Thanks for that. Another question for you. If Im an ATK shareholder, after the merger, my shares will be diluted on the Orb/ATK side effectively? I like all parts of the business, but does the merger mean I have less of my investment (outlined above by you) oriented toward the Orb/ATK story ( Which I believe could spike or be bought this year.) Regards-
If I get fewer OA shares than I had in ORB shares then the OA price needs to be higher to make up the loss in shares or this becomes a losing proposition at least in the short run. It is just that simple.
Do I detect a note of pessimism doc? Both stocks down a small amount at about 1% this morning but the whole market is getting smacked.
Quite true. That would be the math on the surface of it. Fidelity and Google obviously think it is a good deal. By the same token, however, investors are valuing a money losing Tesla stock with a negative PE as if there were no competitors on the horizon. Not saying SpaceX isn't worth 10B, it may be worth more. But, we just do not know as there are a lot of assumptions going forward about what the company will succeed in doing. Nonetheless, that is the nature of these highly technical companies. Orbital, at one time, was selling for 50 and not doing nearly what it is now. Also sold for 4 in the not too distant past.
Well, I am not real good at some of this, but if I offer to invest $1B in an outfit, and they give me less than 10% ownership, aren't I at least assuming a value of $10B for the enterprise?
I am not sure how one comes up with the 10 billion value for SpaceX. SpaceX can sell an investment stake for whatever the market will bear just like any other company but until and IPO comes out and analysts can comb through all the figures it seems like we only have SpaceX's interpretation of their value. Maybe investors in an IPO would push the value higher. Maybe not. We certainly can assume that SpaceX (i.e. Musk) is not launching resupply to the ISS at a loss but does that profit cover the landing platform and building of engines etc etc.
I saw in the newspaper this week that Google and Fidelity have invested $1B in SpaceX. SpaceX says that this investment causes the 2 to own just less than 10% of the business. So I guess that means that SpaceX is worth at least $10B. Yahoo shows ORB with a market cap of $1.8B. I wonder, if SpaceX came out as an IPO, what that would do to the market valuation of ORB (or the new merged company).
Agree with what you have stated here totally doc. Well put. Hopefully overwhelmed and others can gain from what you have said especially the part about one's time horizon for investing.
At this point I do not think the fundamentals support a 35 price tag for ORB. Having said that, that could easily change over the next year or so if the go forward plan is executed with little delay and NASA were to continue support ORB/ ATK on the CRS2 contract. If you believe that to be true and could afford to financially, then holding would be the right thing to do. However, we have been down this road for some time now. There is a new engine to be fit ( and by all accounts a very good one), a pad which needs to be rebuilt, a Russian issue and market confidence restored. Each of these presents a headwind.
What is driving the price of ORB ( and ATK?) seems to be more technical in nature. I was reading a bit about head and shoulder bottom patterns today and it seems as though the ORB chart is a pretty decent example of this. If one were to draw a line between the two necks, the pattern suggests that the magnitude of the potential upside can approach a value equal to where the head and the neckline meet. Low and behold that would roughly be about 6 bucks higher, or 35. I will be a seller of pieces of my position at a time. If I could afford it and had no time constraints ( I was 23, not 63). I might be a buyer here.
Sounds like a screwed up sell on the open or close market order that wasn't filled so the market makers just fixed it. I saw that recently with ATK
Not sure Congress can get that higher defense budget unless they are willing to bend on a couple things the President wants. The rapidly changing situation in the Middle East right now may alter that equation especially with the death of the leader of the house of Saud and newer, perhaps more radical, people gaining power.
Don't let go of your shares so easily, now that defense budget will probably be higher with Republicans controlling both houses. I have held the shares much shorter period of time since the announcement of the merger plan. I believe $35 will reflect fair value of the merged co. You can then decide to either take the profit or stay on. In a volatile market like we have now, keep dryn powder at hand is always a good idea. IMO
The 2600 share drop showed for a while and was verified by NYSE AH data and then one share sent it back up. Weird. Anyway, mcrf52 also thinks 35 is possible. Works for me but am not sure I will stay with the new company if I can get that price as I purchased my shares when ORB took that huge plunge a few years ago.
There was no drop of price noted in Yahoo. As the merger is going to occur by the end of the month, it should move up in price to around $35. Patience after the rocket explosion finally paid off now!