Update - February 9, 2021
Loral Blasts Off
There’s some great news from Loral Space & Communications (LORL) this morning.
Our vision of the 6G market is quickly coming to life.
But before we get to it…
Our stake in Monero (XMR) has come roaring back to recent highs this week. The run, of course, is thanks to Elon Musk putting crypto front and center in the investing world.
With the news that his Tesla (TSLA) has put $1.5 billion worth of cash into Bitcoin, Musk has added fuel to a raging fire.
We’re now up by about 70% on our position.
And because Musk’s news slashes away at some of the speculative nature of crypto, the gains look much more sustainable than some of the recent headline hype – e.g., GameStop (GME) – that has sent prices rising and falling.
It’s good news.
Is This Good Too?
And before we get to some more good news, I want to address two reader questions that have come in over the last week.
The first has to do with my most recent recommendation, Opendoor Technologies (OPEN).
Shortly after we released the last issue, the company announced a secondary offering of 28 million shares at $27 each – just about the price the stock was trading at when the news hit.
Readers want to know my opinion on the deal and whether I’m still bullish on the company.
To be clear, an offering like this is the exact opposite of a share buyback. Instead of increasing shareholder value by pulling shares from the market, secondary offerings dilute shareholders by creating more shares.
But that doesn’t mean it’s bad news.
It all depends on what the company does with the money.
And if you read the latest issue… you know I am quite excited about what this company is up to. It’s revolutionizing the real estate market, one city at a time.
The last part of that line is why this dilutive deal is actually good news. Opendoor can use the cash it receives from the offering – about $770 million – to expand its reach into new cities and territories.
Instead of using the cash to build out a speculative new product lineup or invest in R&D, the company will use the cash to further scale its already proven business.
Ultimately, it’s quite bullish for this young and quickly growing company.
The offering will slow the stock’s run a bit over the next two weeks or so, making this a strong buying opportunity.
After that… watch this one run.
Loral Blasts Off
The second question comes thanks to our most recent special report, “The Most Lucrative Technology in America – and How It’s About to Capture a $1 Trillion Market.”
In the simplest of terms, Loral will soon swap corporate roles with its subsidiary Telesat.
It gives us an ideal chance to invest in Telesat, a leader in the satellite space, before it officially becomes its own public company.
Almost immediately after the news hit, Loral saw a bevy of lawsuits from class-action lawyers looking to score a quick and easy buck.
This is very common.
The lawyers are looking for clients who think the deal undervalues their holdings. We see it almost every time a big merger or buyout is announced. Most often, the lawsuits fall apart because they have no merit.
In this case, we’re getting in after the merger was announced, so these suits wouldn’t affect us anyway. We already know the pricing and, by purchasing shares, implicitly agreed to the deal.
In other words, don’t sweat the suits. They mean very little to us.
The market agrees.
Shares of Loral are doing exactly what I expected. They’re surging higher… up 28% in the last week.
We’ll add the gains to a growing list of profitable plays.
Congratulations.
But don’t even think of selling.
Remember I mentioned big news from Loral?
Just this morning, Telesat announced a whopping $3 billion deal to work with Thales Alenia Space to build 300 low-Earth orbit satellites.
The company says it will now have full global, satellite-based internet service by 2024.
And just who will be using this new constellation of satellites?
It won’t be the consumer.
“This is not a consumer broadband play,” Telesat’s CEO said in this morning’s release.
The news this morning aims squarely at the mobile market.
In other words… the 6G revolution is here!
And we got in just in time.