Mr. Mojo Hyzon, Not So Fine Cytodyn-ing & Covered Calling Cards
Helluva Hydrogen Hullabaloo
It’s that time again, Great Ones!
To send away for the free brochure? To make bubbles with our spit?
To make wildly inaccurate predictions about the stock market?
No, you Animaniacs … though, that last one wounds me a bit.
It’s time for Reader Feedback! Today is the day we dig through the Great Stuff inbox and answer your burning questions … even though I keep telling you, they make creams for that.
Anyway, if you want in on the fun next week — or if you have an investing-related question or rant you’d like to share — just drop us a line at GreatStuffToday@BanyanHill.com.
With the formalities out of the way, let’s get to our featured presentation:
Any thoughts on earnings???
— John H.
Thanks for writing in, John! I have lots of thoughts on earnings. Earnings are good. Bigger earnings are better. Earnings are what investors and companies strive for. They can help you retire…
What’s that? Oh, Hyzon Motors’ (Nasdaq: HYZN) earnings! Duh… It was right there in the subject line. Silly me.
So, Hyzon Motors makes hydrogen fuel-cell (HFC) powertrains for commercial vehicles, such as medium and heavy-duty trucks as well as city and coach buses. HFCs have been around for a very long time, but recent technology improvements have made them very, very competitive to traditional electric vehicles (EVs).
Hyzon is basically a disruptor of disruptors. Tesla disrupts traditional auto sales, Hyzon will eventually disrupt those traditional EV sales. “Eventually” is the key word here. HYZN is a ground-floor investment in the hydrogen power market.
Why HFCs? Because they solve a couple of nasty little battery problems that traditional EVs struggle with — i.e., long charge times and toxic disposal. I mean, you can’t just throw away an EV battery like you do Energizer double-A batteries.
Hyzon Motors: Pre-Revenue No More!
But you already know all this, don’t you, John? You’re a Great Stuff Picks portfolio reader, bought HYZN and are waiting for those sweet, sweet gains. I’m here to tell you, John, they’re coming.
Hyzon’s quarterly report was essentially in line with my expectations for a growth company in a disruptive EV market. The company reported a second-quarter loss of $9.4 million, or $0.10 per share, and there was no revenue. Hyzon was what Wall Street likes to call a “pre-revenue company.”
“Was” is the key word, however. CEO Craig Knight told shareholders during the post-earnings conference call that Hyzon would report its first vehicle revenues this quarter. Knight also reaffirmed Hyzon’s 2021 sales outlook, with 85 vehicles shipping by the end of the year.
Those 85 vehicles are being made in Hyzon’s manufacturing plant in the Netherlands. But, soon, U.S.-built Hyzon vehicles will begin hitting the road. Like, by the end of this year.
That’s because Hyzon’s Chicago plant is expected to come online in the fourth quarter of 2021. Additionally, the Rochester, New York, plant will start production in the second quarter of 2022.
Now, Hyzon already has global customers in Europe, Australia and a smattering of other regions. But most of y’all just want to hear about U.S. sales. I get it. The U.S. market is huuuuge. Well, never fear!
Hyzon has HFC trials currently underway with Total Transportation Services in California. Total is a leading port trucking company in Southern California, specializing in import distribution. It’s testing a Class 8 heavy-duty HFC truck for 30-days. If Total likes the truck, it’ll probably become a regular customer.
And that’s the real rub here. The U.S. market is heavily invested in diesel, and traditional EVs are leading the sentiment push to replace them — mostly due to consumer demand.
It will take a bit of time and convincing, but U.S. commercial trucking and logistics companies will eventually realize what their European and Australian counterparts already know: Hydrogen power is ultimately greener, more tolerant to extreme temperatures and all around just more powerful than traditional EVs.
As for HYZN stock’s reaction to earnings? Well, that was a good ol’ “buy the rumor, sell the news” situation. HYZN surged nearly 40% heading into earnings and then gave back about half of that in the wake of Hyzon’s report.
Right now, the company is still flying under Wall Street’s radar. But that won’t be the case for much longer. I mean, if Nikola (Nasdaq: NKLA) — which doesn’t even have vehicles on the road or products to sell — is worth $4.1 billion, investors will eventually realize that a company with actual products and revenue should be worth more.
As always, Great Ones … and John, can’t forget John … keep calm and Hyzon.
Editor’s Note: “Godfather of the EV Revolution”
As you’re about to see, a former Tesla employee just released a brand-new innovation promising to make every EV out there instantly obsolete. He created the first working Tesla battery. Now he’s about to change everything again.
And it goes beyond cars — his new technology is rolling out to power 50 million homes and businesses, setting up a new market 10X bigger than EV’s. And you can buy in right away.
Thanks for tuning in! Here’s what other greatness we found deep in that virtual Great Stuff mailbag. Remember, if you’ve not written in to us, there’s no better time than now to share your thoughts for next week’s edition of Reader Feedback.
Hit us up at GreatStuffToday@BanyanHill.com anytime!
Also, if you’re new to the Great Stuff action, welcome! Yes, we are usually this weird, and no, we don’t judge your own oddball ramblings in the inbox. So, feel free to drop by and say howdy, you hear?
CytoDone With This Stock
What are your thoughts on Cytodyn? CytoDyn board members filed a 13C. It looks like they are liquidating and hurting the stock per 13D documents…
I love your great market insight. Let me get to my point about leronlimab. It promises to rid the world of COVID, Cancer and HIV. That’s just to start. CytoDyn CEO Nader is under a legal battle with 13C splinter group who is trying to do a hostile takeover of the company. I am a management loyalist. Maybe you’d add perspective? — C.O.
Thanks for writing in! I’ve taken the liberty of merging your emails together here — all of them. You asked for my perspective, so here we go…
Biotech CytoDyn (OTC: CYDY) is not a stock I will touch, and neither should any of you right now. No offense, but this has all of the red flags I’d never want to see from a pharma company — or “innovative treatment developer” whatever.
CytoDyn implied that its leronlimab-based treatment was good against COVID-19. The company’s own clinical testing proved … that was a lie. In fact, the claims were so false and the COVID fears so high that the FDA butted in on the conversation.
The FDA even said that it usually “cannot disclose confidential information about unapproved products.” But because CytoDyn told shareholders the drug worked, the government felt the need to specifically clarify that the drug does not work for COVID-19.
And boy did the FDA clarify things, noting that neither set of trial data submitted showed any effect at all. No difference in mortality rates. No difference in hospitalization lengths. Nada.
Drugmakers shouldn’t ever “promise” anything … they have specific endpoint targets to show a drug’s efficacy, side effects, usability, etc. And in clinical trials, they hope to reach said goals. CytoDyn, if it wasn’t clear already, didn’t meet any of these endpoint targets.
And now, CytoDyn is getting the life sued out of it by shareholders.
That leaves one upshot that CYDY investors could hope for, which is the indication that leronlimab can help with HIV. This would be tremendous for CytoDyn … if there wasn’t a shareholder suit clouding the skies and making this stock toxic.
Toxic, I tell you! I’d avoid CYDY shares for the time being if I were you.
A Covered Call In The Hand Is Worth…
I think I’m in a no-win situation. Your help would be appreciated. I bought 100 shares of Moderna for $30 in March 2020. I’ve written covered calls ever since, making about $2,000. However, the last covered call I sold was for 270 Aug 20. Today the stock is WAY over $400, so it seems I have but one option. Let someone exercise it at 270. Yikes!
You can say I will make a good return on investment, but it feels like I’m giving away that extra $15K. If so, I now know why covered calls have risks I hadn’t considered fully. If you have any wisdom as to any alternative approach to dealing with this situation, please let me know. I need some consolation. — JW
A no-win situation? JW, you’ve uhh … already won?
I hate to tell you this, but you’re stuck with an 800% profit. Ain’t that a shame.
So, you want to keep your Moderna (Nasdaq: MRNA) shares. I get that — thing’s on fire, yo. Your only hope in this situation, without reaching out to Obi-Wan, is for MRNA to fall back below $270 by expiration on August 20. Or you can hope that no one exercises your sold call option. It could happen, though it’s not very likely.
If you click here, you can see a few ways to “fix” your covered call situation with MRNA, but none of these strategies will help you retain your MRNA shares.
The “repair trades” mentioned in that article would work just fine to maintain exposure to MRNA … via options. You won’t be able to keep the shares here. The big thing to note here … especially for you, JW … is that you do not sell calls on stocks you want to own!
By selling a call — no matter how far out of the money it is — there’s always a chance it will be called away from you. This is especially risky on volatile stocks like MRNA.
If you’d asked me a month ago, I would’ve bet that selling an August 400 strike call would be safe, but you could’ve had that option exercised last week once MRNA traded north of $400. And it could still close above $400 by the time August options expire.
Just last month, MRNA traded below $250. Now it’s nearly $400 — that’s ridiculous volatility. And JW, you already played it perfectly — only a gambler thinks about the money they didn’t make instead of the gains you did make.
Times are tough. Sorry, but you’ll just have to live with your 800% gain on MRNA and put the funds into other plays. Oh, and if you’re into that whole genetic-based biotech that makes Moderna tick, I’ve got just what you’re looking for.
It’s called “Imperium.” And according to experts, Imperium is set to go from virtually unknown … to having 2 billion users in the next four years, launching a stock market gravy train almost nobody sees coming.
Saga Of A Sentimental Stock Slinger
I’ve built a portfolio based in part on the success of a couple of stocks, mainly Zoom and Tesla. I bought a few shares of Zoom just before the lockdowns started in March 2020 and watched it skyrocket from there. I sold off parts of my position on the way up for big gains and used this to fund purchases of other stocks such as Tesla, which I bought just after the split for a little over $400/share.
I only have one share of each now, but I feel like I’m holding on to these out of a sentimental attachment to the stocks that made it big. I don’t know if there is still a place in my portfolio for these two stocks, as I don’t really see them going much higher from here. It’s not a bad problem to have, but do you think these stocks are poised for any more gains, or should I ditch them for something with more upside potential. Interested to hear your take. — Dave H.
Sentimentality? In investing? Where oh where do we begin, Dave…
All those emotions and human feelings? You gotta leave that baggage at the door whenever you open up your account. This is where you can separate yourself from the vast majority of impulsive, trade-by-feel investors, which is … the vast majority of retail investors.
You’re better than that. You’re a Great One. But let’s talk about when to sell — without any emotions clouding our judgment here.
What are the reasons to sell a stock? Just whenever you feel like it? Because your hand keeps itching if you don’t open Robinhood? Oh, nay nay. You should consider taking profits (or cutting losses) when:
- Your profit target is hit. You set a target in mind when you bought the stock … right?
- Your original thesis for the stock changes or is no longer feasible.
- Those funds would be better invested elsewhere.
The better question to ask yourself here is: What were the reasons you bought Tesla (Nasdaq: TSLA) and Zoom (Nasdaq: ZM) in the first place? Are these reasons still valid for the stock? If nothing’s materially changed with the company’s ability to maintain growth — Hyzon comes to mind once again — then you stay in the play.
If you don’t think Zoom and Tesla can run higher, ask yourself if you’re thinking that out of due diligence or just because you “feel” like you should sell. Sitting on open gains (and losses) can do funny things to our psychology as investors, which is why we need to be careful to stay unemotional … and non-sentimental.
Furthermore, if you paid for your investing advice — such as through one of the wonderful services offered here at Banyan Hill — you should probably continue following that advice … you know, since you believed in the service enough to pay for it in the first place. Just saying…
Otherwise, we might as well go back to sentimentally “investing” in Beanie Babies or Pokémon cards or Grandma’s secret recipes.
Now, how do you decide to close out a trade? What’s your process? I want to hear all about it — even if you’re a “trade-by-feel” kinda person.
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Until next time, stay Great!
Editor, Great Stuff