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The analogy I'd draw is BELL took off in a 20mph breeze, LUCY bounced down the runway in the blast of choppy markets - but still got airbourne. Today's drop in TEK to 32p is very tempting to do a top up to be fair. Do I compromise on my portfolio balancing and instead be greedy when others are fearful?
Same happened with Bell. Just can’t get my head round this at all.
Yeap, correct Agri. Needs a bit of time to settle to see what has been taken up. Of course the warrants will bring in more money so that means we won't need to fund via placings. Everything is moving forward business and NAV wise. Markets in London are awful when it comes to tech. Watch DARK get snapped up cheap. Look at 2024/35 revenue in a few years and you'll see how cheap it has been given away. Awful market for a lot of PLC's especially Tech start ups. Then you get the random overvalued ones I have no idea how they maintain there lofty market caps. London leaves me lost for explanation a lot.
I'd not thought about it this way until just now but are investors taking into account the value of warrants? Warrants are options that give you the right (but not the obligation) to buy a share at a future fixed price. $7.50 in LUCY's case.
So wasn't yesterday's drop of Lucy actually an increase overall?
If you consider someone paid $7.50 for 1 ordinary share and 2 warrants. At the close of yesterday the ordinary was $5.89 and the warrants were $0.90 each. That's $7.69 total - a $0.19 increase.
Wasn't the $7.50 start price always going to drop because people rationalised I can sell at $7.50 what has only cost me $7.50 less the value of these 2 warrants?
Wasn't it always going to drop if you think about the logic from the point of view of that person holding those LUCY shares and warrants?
What an anticlimax!
As ever, i don't really care so much about the daily moves in the stock price but the underlying business. It has been growing very quickly over the past year. Almost 400% increase in revenue. I would be very interested in seeing some analyst coverage for Lucy though.
Interesting to note that LUCYW (Warrants to buy LUCY @ $7.50 before 08/2027) shot up today from $0.60 to $0.93 at the close. In other words there's clear interest in locking in an option for an effective $8.43 share price.
Bit of a no brainer you might say, and it's a pity us loyal TEK holders weren't offered any warrants, and these were given only to participants - newcomers? - in the small proportion of LUCY floated today.
Lucy's cash:
+$6.2m raised net of fees today ($6.62m gross)
Future funds through warrants = +$13.24m gross (& net?) of future funding
Future funds through Convertibles = +$1.25m (via a reduction of liability)
Dilution: I was going through what a fully diluted future looked like for TEK:
6,060,187 = Total Lucy Shares 14th August 2022
4,963,293 = Tek's "share" of the above.
1,096,894 = non-TEK holders of TEK 14th August 2022 (Crowdfund people & Directors exercised options?)
2,332,500 = Options granted to Management (not yet exercised)
235,562 = Convertibles (Lucy debts that could be converted to shares, not yet exercised)
882,353 = IPO shares issued 15th Aug 2022
1,764,706 = Warrants issued 15th Aug 2022 (not yet exercised)
TOTAL = 11,275,308 shares
TEK's share if fully diluted (all of the above) does occur = 44% (4,963,293 shares of 11,275,308)
Remember however that will be 44% of a much bigger cake and the assets today have swelled from an approximate $2.5m cash raised by TEK May 2022 to $8.7m and with warrants, convertibles etc above the Net Tangible Assets would be about $21.5m. (This would enhance TEK's "fair value" to $50m+ from the current $27m)
The immediate job now, whether we have $8.7m cash or more, is to grow sales by 16 fold. Assuming margins remain static we need to see a turnover of 16x which is $15.3m annualised to generate a $3.8m gross margin which would get us approximately to break even. That's just 0.05% of the eyewear total addressable market. (of $28.3bn in 2021). I think we can easily get there with the momentum and more still.
As Gandalf said to the fellowship in the Two Towers "One stage of your journey is over, another begins" so it is here. Despite a disappointing opening day (from a LUCY share price point of view), the important point to take out of today is that the cash is now in LUCY's bank, and the journey continues. Just as BELL blossomed now it's Lucy's turn to flourish too.
I'm amazed anyone buys the Investors Chronicle any more. In my experience from the deep & distant past, its hits were about as common as its misses.
I'm with you TopCatz on the 40p - 50p soon post, with news on Microsalt and Guident due and then it's £1+ a share moving forward. What we do need more of though if effective editorial articles about TEK in publications such as the Sunday Times, Telegraph, Financial Times, Daily Mail, Wall Street Journal and the trade press etc. It's time more investors heard and read about TEK. i.e. we need more exposure than Cliff's favourite Investors Chronicle to turbo charge the share price to where it really should be now, which is much much higher than at present. Good luck, Brighty
I wouldn't base any TEK buying decision on that if I were you. Even if Lucyd rose well above the indicative price initially, the Nasdaq is volatile currently. Many IPOs there have soared ahead at launch, only to sink below the launch price subsequently. That said, TEK still looks a good investment to me, but only really if you got in pre- the recent rise.
Eyes. You would of thought the market would know what it will open up at in the US
So theoretically, with an imperfect market and all that entails, it could be possible to follow the LUCY share price from 2:30pm and if it flies, buy a ton more TEK shares. Assume the market would see this coming though?
The spread has seemingly been sorted standing at 34/35p so at least shares can now be traded in some sort of reasonable manner. Guess it had to sort itself out first hence MMs putting the brakes on.
Will be a really interesting afternoon. Go LUCY.
Thanks DJ I had puzzled why it was 15c lower than the SEC range!
Agree on the wisdom of being conservative in choppy markets (the bigger prize is the remaining holding which should appreciate dare I say strongly), and that higher 980,000 is a great spot - certainly does indicate a strong level of interest.
I looked for signs in social media Reddit/Tiktok for a "meme" campaign but couldn't find anything.... LUCY IPO feels like something you could imagine Gen Z's and Millennials getting excited over maybe.
$7.50 rather then $7.35 Agricore...
(The 7.35 figure is $7.35million proceeds - 980,000 x $7.50)
Given this years choppy markets led by the Nasdaq the lower end of the $7.50 - $9.50 range was to be expected.
Interestingly the 980,000 shares is more then the 882,353 figure in the SEC filing - so i am guessing there is quite a bit of interest in the shares and (hopefully) there will be an oversubscription
You're missing the point TopCatz.
We are not seeing a 6.3p rise in TEK today, yet. So the market is underappreciating the increase in value - or is factoring in a risk premium to the IPO. The point is later today depending on how LUCY moves the market will know either way.
And TEK should continue to move accordingly.
GLA
I'd add the SEC filing was for a $7.50-$9.50 strike price meaning $7.35 is conservative and people reading the IPO will be aware of this.
Interesting to read what people reading about the IPO are seeing: (Would this pique your interest?)
https://www.robomarkets.com/blog/stock-market/ipo-of-innovative-eyewear-smart-glasses-for-every-day/
Good morning Agricore
The market doesn't believe LUCYD float will be a failure. The Charts are maxed out so little headroom for a meteoric rise.
IMO the rise will be factored in but over time. Besides the day has only just started. The sell on news brigade are exiting but TEK Sp firms up during afternoons for some reason.
It may well be that completion gives it another kick and TEK like to update on all companies at times. Old timers have seen it many a time.
I'd reiterate 40p as a short term target and 50p inbound. News on Microsalt and Guident due.
Good luck. A few strong weeks of buying and we might even get a Golden Cross (a very tasty chart indicator). Fingers crossed
Interesting to note that as at 9am the news that LUCY floats later today (2.30pm UK) has only lifted the price of TEK by 3.25p. The news lifts the NAV by 6.3p suggesting the market believes LUCY will be a failure. The market will know the truth of this later today and my thinking is there's a further rise in the price due later on.
The news is worth an $11.4m uplift to TEK (or £9.5m) or 6.3p/share added to NAV. This brings the $0.51 (42.1p) NAV per share to 48.4p.... so still on a 25% discount despite profits growth and achieving milestones.
Innovative Eyewear will be worth $55m at a $7.35 strike price and Lucyd Ltd owns 70% post ipo = $38.5m. In the last accounts Lucyd Ltd was worth $27.1m so 38.5-27.1 = 11.4.
**HOWEVER** If (when) Lucyd shares increase (let's suppose the price of LUCY doesn't tank as the disproportionately small rise in TEK this morning suggests) for every 10% jump ABOVE $7.35, the NAV jumps about 2.1p more. So if Lucyd jumps to $10/share post IPO for example then the total further gain to TEKkies is a further 7.5p (same as happened with BELL) ($55m/0.7 share/150m shares)
TEKkies should be holding on to their seats this week!