IRNT ... you glad lockup expires on 2/27?

[The_Ni]

It is time …

Six months ago, Aug 27, 2021 to be exact, IRNT completed its business combination with the SPAC LGL.

Well, its six months in a few days, and on Monday (2/27), all shares will be unlocked.

(Technically, there were some shenanigans around allowing one of the Directors to sell stock, and I think some more were issued, but it doesn’t change the general thrust of the story.)

I (and presumably everyone other than the diehard fans at https://www.reddit.com/r/irnt/) would expect the prices to face downward pressure as a result.

Unexpected self-fattening for the sacrifice

Interestingly, IRNT was up 40% at one point today, and has settled on a 27% gain to close at $5.20. Yet it spent a good chunk of the post-gamma-squeeze time in the $3-$4 band. It’s even gone up a few percentage points after hours. Cannot find an actual reason other than positive cybersecurity sentiment.

This feels like a gift asking to be shorted. (And perhaps a final rug-pull setup by the big boys before lock-up ends…)

Btw, short interest will help IRNT even less after tomorrow. SI is ~7% of (current) float, DTC is < 1 day and CTB is ~59%, so even though avg. short price is $2.87, shorts can either cover relatively quickly or just ride it out.

And neither will the option chain - no meat on the bone there for a gamma fart, even.

Wen tailspin, then?

If all goes as expected, prices should plummet early next week.

Looking to play this with 3/18 deep-ITM puts. Note that IRNT has earnings coming up on 3/16 AH. IV nearer to earnings should add a bit more to premiums, if someone wants to risk flying close to the sun.

Not planning on holding the puts through earnings, or get strikes farther out, because they could say things during the earnings that riles up the fans and prices rocket. If that does happen though, we can consider that as another shorting opportunity if there is nothing materially positive.

Thus, my plan is to get some 3/18 deep-ITM puts tomorrow, and liquidate as soon as prices start flirting with the $3 level again.

Seems suspiciously like free money though… what am I missing? Any better way to play this?

[meltedcrayon]

Good find - have you looked at how these share unlocks have impacted these types of entities before?

[nano]

I watched the LCID and TOST unlock. Price typically dropped a day or two after unlock, not same day.

[The_Ni]

Great question. Visually, there seems to be a drop around the lock-up period expiration. Let’s consider some of its illustrious peers - CLOV (Jul 5th) and SPCE (Oct 26) seem to have started dropping in anticipation, while others like LCID (Feb 14) needed a bit more time. LCID actually went up a bit immediately after.

Having said that, it is unclear if the lock-up expiration itself is causing the drop. Very few SPACs have actually had a good time in the last 12 months. They have generally fallen in price, and it is difficult to attribute how much of the fall is because more people selling outright or making more shares available for shorting thus reducing CTB, and how much is just sentiment and fundamentals.

IRNT presents an opportunity because it has been falling steadily for a while. Would not have looked at this twice had it not been for the spike in price today. We’d generally expect it to keep falling, barring material news, and this just adds weight on top to help it sink more.

[Kevin]

LCID also had its first share unlock on September 1, 2021, where the drop was immediate at market open but also immediately started recovering.

[Shawn1]

Do you think this would get hit by IV crush when the shares get unlocked? Right now it’s like 200%.

[greydoge]

@The_Ni

Cannot find an actual reason other than positive cybersecurity sentiment.

Any worries if it becomes more than sentiment? or if Russian Ukraine conflict keeps that sentiment going perhaps, for more than a month?

[The_Ni]

@Shawn1

Do you think this would get hit by IV crush when the shares get unlocked? Right now it’s like 200%

@Shawn1 to the extent that IV is a measure of uncertainty anticipated by MMs so that premium can be appropriately priced, I would expect IV to actually increase a bit as this lock-up expiry adds to the variables that can affect price. Probably not appreciably though, and 200% is already annoyingly high.

@greydoge

Any worries if it becomes more than sentiment? or if Russian Ukraine conflict keeps that sentiment going perhaps, for more than a month?

@greydoge IRNT is a startup that vaunts a specific niche, but that has struggled to convert its supposed advantage into $$$. They have about 3 weeks to get close enough to a deal to be able to report it during earnings, and that is a very short timeframe for serious customers. It is possible that they will still be able to score some deals from this crisis, but I think it’s unlikely they will do so within the timeframe we’re considering for this play. Also, it is more likely that if there is any firm or country that has not beefed up their cyber defenses yet, they will go to one of the companies listed here: Cyber security stock discussion - #2 by T_Milly

[greydoge]

@The_Ni

(And perhaps a final rug-pull setup by the big boys before lock-up ends…)

This screams to me, “price manipulation”. I don’t know why IRNT has to be so special when it comes to cybersec.

Watched few vids of IRNT employees and ex-gen Keith Alexander. Their product idea seems to be ‘untested’ approach of ‘sharing info with others’ to mitigate damage and purports to use ML based detection at network level. I’m not entirely sure if I’m sold on their technicals, but they go into detail how they used it to detect SolarWinds/SUNBURST virus (as a proof of concept? they weren’t the first to find and report) that affected (continues to affect?) US private companies and govt as late as 2020.

I also checked the IV and today’s opex had +300% while march ones are at ~200%. I don’t know what effect share unlock has on the IV tbh. Just throwing stuff out here.

[bajillion]

So is the play here that it’s going to dump into earnings?

[greydoge]

Watching this but not entering yet… spread on puts is too wide for my taste.

[Kevin]

I took a single 03/18 6p for 1.00 in my Challenger.

[macromicrodick]

posted this to TF but it’s a pretty damning assessment of the financials and future outlook:

https://whitediamondresearch.com/research/ironnet-the-doomed-cybersecurity-company-50c-price-target/

tried to dig a bit into White Diamond Research but not that much except some YouTube clips. great DD as usual!

[The_Ni]

@macromicrodick Thanks for sharing, this is a decent summary of their predicament… their entire business case seems to come down to the fact that they have Keith Alexander in their corner. They could have been a thing if they had scaled half a decade ago, but they’re just too late and too narrow in their offering at the moment.

@bajillion, I plan on dumping before earnings. Will not hold into it as this still has some meme power, and they could come up with another grandiose announcement that makes the stock rise for longer than the 2 days to opex after earnings. Sell trigger will be a sub $4 PT.

Speaking of which, glad the 3/18 6Ps filled at some point in the last few hours. Setting GTC sell order with 2x margin.

[bajillion]

I closed out the position for a quick gain. I might look to re-enter if it climbs back up towards $7 again.

[Kelv]

Thank you for this. If only I had read it sooner…would have added more to my position.
Currently holding 1200 shares shorted .

I also expect some pump on this ticker which I will ride it through.

[JellyPowered]

Are you expecting the share unlock to be on Monday pre-market, intraday, or just early next week in general? Either way, I will be looking for a reentry here if it holds above Friday’s close price.

[tittyboy]

I like this play. Things look bleak for IRNT and this pump seems like a good time to get in. I also know that when reddit blindly pumps these “short squeeze” plays a drop is imminent. Got an entry of .96 on my puts so im feeling good. Thanks for the play

[The_Ni]

I’m not sure when the shares technically unlock - depends on the brokers who are handling the 66M shares, I imagine. The fall will probably need a few days at least, though.

[SuckyMayor]

Been meaning to pop in and give a formal thanks for this write up! I took a small March position at the 6P in light of the little pump this past week. My gut tells me that the market is going to have some downward movement on Monday and IRNT may be caught in the wake. I’m thinking general market sentiment and a potential phased unlock will afford those of us who are playing this ample time to cover costs as it starts to move down.

Great follow through on this ticker @The_Ni!