Question for the group:
So, on multiple calls, Michael has indicated that the reason the shares are trading "on par" close $10 a share is a "technical issue" which has to do with shareholders trading out of the stock prior to the redemption period ending at 4pm on Tuesday (technically today).
Honest Question: How does that make sense? (I have a couple of ideas, but none really stellar)
To clarify, why would the initial SPAC investors want to exit the shares prior to the deal close if they invested from the beginning with the anticipation of making more than a few cents on the dollar?
Here are a couple of possibilities (again, nothing strong):
1. Initial SPAC investors gain the benefit of receiving a share and a fractional warrant. If they sell now, they can recoup their investment (and a tiny bit of change) and essentially receive a 5-yr warrant for free with a relatively low buy-in price. Note, this doesn't seem to happen with most SPACs but lets pretend that this is different.
2. Maybe the shares that are being traded are really from insiders who don't want to have to much ownership or looking to diversify (although I would have imagined they would have been under a lockup, but let's pretend they weren't).
So far I have heard Michael, on Thursday last week at a small cap conference, say definitively that the stock will be up 50% by end of this week.
On Friday, Michael was on the Deep Dive and said it would be up 60% by end of this week.
On Monday, on Seeking Alpha's Cannabis podcast he said it would be up 70% by end of this week.
What would cause a shareholder to wait till after the redemption period (i.e., today) to buy the shares rather than earlier? What will cause it to rise post tuesday by 50 - 70%?
These really are genuine questions, so would appreciate any real answers for those of you who are following this.