Masa’s Son
Non-Consensus Long/Short Technology Investor
Merlin Labs common stock is in a death spiral toward zero because preferred holders and shorts hold the upper hand. Equity raises have no limit and the preferred ranks senior to the common, so fundamental analysis does not matter. @ShawarmaCapital, a former bull, attributes the fall from $17 to $1.81 to a roughly 44M-share unlock on a thin float, a Series A Preferred conversion reset on October 15 already headed for its $5 floor, and an unwinding short squeeze. x.com x.com
Merlin is a 100x-or-bankrupt opportunity, too binary to invest in personally despite liking Merlin and Matt. Shield AI and Anduril are focused on defense right now, but it makes sense for them to go after the commercial sector eventually with proven tech, and more competitors are targeting cargo. The stock should rebound once high-beta names come back into favor. x.com
Merlin's long-term competitive moat is questionable, because companies like Anduril, Boeing or Lockheed Martin could build similar technology in-house instead of paying Merlin for it. The stock is a falling knife; a break of the downtrend would help, and landing a big new partner or contract could break the trend short term, but the long-term fundamentals remain the concern. x.com x.com
Merlin could squeeze sharply because about 72% of the float is short in a low-float de-SPAC positioned in AI and military spending, two of the decade's biggest themes. The float should stay dried up until late May or June, raising the question of whether it can reach $30 or even $50. x.com
Merlin was always highly speculative: buying a stock at 125x sales means accepting it could fall to 30x without any solid reason why it shouldn't. Its price spike came when it was being pitched like crazy on X. x.com x.com
C3is is likely to run another round of death-spiral financing once its new shares lift the market cap enough to repeat the process. Class F holders converted and sold zero-cash-exercise shares, getting four for each warrant, so the real conversion price was a fifth of what it appeared, and the company could again find a way to 10x the common share count. Per @ej23ny, the CFO said $48M on hand covers $38M of January payments, with $26M of annual cash generation. x.com x.com x.com x.com x.com … Show more
Merlin Labs' real-time short interest has hit an all-time high of 4.6M shares with the borrow rate still around 37%, building the supply setup further. Short interest has climbed steadily from 3.1M on May 21, even though PIPE holders became free to sell when the resale registration went effective April 17. x.com
Xanadu's stock was a textbook trap that has now sprung, falling about 60% premarket as insiders exit. An S-1 registered about 294M shares for resale by existing holders, which brings the company nothing and floods the float of a startup with $4.6M in annual revenue. A multi-billion-dollar valuation was unsustainable, and as a post-SPAC name its hype premium evaporated once lockups and conversions hit. Brilliant technology doesn't make a safe stock when insiders rush for the exits. x.com
Strategy is no longer just a levered bitcoin proxy but a credit engine that must dilute common equity and sell bitcoin to keep its capital structure afloat. It sold bitcoin below its average cost basis to buy back STRC preferred shares, breaking its "never sell" thesis. It also raised $653M through at-the-market common stock sales toward a $4.65B cash reserve, prioritizing preferred dividend coverage over buying bitcoin, which exposes the rising cost of its preferred stack. x.com
Merlin's finished Critical Design Review for its C-130J autonomy program with US Special Operations Command removes a big chunk of technical risk. It shows Merlin Pilot AI meets the performance, safety and airworthiness standards for one of the military's key transport aircraft, and the program moves to integration and flight tests. A $100 million-plus IDIQ ceiling and commercial runway in cargo and pilot shortages make it asymmetric, and high short interest adds explosive potential. x.com
Strategy's preferreds are now well covered, with net debt effectively zero at $64 million. Per Michael Saylor, it raised its USD Reserve to $5.10B, added $1.59B of USD cash and repurchased $136M of STRC. Reserve plus cash now almost equal its debt, or about four years of preferred dividends. After stumbling in early June, Strategy corrected course, and STRC should work back toward par, reopening issuance to buy more bitcoin, as Strive is doing with its SATA preferred. x.com x.com x.com x.com … Show more
