BRCC / SBEA / Black Rifle Coffee despac

Redemption deadline is 1 Feb 5pm ET so assuming settlement mechanics of T+2, the NAV floor should start to fall away today and this could see some downward movement.

This could follow the trend of recent despacs and negative sentiment around speculative growth names with its negative/marginal profitability for 2022/23.

May be a bit late to the party here so depending on opening price action you may want to just short shares or sell a credit spread and get in/out before merger vote on 3 Feb. I personally have not opened a position yet.

Investor presentation if you want to read more about the company

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Puts are very expensive.
If it comes down massively it could be an interesting setup for a long hold.
The whole millitary/weapons romantizising could resonate with a lot of people, they could have good growth prospects.

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Did some digging looks like black rifle coffee company imports most of there beans from brazil and Columbia.

Apparently Brazil has had record cold seasons and a drought problem which can impact coffee crop as far as 2023.

https://electroverse.net/brazil-breaks-47-year-old-cold-temperature-record/

https://www.nature.com/articles/d41586-021-03625-w

Columbia has also failed to deliver on coffee beans as well.

With bad crop yields the price of coffee beans will rise leading to a higher cost to import. Wondering if this would impact earnings for the company or if they could just raise prices to compensate would love some input from anybody familiar with agriculture.

Just checked the put pricing and iv is insane a longer put wouldn’t be worth buying maybe selling calls would be a better.

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I was just thinking about this company while walking my dog last night and was wondering if their stock ever moved.

A few of us caught the initial news back in November pre-market and played a run-up that popped right at open, then the stock went flat and never did anything since.

I agree options already look over-priced, and with 2.5 between strikes you would really have to play the 10p.

I think a better strategy like someone else mentioned was to let it bottom out, then possibly go long. It seems to have a strong following, but I don’t know if that translates into sales / growth.

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for what it is worth - I would hear their commercials on all the time, but recently not a peep out of them not sure if there marketing strategy changed at all

snippet of flows over 1K for SBEA today

Gonna go for a gamble on the 10p at 2.00

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This reminds me of Core Scientific (XPDI) when it went down sub 9 on floor unlock and back to 10 next few days before going mid 5’s. I wouldn’t pay more than 0.75 for those 7.5’s closest exp. Even those are too expensive. This is my third round trip in them, was in and out prior to their floor unlock.

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Something to look out for is Starbuck’s Q4 earnings call and guidance for 2022.

Black Rifle is supposed to be valued at $1.7B with this merger which puts them at a P/S of 7.4 for their estimated 2021 revenue, well above what Starbucks ever did in the past 5 years. If they hit their 2022 targets, they will be at 5.46 which is on the higher end of what Starbucks has traded at.

I’m not sure if Black Rifle is still ok with the Trump crowd, but given this is an election year, I could totally see them hitting their forecast. Also given what we’ve seen on DWAC, valuations may not matter. I echo the sentiment here that puts are overpriced and potentially dangerous.

That being said I did put in a bid for some CCS at 7.5/5, but I don’t expect it to be filled.

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I took the 7.5 puts at 0.75 for an overnight trade. Otherwise it’s a solid company and Ken Griffin just recently posted that he owns 5% of the company.

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Opened a small position via 18 Feb 7.5/10c credit spread which I got filled for 1.46

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https://www.businesswire.com/news/home/20220203005954/en/SilverBox-Engaged-Merger-Corp-I-Announces-Stockholder-Approval-Extension-of-Deadline-to-Withdraw-Redemption-Requests-and-Planned-Listing-on-NYSE-in-Connection-with-its-Proposed-Business-Combination-with-Black-Rifle-Coffee-Company

This is interesting… Merger approved with transaction expected to close on 9 Feb. However, they have extended the deadline to allow SPAC holders to withdraw their redemption requests to 5pm ET on 8 Feb

Am still holding my call credit spreads

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Shouldn’t this have gapped right back up to $10? It’s $9.63 in pre market rn

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I think the news above is ‘bearish’ in the sense that redemptions are expected to be low. but let’s wait for the final redemption numbers which should be out on 9 Feb

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I’d be very careful with trying to play puts on this, I think playing lotto calls on the $12.5 will be a better play.
With the current rally of TRUMP stocks like DWAC and CFVI you might see a sympathy pump with SBEA. Given that’s calls are extremely cheap and the fact that it hasn’t dropped yet at all after the floor was removed (lowest was $9.10) i wouldn’t expect it to fall unless theirs massive drops in SPY. The stock rallied about 16% on FEB 3rd and i expect it to rally again when it changes tickers given the current rumble and trump social sentiment. Photos like the ones i posted above may circulate and you’ll start seeing people pump it. If you really wanna play some puts i’d suggest putting like 15-20% on the $12.5 C as they are very cheap and if your plan doesn’t workout you’ll make so money back. Black riffle coffee has very loyal customers and is expanding heavily. Here’s some pictures from their investor presentation it’s not bullshit imaginary shit like other spacs. With the current trump enviroment i’d say don’t play any puts it would be very risk especially with the high premium. Check out their presentation https://cdn.shopify.com/s/files/1/0678/8333/files/BRCC_-_January_Analyst_Day_Presentation_1.18.22.pdf?v=1643235406

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I think I agree. I can see this run on sentiment. Some notes:

  • Strong social media following.
  • “Familiar” business – they’re a coffee company.
  • They’re owned by former members of the armed forces of the United States.
  • Gross profit margins of ~40%.
  • Revenue and profit growth of ~40%.
  • Negative EBITDA in 2021 and 2022, but expect to be positive in 2023. However, they were positive in 2019 and 2020.

Compare this with something like ESSC where it’s just a SPAC with a sketchy Chinese company. My understanding is that a key ingredient that helped stocks like GME and AMC gain sentiment was that they’re familiar and relatable businesses.

Some relevant slides from the presentation:

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With everything pumping this might have a large pop tomorrow like back in the SPAC ERA, so if your looking to play lotto calls this is the probably the time to get in imo

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Glad I sat this one out, props to Kevin for the additional DD. There may be more room on the upside after this merges, so going long here may be a decent option.

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https://www.bizjournals.com/sanantonio/news/2022/02/09/black-rifle-coffee-to-celebrate.html
CEO Evan Hafer will ring the bell tomorrow, might see a big pump and then a dump imo.

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completely missed the pump despite my own comment above saying ‘o yea i can see this run’ lmao. Hope to get in on the dump side.

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Definitely think it will dump hard after the pump, Hoping it runs to $15. Will try to ride the dump as well.

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