MoneyLion (ML), formerly known as FUSE is a fintech banking company. This stock has gotten a lot of attention running up to merge, through ticker change, and redemption. This attention is due to the De-SPAC frenzy that saw tickers like OPAD, IRNT, SPIR, and TMC run up well above fundamental pricing. If you’re not familiar with the De-SPAC frenzy or don’t really know why these tickers ran up like they did I will explain it here in short. If you are familiar skip this section.
De-SPACs Explained
Acquisition companies like $FUSE bring a company like $ML public. The outstanding shares are locked up by early investors. These investors are known as PIPE investors or these early investors might be the sponsor, or employees of the acquired company. When ML or OPAD go public with their SPAC partner the ticker symbol changes from the SPAC to the new public company (ex. FUSE->ML). At this point early investors are given the choice to redeem their shares for the net asset value of the SPAC (usually $10). A high redemption count can significantly reduce the float of shares available for the public to trade.
A gamma squeeze occurs when market makers hedge your OTM calls by buying shares. The greater the gamma and delta on those calls the greater the hedge, the more shares bought. Gamma increases as expiration approaches; thus, the hedging buy volume increases closer to expiration. Generally, this hedging process has little bearing on the stock price but in cases where the float is very small this can significantly move the price of the stock. This is the important part.
In all instance the examples I laid out (OPAD, TMC, IRNT, SPIR) the float was miniscule, think like 3M-10M. Wildly large buy volume on ATM, ITM, and OTM calls sent these fuckers flying. In IRNT’s case high short interest, general bullishness on the underlying, and WSB pumping sent it even higher.
MoneyLion
MoneyLion presents an IRNT style setup for you. This bitch has a low float and incredibly high short interest. The float was revealed to be 9M after redemptions. Leading up to the merger short interest was as high as 11% of the outstanding shares. This short interest fell off a little bit (figure 1) right up to the merge and that short covering was likely why we saw a little bump in stock price at the same time (figure 2). Now look at that price action. Hoe Lee Fuk. look at the fuckin gaper mang. Look at my positions (figure 4). I am damn near BTFO. Do you know why I’m staying in this bitch? Because I believe. I believe I am not wrong, just early.
Why I’m Still in AND ADDING
The combined open interest on calls and the high short interest at rock bottom pricing got this bitch primed. We know that all the shorts didn’t cover after merge because I have the chart right there (figure 1). In fact, looking at the price action and volume it would be reasonable to assume that they kept shorting and short interest is substantially higher. Some claim that there are no more shares available to borrow (figure 3). But let’s use the knowns. The float is 9m, the SI is between 3.5 and 4M. That makes the new float ~5M.
Now, look at the options chain. Look at October, look at November, look at January. Do you see the fatass OI on those calls? I do. The stock has nearly bottomed out here. Once we clear those milestones, force some hedging, force some scumbag shorts to cover, this bitch is gonna rip.
If it doesn’t rip I’ll probably keep my shares tbh. I look at this company as the secondary to SOFI with an incredibly diverse set of services that will appeal to a broader audience and allow greater market capture. I’ve added to this position from 11-6 and I think the company is, at these prices, a legitimate growth play. Rosenblatt just initiated coverage on ML and says this bitch is a buy at 12. Considering that the executive director of Moneylion and three separate funds just purchased a total of 67.5M shares in private placement; it seems that the Executive Director and several institutions believe this stock is a buy at these prices.
This article was written by u/bbbbbbbdbbbbbbbb.
