I think it is actually nice to have people with a different viewpoint on the stock. There are hundreds of biotech companies like RNN so no one should assume anything is a given. It is likely that at least 2 of these drugs will fail, but if just one of them is successful then it will go higher.
I would say that the downside here is pretty minimal, so the risk-reward is great at these levels, I just feel bad for anyone that bought above a dollar over the last few years.
I've been following RNN for several years and honestly have no idea what's going to happen. Everything sounds great but every Biotech says that's. This is a decent spec with huge upside, low probability, but of course the downside of your investment going to 0.
The real question is what would the price be for a buyout? The stock has been stuck in a trading range 28-34 for quite a while now, but I think most stockholders would be upset with anything below 40.
I think any buyout offer will likely wait until they see a turnaround in the SSS or see how the 365 stores are doing. Maybe by year end if we are lucky.
Sentiment: Strong Buy
Do we know how much of it they own?
It seems like a nice restaurant, and it would of course go great inside of their new 365 stores. Not sure how well 10+ dollar sandwiches will go in other markets but I think it is definitely within their customers wheelhouse.
Sentiment: Strong Buy
This drop helps limit expectations a bit. They have likely bought back a ton of stock over the last quarter so I definitely expect an EPS beat. SSS is really the issue, but they will be turning back to a premier growth company with the 360 chain. This company should make new all time highs over the next two years.
Sentiment: Strong Buy
This story was already proven to be fake and the lawyer who brought the incident to a judge is now not talking to the media because he knows he messed up and Whole Foods is suing him and the preacher.
A member of the LGBTQ community will NOT use that word and absolutely will not write it on a cake at their work place. The preacher is so dumb to think Whole Foods was the place to go for this scam. They are the most inclusive grocery store chain.
Also it all can be wrapped up by seeing that "Love Wins' was written in dark blue and traced over with light blue to match the F-G that was written. There is not true about this story and you are a fool to think this is a good short at a low valuation and near its 52-week low. The risk is 2 dollars down and 30 up.
Sentiment: Strong Buy
This was completely expected which means it was priced into the stock fully. The only movement you would have seen was the stock losing 100 dollars if it failed.
This is what happens when rumors pop up, and then nothing happens. This will continue to drop until any real news or rumors pop up about a solid restructuring plan. JF likely isn't buying anything right now, and in the meantime the shorts are loading back up to push it below 2 again.
I agree with many of the things you are saying and I'm wondering at what level do you think the risk-reward of bankruptcy vs recovery gives you a good entry point? I was originally attracted under 2 and bought and sold for a quick 30% profit, which turned out to be a mistake, but at what levels would you buy going forward?
I was thinking in the 2-2.5 might be a good risk-reward level.
I agree with appleshort, the fact that every oil company is cutting cap-ex is a bad sign for Seadrill. First off cap-ex cuts can take 12-24 months to be seen in supply reductions, but they immediately impact a company like seadrill who loses potential renewals and new contracts. There's a decent chance in the next few years that no one is interested in deep sea drilling anymore, it is not feasible in a 40-60 dollar oil environment.
When you hear cuts in a spending budget, what do you think is being cut? Expensive drilling contracts with companies like Seadrill.
Drastic Cap-ex numbers actually back him. Its not that people aren't drilling, just that drilling is way down.
I think the bigger issue is that deep water drilling is the expensive drilling that no one does when oil is cheap. I think he may have a good point.
My point is, this stock isn't worth 10 times where it is now because of their debt. It used to be worth 10 times what it is now, but that was a different economic climate.
In a world where many think oil will never see above 60-80 again, where even the largest oil companies are cutting dividends, where some of the largest countries in the world are facing huge budgetary issues(Brazil, Venezuela, Russia, Iran, Saudi Arabia) related to oil you just can't assume everything will go back to how it is. This was a simple short squeeze, and shorts are likely going to pile back into this stock anytime it goes above 5. There was a pretty brutal drop from 7 back down to 5 and I would expect that to keep happening unless oil breaks out.
I'd love to start a long term position under 2.5, but there's no way I'm buying up here. Nothing in the oil market has changed and that is all that matters.
This is a real intense short squeeze. I could see some hedge funds losing their shirt over this whole sector. Imagine someone with leverage shorting this going into the week. It could bankrupt their fund.
gameplayer1 is right, no one is expecting a rally in oil, except the people who don't understand oil fundamentals. Technicals really don't play much of a role into oil trading except in terms of support. Oil will rally when oil supply drops to a reasonable level, which it hasn't yet.
This huge rally in SDRL this week is related to short covering, but make no mistake they will re-enter this stock heavily as it continues to rise. Now would be a great time to sell a little and get back in sub-3.
Undervalued by what metric? The stock is on the way to bankruptcy if they don't restructure debt or raise capital, which they will of course. Just saying if management did nothing, this stock would default on their loans. That means this stock is definitely not undervalued since the risk is always there.
The way to think about this stock is risk-reward. It was great under 2-3, but above 4 I think its still a coin flip.
I'm glad you mentioned your average is around 6 now, that 45$ buy is painful. You may be in the positive sometime in the next week but be careful. Care to explain your 100$ thesis for the stock? I think if this stock is above 30 in 5 years that would be amazing. Don't expect anything near 100 though, that sounds a little insane, no offense.
Oil doesn't have to go up for a few more years until this cap-ex crunch is sorted out. The problem is SDRL has so much debt due very soon that they currently can not afford to pay. There are ways out, but it is a very risky situation. 7-13$ would be a shock, because this is the riskiest company in the Rig space.
I think the risk-reward was great under 3, but the prospects of going bankrupt haven't changed from when the stock was sub-2 last week, so I will not be buying unless it reaches under 3 again.
I haven't really heard anyone say oil is supposed to rally this year. Demand has never been the issue, it is the supply. Many projects will be turned on as oil hits 40 or so, but that will just put a ceiling on the price of oil until more companies, or countries, go bankrupt. I would be careful if your investment thesis in SDRL is related to $50+ oil.
This is how companies with more than a coin flips chance of going bankrupt trade. SDRL has some big potential if they don't go bankrupt but you would have to have your head in the sand to not think that is a sincere possibility, even now. This is a short squeeze, but the stock will head back down until oil makes a sizeable rally. Oil companies have dropped their cap-ex significantly and many of SDRL's rigs will be idle for the next few years or even longer.
The reason why SDRL was a good investment under 2 is because the company is maybe 50-50 to go bankrupt, so if you buy 2000 dollars worth of stock, you either lose 2k or they recover and you gain 400%-1000% your investment. That's some great odds on your investment.
Just keep in mind this stock will likely trade much lower than 4 dollars in the next month unless oil rallys. Oil isn't rallying, it just is acting stable.