere the name George Sherman for All Eternity, Sherman and the Board make a lame-ass move to try to protect their jobs and--lo and behold!--THIS is the main takeaway of the report and call. And what drives the precipitous dive in SP AH and yesterday. A dive so steep that it removes well over $100M in market cap in value, the kinda-lame amount that you’re trying to stick Cohen with (and dilute all of us) so you can keep your Big Fancy-Man Job and the bonus you’re counting on so you and the misses can jet off to Sandals Jamaica like you always do. George: Whoops? Knew we should have gone with a higher number! A lame ass “poor man’s poison pill” as u/snowk88 on stocktwits put it (shout out because he also helped me flush out this thesis a bit and clued me in on Chris Davis’s work for MC).
So back to how I started this missive, back when we were all younger and maybe a bit more naïve, right? Anyway. Yesterday Ryan Cohen lost over $20M on paper because George Sherman thought the best way to handle that Punk-Ass Millennial was to use shareholders as a hostage in any possible fight over control of this company he’s been building his entire—oh, eh, the last 18 months because he’s just a hired gun that goes where the money is and waits for his ka-ching moment before splitting because who gives a fuck he’s George Sherman and You’re Not. But guess what happens when you do that? (Hand down, George: you’ve had your turn). You ENRAGE the shareholders who you want to have your back and vote for you in any possible proxy fight or takeover offer! What strategery! You must have been involved in planning the Iraq war, George.
But guess who was likely laughing their ass off yesterday at their colossal good fortune at this misstep? Ryan Cohen and Chris Davis. Because now Sherman has opened the door even wider than it was before and made it that much easier for Cohen to get the votes and kick down his fucking door.
And yesterday, to no one’s surprise, the SP falls almost 20% and even Jim Fucking Cramer piles on and tells all his braindead Boomer TV watchers that this is The Next Blockbuster like all the other Super Sophisticated Analysts out there.
And now we see the #WeWantCohen and #InstallCohen hashtags (which you all should consider using frequently if you dig all this and think Sherman needs to go).
What are you thinking if you’re Ryan Cohen? Take your ball and go home time? Or: maybe that it’s time to Show George Sherman that You Do Not Fuck With a Super Nice Guy With Really Good Ideas That Are Usually Respectfully Presented (Unless You Piss Me Off) Like Ryan Goddamn Cohen?
I’m thinking it’s the latter. Taking all of this, I think Cohen and Chris Davis have been planning some kind of takeover, possibly even via consent solicitation like Davis did in his MC matter, since the summer and that George Sherman’s ironic attempt to save his own skin is about to backfire stupendously to help Cohen lock in the votes he needs. And it couldn’t happen to a nicer guy—excuse me—I mean: Smug Asshole.
Epilogue: The Consent Solicitation
Ed: the consent solicitation is not likely in play here. But Cohen is definitely still coming for Sherman and Co - we just don't know exactly how yet.
Now, just what in the hell is a consent solicitation and why does it matter? I confess that I didn’t know shit about this until I started READING ALL THE WORDS, but our friends at theactivistinvestor.com have some useful information to help those of us with tiny little baby brains understand what it is and why it may be relevant here (relevant excerpts below, but it you really want to geek out on this shit, I would recommend clicking the link, reading the words and THINKING BIG THOUGHTS). And also, hoping that some folks can respond in comments to help flush this out further because it’s late and I’ve already written too many words.
But, before I drop some k-n-o knowledge from our friends at theactivistinvestor.com, just to remind you: GameStop is a Delaware Corporation.
Now imagine being magically whisked away to…Delaware! (Hi. I’m in Delaware).
*******
From: http://www.theactivistinvestor.com/The_Activist_InvestoConsent_Solicitations.html
[Ed: removed quoted text] *****
CPT Hubbard here again. I’ll release you momentarily. But study those steps a bit and ponder where Cohen might be in that process. And also recall that we know that Cohen had an “off the record” meeting with our man Dopierala from DOMO Capital and we have no idea what they talked about. Could Cohen have been getting shareholders consent? No idea. But it certainly seems possible. If that is the case, the 60 day clock is ticking. Which means that, assuming Dopierala was stop #1 (probably doubtful, but it’s the one data point we have), we should know something by at least late January if Cohen is actually initiating a consent solicitation on this incompetent Board and probably a lot closer to mid-January (Sorry Jan call holders) since I assume Cohen started reaching out around the time he sent that letter on Nov 16th.
To which I say to Cohen: Little old me and my 20,000 shares consent! We consent most emphatically, sir. And no one will ever accuse you, Mr. Cohen, of not seeking consent. You may retain this for your records.
To conclude, Cohen is Young, Scrappy and Hungry and He’s Not Throwing Away His Shot. And Fuck George Sherman.
“I’M FINISHED”
**To be clear: this missive is for information purposes only and I would advise against following my example in any way, shape or form, as this pandemic has quite plainly knocked a screw loose if I'm here writing novelas to a bunch of Paste-Eating Rocket Kids.

Disclaimer: This article my article. You are reading it first, as I didn't post it anywhere else.
Summary

• Game developer with $450 million in revenue with $110M net profit valued at Price to Sales (P/S) ~4.2.
• Company seems reasonably valued, operating in growing mobile games market.
• Risk-reward ratio at current price is outstanding due to SPAC-merger rules with the cash NAV set at $10.

Kismet Acquisition One (KSMT) to Combine with Nexters Global in $1.9Bn Deal

Not much information about this company, so I started writing my own research on the company. Here is the investor presentation:
https://nexters.com/images/inv_info/Nexters_Investor_Presentation.pdf
If want to understand the valuation of the company, the risk/reward, and the potential I need to answer the following questions:

1. What is Nexters Global?
2. SPAC is a safe bet?
3. Comparison with its competitors?
4. $1.9B is cheap or expensive?

Let's begin!

1. What is Nexters Global?

Nexters Global is a fast-growing mobile game development company with $450 million gross revenue* (2020), 85 million total game installs, 5.4 Million monthly active users, with 10x growth of revenue in the last 2 years. Already profitable with $110 million net profit in 2020.
The management has more than 10 years of experience in creating games. Located in Cyprus (Europe) with roots in Russia (a very strong IT region). They are well known for being in Game Development since early 2005 in the epicenter of the web, social and mobile game development.
https://preview.redd.it/juhbhhuwhmg61.png?width=640&format=png&auto=webp&s=529a0e927aa3bc3205430d97204d3d625f36fc8d
Since the launch, the company has proven that it can develop, publish and use marketing to scale its games. With 37% of its revenue coming from the US/Canada, 23% from Europe, 19% from Asia it is already an international company.
\In the investor presentation Nexters Global states 310 million net revenue, as at the* sec.gov reports it is more common (example) to use the gross revenue for gaming companies as their base metrics. That's why here and below I’m using gross revenue. Please see the spreadsheet below with a comparison to other companies.
Further plans are:
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https://preview.redd.it/t9kdphd0img61.png?width=994&format=png&auto=webp&s=b70e92455e253033e99a91b17b0a1f85012e1e5b

• To increase the revenue of existing games (basically, double the revenue in 3 years).
• Launch new titles in 2021: 3 new games announced
• Working on the sequel of their best selling game "Hero Wars 2".
• Use cash to acquire other game developers with great games to amplify revenues using their expertise and marketing/production capabilities to make global hits.

2. SPAC is a safe bet?

There are so many SPACs, that we should be very selective on what we choose to buy. To do that we need to check if the business is real.
There are different kind of risky SPAC’s on the market:

• Without product
• Without revenue
• Without an addressable market
• Without proof that they can scale

We need to verify that Nexters Global is not on that list. Let’s have a look at the company:
The product? Web, Social, Mobile Games.
To check if their numbers are real simply open the game page in App Store and Google Play store.
Android Apps by NEXTERS GLOBAL LTD on Google Play
‎Nexters Global LTD Apps on the App Store
The top game has more than 50,000,000 installs with more than a million positive reviews and an average rating of 4.6. With other games/stores combined, it correlates with the company's stated 85 million installs.
​
https://preview.redd.it/jwh51gm2img61.png?width=735&format=png&auto=webp&s=428ec2dc85a4a6c1d51c67aa8fa1f7876edd3dab
I like that I can see the numbers myself, and also can "touch" the product and how it works. it increases my confidence in owning the stock.
Actually, I have been playing their top-grossing game Hero Wars for several months last year. And I loved it... loved it so much that I’ve spent around ~1000 dollars within 3 months. And I’ve seen players that spent much much more than me (higher ranked, had much more power and ranks). And there were so many players that they had to add new servers each week, or even daily.
The first impression is that I really like the product. I see how it works.
The revenue. It's huge.
In the SPAC world, there are companies that can’t make revenue but predict that their revenue will go up 10-20-50x times in 3-5 years. Usually, such companies are SCAM as they mislead investors with revenue that will never happen.
On another side, Nexters Global has already $450 million in revenue with a $110M profit. And the growth rate is +177% YoY. And even the slowdown in growth means the actual increase in revenue substantially, just by the magic of the compound growth.
I like the numbers very much here.
The addressable market
How big is the addressable market? The World’s 2.7 Billion Gamers Spent $175 Billion on Games in 2020; The Market Will Surpass $200 Billion by 2023. So Nexters Global is well-positioned in expanding market.
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https://preview.redd.it/tf41au04img61.png?width=888&format=png&auto=webp&s=7547a1d3c2c8da43554a655d9b32bb4aaf4f2d97
Revenue geography shows that it is also diversified well. The company has proven that it can generate revenue all around the world, not just in its local market. That is very important in order to calculate the valuation of the company.
​
https://preview.redd.it/sxq08qg5img61.png?width=362&format=png&auto=webp&s=ed9b771d632268efb31d96d57c831d61d8caf12f
But how long Nexters can generate revenue?
Unlike the traditional PC gaming, where the peak of sales occurs after the launch of the game and then shrinks a lot, in the online mobile game market - games get updates each month/quarter to engage customers and make them stay in the game longer.
Games with great engagement + marketing resources can stay on top charts for many years.
You just reinvest part of your revenue into marketing to earn even more. It works for games with high revenue per player (ARPPU).
Nexters Presentation: $106 - Average net bookings per paying user(2) (Q4’20)
​
https://preview.redd.it/jsqcmby6img61.png?width=666&format=png&auto=webp&s=f96f6ef490ee2b16cf6ca01e8508df578bfdd302
Percentage of paying users increases. Average net booking increases.
With the 6% of paying users and $106 net payment - it is quite easy to calculate that you earn $6.36 from any user that downloads the app, so you can spend on advertisement a lot of money and you will earn even more.
When you have 277% revenue growth in 2019, 177% in 2020 it won’t just stop growing. Next year double-digit growth of revenue is highly probable.
From a statistical behavior the growth slowdown to zero is very unlikely. If we take examples of other super-hit games from Supercell (Clash of Clans) and Playrix (Gardenscapes).
Example: Playrix did continue to grow since 2016 explosive revenue withadding +41% YoY growth in 2018 +35% in 2019.
​
https://preview.redd.it/so9ijp08img61.png?width=667&format=png&auto=webp&s=6f6acbdf41374f89c045bb07c4b4e5f7dc235bf9
Another example: Supercell's revenue continued to grow at least 2 years after the revenue explosion before slowing down.
​
https://preview.redd.it/tjjuf159img61.png?width=855&format=png&auto=webp&s=01116616d83bbeeb34bbe98da012d22c3964f5d5
The growth
Great games could continue to grow. Nexters Global estimates their net revenue to reach $562 million dollars. That equals to ~$802 million gross revenue in 2023. And the company is valued at just 1.9B now. Re-think that.📷
This chart also shows that they project only +10.5% YoY growth in revenue in its current games after this year's gain. Which I think is too conservative considering the examples above. I understand that they’ve chosen the strategy not to mislead investors and should stay conservative, but I think they will easily beat their own estimates and 20-25% growth is much more realistic.
The good thing is that we can track their performance in terms of downloads and revenue in stores. We can stay ahead and know the data earlier than official numbers come out, which brings another level of transparency for investors.

Kismet Acquisition One Corp company

The company is led by CEO and Director Ivan Tavrin, the founder and Principal of investment firm Kismet Capital Group. Tavrin previously served as the CEO of PJSC MegaFon, Russia's second largest telecommunications operator, and before that, he founded UTH Russia, one of the largest independent media broadcasting groups in Russia.
Kismet Acquisition Two plans to target the internet and technology sectors operating in Europe, including Russia, as well as businesses established by founders with Russian origins.
Credit Suisse, BofA Securities and LionTree Advisors served as financial and capital markets advisors to Kismet Acquisition One Corp.
Advisors look good to me. The CEO's background and experience too. Additionally, he was one of the shareholders in the recently launched Russian IPO "OZON" marketplace. Which is now +120% up.
The only thing that sounds scary here is the word “Russia” everywhere. Is there an unwanted geopolitical risk? From the legal point of view, every entity is registered under British Law jurisdictions (Cyprus, BVI). So, basically, there shouldn't be any problems.
Well... they would better be in the US as many investors don’t like foreign companies. But there are great examples of super successful Supercell and Rovio that were NON-US too. And we know that the Russian Tech-sector is high qualified (Google Founder - Sergey Brin, Pavel Durov - Telegram, Vitalik Buterin - Etherium, and even Russian Hackers is a “meme”).
And as I said before their business looks crystal clear, anybody can check their metrics so they can’t fraud the data, unlike, for example, Luckin Coffee did in China. Therefore, this kind of risk is eliminated.

3. Comparison with its competitors?

Let's talk about numbers. I’ve tried to compare the game developer to its direct competitors. I've selected only companies with major mobile game-driven revenue.
Here is the full spreadsheet access: Nexters Global Comparison
I’ve marked the concerning metric with yellow and red, Good metric with green, Superb one with dark-green color.
​
https://preview.redd.it/tmsosbtaimg61.png?width=1079&format=png&auto=webp&s=2b50cd7a1a54115bb496849c43b3611094fc6309
Please take time to read the numbers and come back after.
Update! With the latest news that Electronic Arts buys GLU Mobile with +39% premium from the market - the sector is officially undervalued.
Thoughts on Nexters Global

• Nexters is big enough in terms of revenue
• The MAU (Monthly Average Users) is not very big. While you can consider that as a “minus” that's actually the sign of a young company, with the opportunity to attract more users “cheaper” (with high efficiency). When you already big and you have hundreds of million players, you have to spend more and more money on user acquisition.
• No diversification. That’s a red flag. Hearing of 3 titles coming next year + Hero Wars 2 to be developed. And the idea of acquisition of small developers with excellent games to amplify their revenue 10-100 times promoting it around the World is the Next goal for Nexters. This will bring diversification.
• Remember that Supercell (also a European company, HQ in Finland) with its only best selling game was sold to Tencent at a $10.5 billion valuation. This "Hero Wars" game is currently following its path (in terms of growth numbers & revenue).
• Games are high gross margin projects. I assume this gross margin from the cost of revenue is: AppStore/Google Play 30% commission + spending on maintaining the Servers. That brings me to the industry average of 65%
• Marketing spending numbers are rational (20-40% zone), in order to stay profitable and to maintain modest growth.
• It's already a large scalable company. No “company growth issues” seen through this data. Sign of good management here.
• Unusually high net income seeing here. Assumption: Research & Development costs /Administrative spending / Sales and Marketing is much lower compared to other US companies. Probably they benefit from HQ being outside of the US. That should affect the company multiplicators (P/E) positive.
• With not very high US Market penetration - the opportunity still there.
• Game reviews/rating is essential in mobile games: The higher-rated games = the cheaper is the cost of user acquisition. The longer players stay in-game. The “4.5” rating tells me that customers of this company are very satisfied.
• Fascinating growth. Very young company. The slowdown in growth is expected but compound growth is still very probable.
• Estimated Compound Annual Growth (CAGR) is 25%. Which would bring the company ~$802 million revenue in 2023.
• Is the company valued right? It's more profitable in comparison to its competitors, its double-triple digit growth company with all signs of the trend to continue.
• The company is honest with its estimates and setting very realistic numbers. Other SPACs prefer to predict 10,20,50x revenue in the future even without proving they can scale. This company is doubling-tripling every year and shows estimates of 25% annual growth each year.

I ended up with numbers: P/S = 4.19, P/E = 17.27. This valuation seems just right with current earnings and the sector, but not with the future growth. As there is a Hot trend in gaming and with outstanding YoY growth could be worth much much more.

4. $1.9B is cheap or expensive?

The current price of $KSMT (“GDEV”) is $10.15 which represents a $1.9B valuation. Before the deal is completed the price cannot be valued less than $10 due to SPAC rules. So there is simply no downside risk at this point..
But can it go up? What is fair valuation? Is there a risk of a selloff from shareholders? How rich the valuation can be in terms of P/E (Price to Sales ratio)?
First, let's find out the risk of insider selling:
Here is the sec report: https://www.sec.gov/Archives/edgadata/1814824/000121390021005589/ea134294ex99-1_kismet.htm
The Transaction is expected to deliver up to $150 million in cash to the Company’s balance sheet before advisor fees and/or redemptions by Kismet Acquisition One Corp. current shareholders, with proceeds expected to be used for general working capital purposes and potential acquisitions. Existing shareholders of Nexters will receive a cash payment of up to $150 million pro-rata to their pre-money shareholdings, and will roll approximately 92% of their holdings into the combined company while agreeing to a 12 month lock-up (subject to certain exceptions). In addition, the founders and the management will receive 20.0 million Earn-Out shares over 3 years (with 50% of the Earn-Out released at $13.50 VWAP and 50% released at $17.00 VWAP), also subject to a 12 month lock-up. The Transaction will be funded by approximately $250 million held in trust by Kismet Acquisition One Corp., subject to any redemptions, as well as the additional $50 million investment by the SPAC Sponsor, Kismet Capital Group, via an affiliate.
The investors will have a 12-month lock-up on selling + they get benefits on reaching the valuation 35% and 70% higher from the current price. This means that there will be no insider selling in the near term, which is very positive signal.
Acquisitions
Nexters Global plans to use proceeds in M&A (buying small game development studios with great projects that just don’t have enough cash, expertise, or right developer team) to benefit from its situation in order to launch great games worldwide.
​
https://preview.redd.it/xhypgzqfimg61.png?width=1000&format=png&auto=webp&s=642c03fecbb851984527c46774beb0ecc44eba0a
It is a common mistake to assume that great games can be run by small studios or individuals, as in 2020 you need at least a couple of million dollars spent on marketing to understand if the project is worth it, or not. Small developers can’t afford it. On the other side, Nexters can benefit from it really well.
If they are successful in that, we could see 10+ new titles in the future. That could diversify its game portfolio, making this company a safe bet for Hedge funds and other market players, driving future growth.
“Hero Wars 2” game announcement.
Hero Wars is the top-grossing game, which generates most of the revenue. With “Hero Wars 2” announcement the company can benefit a lot..
Usually, game sequels can do very well, as they are easier to promote, finding their “fan base” from the beginning. This could create a new source of income, work as a diversification, launch the new cycle of the revenue stream for many years ahead.
Partnership with Playrix founders
Here is another thing that I want to focus on:
Bukhman brothers acquired a 43% stake in Nexters in 2018
They are founders of “Playrix” - a private mobile game developer company, currently valued at $7B(valued in Q1 2020). Now more likely ~11B as their revenue increased 1.5 times during 2020.
Please read these articles in Bloomberg and Forbes first:

1. https://www.bloomberg.com/news/articles/2020-09-29/billionaire-gaming-brothers-emerge-as-tencent-s-biggest-rival
2. https://translate.google.com/translate?sl=ru&tl=en&u=https://www.forbes.ru/milliardery/410509-nash-rost-ne-svyazan-napryamuyu-s-lokdaunom-milliarder-igor-buhman-o-tom-chto

Summary from the articles:
Cashing out (selling out to Tencent or Activision Blizzard) is not interesting right now. We are growing every year. Game industry multiplicators of public companies were priced wrong . This year has changed it. And this trend will continue as top games can grow for many many years, reengaging users with updates.
Playrix is not interested in IPO's at this valuation. They want to wait until the market changes and start pricing gaming companies at different valuations, not the 4-5 year revenues, but maybe more like Tech companies are valued now (P/S 20-30 instead of 4-5)?
I can assume that Playrix founders are interested in the long-term success of Nexters Global SPAC-merger in order to change how markets price the gaming companies as they want to bring Playrix to an IPO in the future. They want to wait until the market starts pricing gaming companies at different valuations, not the 4-5 year revenues, but maybe more like Tech companies are valued now (P/S 20-30 instead of 4-5)?
So, for the Bukhman brothers who own 43% shares, Nexters Global is a long-term play company. They don’t want/need to cash out.
I also think that at some point, Tencent could just buy 20-30% of the company through the open market (buying shares). Why? Because it is common for Tencent to buy a stake in gaming companies that earn a lot of cash and priced at these valuations.
​
https://preview.redd.it/uphpbubcimg61.png?width=804&format=png&auto=webp&s=4f35889049fa9302786bf65d1b83f02a92d71eef
​

Summary

In my personal opinion, this is a great company with a bright future.
Valuation seems reasonable and there is a big upside if any of those happens:

• Company starts to actively search for acquisition targets (we will see from press-releases)
• Company launches "Hero Wars 2" title
• The company beats its own low guidance estimates (which I think the most probable)
• Company launches more titles which enter “Top ranks” in AppStore/Google Play store.
• Aggressive Tencent/Other major Gaming Holdings buying.

At this exact moment, the fair valuation of the company will move to $3-4 billion dollar. (+100% upside).
At this right moment of the time as the price is near $10 there is literally no risk in a pre-merger state, as SPAC can’t go below $10 price by its concept.
Disclosure: At the moment of writing this article I do have a position in $KSMT, that is not more than 10% of my entire portfolio. I do not plan to sell at any nearest time in future. Stocks are risk assets and this is not investment advice.

From the guys who brought you The Greatest Short Burn of the Century..

Oh man, oh man, oh man.
Not again.
-Drizzy

Preface:
Please believe me when I say I really wanted to take this month off and enjoy the snow in Tahoe. But as I was driving, something caught my eye...
Make no mistake. This stock is not going to be nearly as volatile or profitable as GME. In fact, this might be so boring that most of you will ignore me yet again. And that’s exactly why I like it. I’ll do my best to make this engaging, but the fact is, this is going to be a slow grind. Both this DD and the stock.
Also, as a bonus, Reddit is currently public enemy #1 in the eyes of the media. Why don’t we do a quick heel-turn and join their side? Are they gonna hate us for buying boring value stocks? They won’t know what hit them. That will be a fun show to watch.
Anyway… let’s take a look under the hood. As always, not financial advice. Just education. NOTHING IS A RECOMMENDATION. We are just sharing knowledge here. Ok SEC?
Intro:
Ford (NYSE: $F -- NOT NASDAQ:$FORD), is another depressed deep value multiple expansion arbitrage play. No short squeeze this time. The GME asymmetry may not be seen again for 10 years.
It might seem boring and unsexy on the surface, but Ford is a fantastic company in the midst of one of the best turnarounds in American history. And with a little help from our friend Mr. Options (or as Buffett called, Financial Weapons of Mass Destruction) we can turn a boring old Ford into a lightning fast Ferrari using the quadruple income option wheel strategy. Don’t try this at home. If you don’t know what CSPs, CCs, or vega are, stick to shares. Those should work just fine.
Let’s break this down into 5 parts: electrification story and leadership, multiples expansion, technical analysis, options, and the trade.
By the way, in 2019, the Ford F-Series was second only to the Apple iPhone, which raked in $55 billion, in terms of total revenue generated. The F-Series generated more revenue than the NFL, MLB, NBA, and the NHL combined, which added up to $40 billion. Just something to think about.

The wheels on the bus go round and round, round and round...

Electrification story and leadership:
Let’s jump into history for a second. Ford had a meteoric rise from 1997 - 1999 from $15 to around $32 at the peak. This was due to $F reporting massive earnings increases each quarter:

• Dec 1996 - 1997 Ford F-150 - Truck of the Year
  
• Jan 1997 - Ford profits up 82 percent
  
• Oct 1997 - Ford profits up 64 percent
  
• Jan 1998 - Ford profits up 56 percent
  

They were just feasting and feasting. Jim Farley looks like the best person alive to revitalize Ford, capable of tripling the stock in 2-3 years. Look at the last two quarters:

• Q3-2020 - Adjusted EPS: 65 cents vs 19 cents expected, Automotive revenue: $34.71 billion vs $33.51 billion expected (due to pent up demand)
  
• Q2-2020 - Adjusted EPS: A loss of 35 cents per share versus a loss of $1.17 per share expected, Automotive revenue: $16.6 billion versus $15.95 billion expected.
  

Here are excerpts from the Q3 earnings and some other notable highlights:

Farley: Now that plan, which was introduced to the Ford team and many stakeholders on October 1, is very straightforward. Among other things, No. 1, we will compete like a challenger, earning each customer with great products but as well services with rewarding ownership experiences. Number two, we're moving with urgency to turn around our automotive operations, improve our quality, reduce our cost and accelerate the restructuring of underperforming businesses.
And third, we're going to grow again but in the right areas, allocating more capital, more resources, more talent to our very strongest businesses and vehicle franchises; incubating, scaling and integrating new businesses, some of them enabled by new technology like Argo's world-class self-driving system; and expanding our leading commercial vehicle business with great margins but now with the suite of software services that drive loyalty and generate reoccurring annuity-like revenue streams; and being a leader in electric vehicle revolution around the world where we have strength and scale. So now speaking about EVs. To start with, we're developing all-new electric versions of the F-150 and the Transit, the two most important, highest-volume commercial vehicles in our industry. These leading vehicles really drive the commercial vehicle business at Ford, and we're electrifying them.

Quick sidebar here from my buddy M: "Whereas traditional manufact / consumer / industrials are valued on an EBITDA multiple, SAAS has historically been valued on a revenue multiple, which translates to flat out higher valuations. EVs themselves are not necessarily a higher margin product that justifies a higher multiple (at least not that I've seen), but tech services / subscriptions are the real money makers in this game. Hint Hint companies like Apple throwing everything they have at trying to integrate services and subscriptions over the last 5 years"
This further justifies the expansion multiples we expect will catch up to leading EV automakers (see below).

We own work at Ford. And these electric vehicles will be true work vehicles, extremely capable and with unique digital services and over-the-air capabilities to improve the productivity and uptime of our important commercial customers. The electric Transit, by the way, will be revealed next month, and you heard about it here first, for all of our global markets. We believe the addressable market for a fully electric commercial van and pickup, the two largest addressable profit pools in commercial, are going to be massive.
Now you're going to see our strategy of electrifying our leading commercial vehicles and our iconic high-volume products expand very quickly at Ford.
When you look at our results, they reflect the benefit of our decision two years ago to allocate capital to our strongest franchise, namely: pickups, a whole range of utilities across the world, commercial vehicles and iconic passenger vehicles. Additionally, we saw higher-than-expected demand for our new vehicles in the quarter.
Together, these factors, plus the strongest performance from Ford Credit in 15 years, led to a total company adjusted EBIT margin of 9.7%. That's 490 basis points higher than last year.
As an outcome of all this, we generated $6.3 billion in adjusted free cash flow.
The strong cash flow in the quarter gave us the confidence and the ability to make a second payment on our corporate revolver, which we did on September 24. So now we have fully repaid the entire $15 billion facility, and we ended the third quarter with a strong balance sheet, including nearly $30 billion in cash and more than $45 billion of liquidity, which provides us with the vital financial flexibility we need.

Check out this credit downgrade weeks before Ford paid off their revolving credit facility. Smells like GME?
Alright. What about Q4-2020 and beyond? Ford is expected to post a loss. TA is signaling a beat (see the TA section). Ford is spending this money in order further restructure and deliver on the following items in their pipeline:
Bronco:

• Within the first month of open reservations, the Bronco had received an estimated 230,000 reservations. 230,000 reservations is an incredibly impressive figure, especially when put into the context of Ford’s total vehicle sales. 230,000 sales would represent 4% of Ford’s total sales.
  
• Current estimates place over 20% of reservation holders as first-time Ford buyers.
  
• The most expensive trim, the limited ‘First Edition’, has already sold out.
  

Mach-E vs Tesla Model Y. Just the fact that there is debate between the better car is bullish for Ford.

• Source 1
  
• Source 2
  
• Source 3
  

The upcoming 2021 F-150 has positive consumer reviews as well:

• The 2021 Ford F-150 Is So Stuffed With New Tech & Gadgets That Even Tesla Owners Are Impressed!
  
• DeMuro - The 2021 Ford F-150 Is Totally New and Really Impressive
  
• Some other nice features: Fold down the shifter, lay seats down completely flat, speakers in headrest, tailgate worksurface (pen/pencil holders, rulers) C clamp, 120V outlet, bottle opener, light), sensing running board, tailgate step and railing, and more. Watch the video.
  

Ford Raptor launch (just happened today, customers are excited. Look at the comments on YouTube and IG)
Further potential tailwinds:

• Ford partnering with Rivian in a $500M deal. Product yet to be released.
  
• Google partnership that caused the intraday spike on 2/2.
  
• Ford is rumored to secure the USPS contract since deal talks are falling through with WKHS.
  

The Postal Service told Trucks.com that it expects to reach a contract with one or more of the teams bidding for the business in the federal government’s second fiscal quarter of 2021. That works out to the first quarter of next year.

• There is a historical inverse relationship between gas prices and car sizing. Tell me if I'm reaching here. But as America continues to head towards electrification and energy independence under Biden, larger gas cars will be more in demand. Furthermore, the aftershock of COVID will continue to propagate the dedensification of cities. Less commuter vehicles, and more travel vehicles. And look who is conveniently positioned to take advantage of all of this?
  
• Dr. Anning Chen is also a killer CEO of Ford China. This is largely intangibles (which Wall Street cannot model), but watch his interviews here and here.
  
• Dr. Chen used the COVID shutdown to improve the operational efficiency of the company. It has not shown on the bottom line thus far, but it will later.
  
• CTO Dr. Ken Washington bio. Ex Lockheed.
  
• Kennard on the board.. PE guy, on the AT&T board and former FCC chairman.
  
• Vojvodich. Ex CRM and ADHZ.
  
• Regarding the above leadership and BOD members, experienced executives are a better fit for running the day-to-day than any other. Add a sprinkle of savvy techfin folk and you have a recipe for a elite transition.
  

English please? Ford is a strong company. Farley is delivering on his promises and can lead the company towards an operationally efficient turnaround towards electrification. Combine this with a loyal customer base rivaled only by AAPL, and you get another special opportunity. This is the turning point.
Multiples Expansion:
Now here lies the crux of the thesis. Amidst all the EV hype, Ford is being unfairly ignored at an extremely depressed multiple compared to the other companies in the EV space. Here are some comparisons (numbers may be slightly outdated, pulled earlier this week, more relative comparison than absolute):
$Ticker - Market Cap - TTM Revenue MM - TTM EBITDA MM - Revenue Multiple - Ebitda Multiple
TSLA - $810B - $28B - $4B - 29X - 202X
NIO - $92B - $12B - ($7B) - 7.6X - (NaN)
GM - $78B - $116B - $18B - 0.7X - 4.3X
F - $44B - $131B - $10B - 0.3X - 4.4X
That’s an eyesore. Let’s focus on just TSLA and Ford, because why not. Assuming Ford can quickly turn towards electrification (from the evidence above), these two companies are fair comparisons. No Tesla is not a software/energy company, look at their automotive % of revenue. Stop it. It has only recently dropped to 80% due to the expansion of their leasing division. Energy is still a tiny part of TSLA.
Revenue Multiple:
TSLA = 29X
F = 0.3X
EBITDA Multiple:
TSLA = 202X
F = 4.4X
Yes those numbers are correct. Look at them for 60 seconds and tell me what you see. Quick quote from my buddy M:

Just zoom out and think. TSLA is for sure ahead of the rest on their tech and charging infra right now. But in terms of just overall bottom line infrastructure and manufacturing capability; once the GMs, Fs, and VWs of the world can get the ball rolling, they are way ahead in that aspect. Much more experience in production and retail / distribution channels, as well as logistics sourcing. Plenty of battery makers, and self driving tech makers out there too right now. Small to mid scale M&A will probably be the name of the game if I had to guess.

This is why Burry is short $TSLA, but two scenarios can unfold: either the high-flying stocks drop, or Ford rises. I believe we will land somewhere in the middle, with Ford rising as we begin to enter the optimism phase in the final third of our bull market.
Shorting is a dangerous game anyway... So I’ve been hearing on the news...
TA, Options:
Exhibit A from our resident chart whisperer J (who will remain unnamed because you monkeys keep bothering him).
Larger view.
As you can see, the trendline has broken out.
Exhibit B from our resident quant T (also to rename unnamed):

Starting on 1/4 you'll find right tail distributions into any liquidation which represent large buying. Which has led up to a recent run-up and eventually left tail distributions which represent short coverings which lead into the gaps and thinner distributions where there aren't any major bids. Even with the pullback on 1/22 we see more right tail distribution after the profit taking from the recent run-up, which means someone is buying up the inventory.
This is unusual for F, where F trades within tight ranges. On 2/1 you can see a bimodal distribution which means a new player has stepped in, which we assume has additional knowledge apart from the larger players that were already in the market. The recent range between 10.70 and 11.20 indicates that the market has accepted this price range as fair value. Without additional research at first glance we can see that a large player (or players) is buying up a significant amount of inventory.
On 1/4 we find that the volume increased to 77,559,128 from the previous trading of 34,462,454 (125% increase) and 33,127,776 the day before that. Volume has been higher since.
On our first major left tail distribution (which represents short covering) since the buying on 1/4 the volume was at 113,707,973.

Exhibit C
250k shares of F 10.92; 100k F 11.04; 3.53m F 9.78; 708k F 9.78; 500k F 9.64; 377k F 9.50; 338k F 9.50; 201k F 9.75; 192k F 9.80; 150k F 9.77
These are blocks of shares bought in the past 7 days
Top OI changes:
+19610 F 02/05/21 11 C 43821 38% 13% 48%
+12904 F 02/05/21 12 C 31929 38% 11% 52%
Top OI positions:
170902 F 02/19/21 10 C +807 26% 49% 25%
112480 F 02/19/21 12 C +3207 29% 29% 41%
The percentages are bid mid ask.
Someone is bullish on Ford.
For an earnings play, daily RSI is oversold looking towards an uptick.
Options gamma is interesting to note as well.
Open interest on 2/5 $13 and $15Cs are also notable. Could be covered calls? Could be someone knows something?
Could be Jeff reading too much into the tea leaves. Not financial advice. Just showing you what I see.
The Trade: The simplest way is just to purchase shares and collect dividends as Ford may reinstate them sometime in 2021. Possibly leaps if you feel adventurous.
For the option junkies like myself, and as a tribute to the greatest company in American history, I will use the wheel(s). The GME trade was a very special and momentous occasion. Now that we have a bankroll, we’ll just quietly play theta gang as we enjoy our lives and spend time with our families and loved ones. Here’s a good summary.
This is not for amateurs. I mean, none of this is financial advice anyway, just educational.
But in a nutshell, I will: 1) Buy shares, 2) Sell CSPs 30-45 days out with 0.3 delta, 3) sell CCs with 0.3 delta (will reconsider this if Ford goes vertical) 4) Collect dividends.
The Wheel doesn’t work on everything. Here are the qualifications from the above post, let me know if this sounds familiar:

• Profitable company that has solid cash flow
  
• Bullish, or Very Bullish, analyst ratings
  
• Priced around $10 to $50 so that I can afford to take the assignment if needed and I stay away from sub-$10 stocks as a rule
  
• A stable chart without wild gyrations (especially those caused by CEO tweets!)
  
• A nice dividend is always a good thing, both that you may collect it if assigned the stock but also that dividend stocks tend to more stable and predictable.
  

Hmm...
Conclusion:
Ford is a massive, complex, multinational corporation so I’ve likely missed very many things, but I wanted to get this out before ER so I can flex again. (No market manipulation here lol. My buddy's multi-million dollar block buys didn't move the needle one iota.) There are many things I haven’t covered, and simply don’t know yet. As more facts begin to unfold, and as I spend more time with the stock, I’ll share the information here. Also, every time I post about an equity, it seems to go down. Lol... (GME). With all this in mind, this is still a very risky bet.
Nevertheless, I like what I’ve seen thus far. Ford looks like a fantastically healthy company in the midst of a turnaround towards electrification with a phenomenally depressed multiple according to the market’s appetite. It deserves a multiple trending towards TSLA’s, not a dying auto manufacturer. Jim Farley has shown early to be a great CEO and I think he can continue the transformation. We’ve begun to enter a phase of exuberance, so I’ll choose to long Ford instead of short TSLA.
As a bonus, we have the opportunity to join forces with the boomers and talking heads and bet on one of their favorite companies. Time for America to be on the same side again. We’ve been divided for too long.
I know my GME posts were lucky. I’ll stake my reputation on another bet. One call sure is lucky. What about two? In any case, investing is a marathon, not a sprint. Glad to be a part of this journey with you all. Note: I will not discuss GME in the comments, which all depends on Ryan Cohen. There is nothing further to add until Q4 earnings.
And finally, we’ve officially entered the last phase of our very long bull market. This is not necessarily a sell signal yet, as some of the greatest returns can come in this period and can last for a long time. I will do my best to look for the signal and sound the alarm. The world will be celebrating, and I will be bearish. Burry’s passive indexing bubble call in combination with Thiel’s government debt bubble call will lead us into a dark time of unprecedented proportions. Tail risk hedging won’t work as the declines will be slow at first, and then fast and violent and unrecoverable. Be careful. Listen to Ken Fisher. Thank you very much for your time.
Positions: Bullish shares, LEAPS, on-going quadruple income wheel strategy as Ford reinstates the dividend. Timeframe 12-18 months. Watch out VIGILANTLY for macro risks. Bear market is on the horizon. Drop some Fs in the chat to pay respects.
PT: $32 with a chance of $98 if we start to see exuberance in the broader market.
-JA