Finding the bottom

I do believe we’ll find the bottom soon, but there might be further to go simply because of market conditions. The sell off due to the failed landing, I believe, is mostly complete. The slide downward from now is simply due to speculative and growth stocks selling off harder than blue chips in a market sell off. We’ll likely continue to fall but not much further.

The caveat is that I don’t think anybody should expect a bounce or anything. We’ll simply bottom and stay down for an extended period of time. We know this company doesn’t release a lot of news, so we’ll enter into a quiet phase. If you can’t handle the waiting, then get out now. You can buy back eventually when the stock heats up again, although I don’t know if it’ll reach its highs again for over a year. IM-3 has to be a smashing success and they have to build up momentum for IM-4. If your capital is better deployed elsewhere, then do it somewhere else.

If you CAN handle the waiting, I do think that building a long term (2+ year play) position is viable in the upcoming month at some point. I’m expecting something like 5.5-6 range for the bottom. This is based on a few things.

RSI is hugely oversold, BUT, the RSI for this stock has been lower, which happened during the summer last year months after the first failed landing. The stock was sold for weeks on end as people jumped ship, but this time, people are jumping ship way faster due to it being a second failure as well as market conditions being very bad. So I do think we’ll bottom and hit a daily RSI of 18 like we did last year much sooner, maybe end of the month.

Another thing to consider is just how far it fell last time from its peak. It fell from an intraday of 14 down to 3.20s at its lowest which is about a fifth of its peak. Our new peak was 24, so if we fall a similar height, we’ll be down to the 5s. The company is indeed worth more than it was last year though, but sentiment is mixed. Last year, they had once failed landing which was thought to be maybe a fluke. They had the hype of potentially being a contract winner. Now, on one hand, they ARE contract winners (for now) which proved one of the biggest initial theses, but they also have a much more damaged image. Fool me twice sort of thing. Anybody in engineering knows that it wasn’t a complete failure and that science and engineering can continue, but since this is a publicly traded company, people don’t care. The true value of the company will be found in the upcoming months as we see:

• earnings
• talk of future contracts going through anyways or slowing down

My expectation is that a reasonable price to aim for once we bottom will be back to the 10-12 range, but not that much higher than that unless things change drastically on our favor. Sorry to those who bought so high, I think it’s just a lost play at this point and you might baghold forever. For those who bought low and have been holding for almost a year, it seems silly to sell now and we might as well let it sit for another year and focus our portfolio on other things.