Hyliion (NASDAQ:HYLN) stock recovered on Wednesday but investors and analyst went negative on Hyliion, with shares of Austin, TX. company sinking almost 4% on Thursday.
Present news weren’t the problem, though. Hyliion announced yesterday a partnership agreement that “offers Hyliion customers discounted pricing for renewable natural gas at ANG fueling stations across the country.” What rankled investors then?
Here are the bad news for HYLN
There are 2 bad news going towards HYLN shareholders. One of those two, well you probably already heard about it. Goldman Sachs initiated Hyliion Holdings with a “Neutral”. Mark Delaney, analyst at GD said how HYLN stock is fully valued at this price and gave it a target of only $22. I say only, but at this moment this feels like a good price target and here is the other bad news that will prove this.
According to this source all registered warrants must be filled before October 22 and warrants are at 12.21, and give the right to buy common (share) for $11.50, so the total price for a common share would be $23.71. The common is now trading at $28. That gap will close upon registration, and usually its from the common stock falling.
According to SEC filings and everyone else you still have around 2 weeks before 19 million warrants are exerciseable at $11.50. They will be coming into the public float around November 1st 2020 (which is 30 Days From the Merger Closing). People will exercise the HYLN.WS warrants and sell the equity HYLN until they are at parity.
What this means for current HYLN stock holders?
This means that you have a week or two to decide if you are sticking with Hyliion stocks for a long haul or a short gain.
Do not try to catch the falling knife once it starts going down. Wait until the stock hits the bottom, which is around $22.
This can be stopped if Hyliion decides to redeem these securities for cash by issuing a notice 30 days in advance. Will Hyliion Board of Directors decide do that? I doubt it.