Long Post for Investors (redflix S3E02) Didn't
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Posted On: 04/07/2019 6:40:44 PM
Long Post for Investors (redflix S3E02)
Didn't mention why longs might like season 3
Season 3 will be information and DD
I'll likely post less now and just throw everything together in a longer post
Maybe a few surprises for the 20 people that followed the first two seasons
I think some longs want to take advantage of the fire sale so I won't go into that this weekend. Start with something else.
VERB Stock Warrants
I mentioned, it is leverage. The opportunity to profit if the share price rises above the exercise price of $3.44 plus your warrant purchase price.
The difference between the warrant price ($3.443) and what the price of the stock rises to, lets say $5.00 is the intrinsic value. It means the warrant, if the share price went to $5.00 is worth at least $1.557. That the lowest it's worth and likely worth higher.
Why? Because if it was priced lower, everyone could just buy them, exercise and they have instant profit.
Time also plays an element into what they are worth. Warrants that expire in 5 years like VERB's are worth more than say warrants that had 6 months left if they both were underwater.
Risk is an important factor. If the share price does not reach the exercise price within the window plus what you paid, you lose what you paid. If you bought the warrant for .60, you lose that. Now if you actually bought stock instead of warrants, you didn't lose anything if the share price stayed the same for five years
There are other factors that influence warrants like interest rates. If money was free to borrow, you wouldn't really need warrants. Just buy the stock with borrowed money. But unfortunately it's not free to borrow money.
So far so good? Now let's say you wanted to buy 1000 shares or warrants. What should you do? Let's say you could buy VERB at $3 or warrants at $.60 just to pick some numbers.
To buy the shares you need $3K. To buy the warrants you need $600. Only 20%, using these numbers. If you plan to hold for 5 years, only 20% of your money is tied up
Keep in mind, all that is tied up is your $.60 or whatever price you bought them. So warrants seem like a better deal?
It depends. There is risk as I mentioned above and you are paying a premium in the end. Instead of buying stock at $3 today, your shares, when all said and done if you exercise will be about $4 invested on your end.(.60 + $3.44)
If the stock goes up to 6, you doubled your money buying shares but only a 50% gain with the warrants assuming you were selling at that point.
Now some might be thinking, as soon as VERB goes above $3.44 the market will be flooded with exercised warrants.
No for a few reasons.
Remember, the warrants are leverage. Opportunity to buy way in the future at a set price. They likely will appeal to long-term holders
Also, the institution that received them are long-term holder from what we heard
As I've said many times. Everyone should do their own DD and not get if off a message board. Take what I shared and start googling warrants if you are interested. Do you own research and base your facts on that.
Also look up other companies that have recently offered them. Know what you are buying before you buy.
Didn't mention why longs might like season 3
Season 3 will be information and DD
I'll likely post less now and just throw everything together in a longer post
Maybe a few surprises for the 20 people that followed the first two seasons
I think some longs want to take advantage of the fire sale so I won't go into that this weekend. Start with something else.
VERB Stock Warrants
I mentioned, it is leverage. The opportunity to profit if the share price rises above the exercise price of $3.44 plus your warrant purchase price.
The difference between the warrant price ($3.443) and what the price of the stock rises to, lets say $5.00 is the intrinsic value. It means the warrant, if the share price went to $5.00 is worth at least $1.557. That the lowest it's worth and likely worth higher.
Why? Because if it was priced lower, everyone could just buy them, exercise and they have instant profit.
Time also plays an element into what they are worth. Warrants that expire in 5 years like VERB's are worth more than say warrants that had 6 months left if they both were underwater.
Risk is an important factor. If the share price does not reach the exercise price within the window plus what you paid, you lose what you paid. If you bought the warrant for .60, you lose that. Now if you actually bought stock instead of warrants, you didn't lose anything if the share price stayed the same for five years
There are other factors that influence warrants like interest rates. If money was free to borrow, you wouldn't really need warrants. Just buy the stock with borrowed money. But unfortunately it's not free to borrow money.
So far so good? Now let's say you wanted to buy 1000 shares or warrants. What should you do? Let's say you could buy VERB at $3 or warrants at $.60 just to pick some numbers.
To buy the shares you need $3K. To buy the warrants you need $600. Only 20%, using these numbers. If you plan to hold for 5 years, only 20% of your money is tied up
Keep in mind, all that is tied up is your $.60 or whatever price you bought them. So warrants seem like a better deal?
It depends. There is risk as I mentioned above and you are paying a premium in the end. Instead of buying stock at $3 today, your shares, when all said and done if you exercise will be about $4 invested on your end.(.60 + $3.44)
If the stock goes up to 6, you doubled your money buying shares but only a 50% gain with the warrants assuming you were selling at that point.
Now some might be thinking, as soon as VERB goes above $3.44 the market will be flooded with exercised warrants.
No for a few reasons.
Remember, the warrants are leverage. Opportunity to buy way in the future at a set price. They likely will appeal to long-term holders
Also, the institution that received them are long-term holder from what we heard
As I've said many times. Everyone should do their own DD and not get if off a message board. Take what I shared and start googling warrants if you are interested. Do you own research and base your facts on that.
Also look up other companies that have recently offered them. Know what you are buying before you buy.
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