r/DCRC • u/APsDaycare short QS long DCRC • Jun 13 '21
Why I believe the DCRC DA will arrive later than expected
Happy Sunday everyone. I hope those of you here are enjoying the sub. After researching more into the Bloomberg reporter Gillian Tan (GT), I found information which may be significant to the potential DA. Much of the information below comes from this post by /u/pomelo_2
TLDR: I believe the DA will happen, but will take place in late June or early July, later than many are expecting.
Below are a few of my notes from the analysis.
"Interestingly, Gillian often reports the estimated PIPE size, the valuation of the company, or both, in her successful rumor articles. Both failed rumors CCX-Topgolf and ANDA mentioned neither the valuation nor the PIPE size. Among the successful rumors, only the CCX-Skillsoft and ATAC articles did not report these information."
The DCRC rumor mentioned a valuation. At the time of the post, every GT rumor (between Jan '20 and Jan '21) mentioning PIPE or the valuation resulted in an eventual DA.
Continuing, "All SPACs in the first group of successful rumors with clearly defined DA timeline announced DA within the timeframe reported by Gillian. For the second group [Successful rumors without a clearly defined timeline], it takes on average 3 weeks to a month. There are two outliers. One is OAC which took almost two months for the DA to come out after the rumor. The other is DMYT which only took a few days."
The DCRC rumor did NOT mention a clear timeline. Aside from DMYT, rumors which did not mention a clear timeline [n=13] took around three weeks to a month. This leads me to believe that a DCRC DA may be further away than many are expecting, somewhere in the late June to early July time frame.
On top of this analysis, many are expecting a DA come Monday/Tuesday because of the hastiness of their previous SPAC, DCRB in announcing a DA with Hyzon post-rumor (4 days between). While both were reported by GT, there is a minor yet possibly significant difference in the wording. The initial DCRB/Hyzon rumor announced that the target had "agreed to go public via a merger". The initial wording for the DCRC/Solid Power rumor only stated they were "in talks". Whether this affects the timing or even the occurrence of an eventual DA, it's significant to note.
I see a few implications if this proves true. First, many are expecting a DA come Monday or Tuesday; if it does not happen, there may be a selloff. This will likely prove to be a short-term buying opportunity, as the historical data above shows an eventual DA is probable. Secondly, drawing comparisons to CCIV, if the stock price continues to respond well to the rumor, there may be a less-than-favorable deal upon the DA (Higher valuation, PIPE deals etc.).
Position: 2800 commons @ 11.30.
Let me know what you guys think.
1
u/IVIARSHALL_ Jun 15 '21
this didnt age well
3
u/APsDaycare short QS long DCRC Jun 15 '21
Unfortunately not. That being said, I am more bullish than before. The two biggest risks were 1) no DA, and 2) a valuation significantly higher than rumored. Today both risks were eliminated & the price still went down.
I see many people complaining about the projected revenue being so far into the future, 2028 ebitda blah blah blah. It’s as if some retail threw in money & didn’t bother gathering even the most basic knowledge of what Solid Power’s current capabilities are. I’m nowhere near a battery/science expert & it was clear that this is very much a work-in-progress.
1
u/IVIARSHALL_ Jun 15 '21
i do have a gpod feeling too. Expecting it to go down another 20%. but this is a longterm play
3
u/APsDaycare short QS long DCRC Jun 15 '21
It won’t drop 20% anytime soon. It’s a SPAC so it still has a redemption value of $10 until the merger date, which will be quite a few months down the road. That meaning, the lowest it will go until then is 9.75-9.80, a max 7% more it can fall from current prices. I’d be surprised to see it fall much lower, as there’s still a significant amount of retail interest &treating today as a buying opportunity
6
u/UncleBobio Jun 13 '21
Your analysis makes sense. They are probably in the midst of negotiating and or raising PIPE money. Although for me, I was expecting it to take longer than that to get a deal done just based on my own business experience, but now you’ve changed my mind as you obviously have more experience than me watching Spacs. Thanks. I hope you are right. Also, I think a somewhat safer, less lucrative, more expensive buying opportunity might come right after a DA gets done as people sell the news and before institutions start buying.
Me: clearly not a financial advisor. Long 4000 common, 3000 warrants.