DWAC: Cause A Squeeze By Buying SPAC Warrants And The Next Undiscovered MAGA Meme Stock

Last time we talked about meme stock SPACs we said that if you want to cause a squeeze in the stocks, buy the warrants. We warned people that if you don't do that, the stocks will tank because hedge funds use their warrant inventory to relentlessly short the stocks once they become exercisable. And what ended up happening? IRNT, OPAD and HLBZ all ended up tanking once their warrants became exercisable. 

MAGA meme stocks DWAC, BENE and PHUN went up massively these past couple of days because of Donald Trump's new social media platform set to merge with DWAC, while BENE and PHUN are rumored to have some connections. DWAC being the biggest gainer of the three with the other two being sympathy plays.

If you want DWAC to move up: BUY THE WARRANTS. If you DON'T buy the warrants, the stock price will eventually crash. 

Why? Simple. Warrants are like long term call options. The warrants have a strike price of $11.50. That means submitting a warrant and $11.50 will get you a share. DWACW closed at $29.10 on Friday while DWAC closed at $94.20. Buying a warrant and paying $11.50 for the stock is like buying the stock at $40.60 instead of $94.20. This is a $53.60 discount! This large discrepancy exists just like it existed on IRNT when the stock price was over $40 and the warrants were trading at $7. Or on OPAD when the stock price was $20 and the warrants were $2. Or on HLBZ when the stock price was $40 and the warrants were $2. This all happened just several weeks ago. What ended up happening to those stocks? They all tanked once the warrants became exercisable.

Why did this happen? Hedge funds own an inventory of warrants as well as the stock. When they sell off their stock, they can use the warrants to SHORT shares with minimal risk. They will keep on doing this when the warrants are trading at such a steep discount to the shares. DWACW is at a very steep discount right now. If you want the shares to spike, you have to buy up the warrants to the point that they are trading with just an $11.50 variance compared to the stock. Anything greater and the stock WILL BE SHORTED.

PHUN and PHUNW actually have the opposite problem, and why we think the stock will be bullish. PHUN closed at $8.74 but PHUNW closed at $6.40 despite having an $11.50 strike price. We thought maybe the strike price got adjusted, but no, according to Phunware's website, the strike price is $11.50 per share. If you are bullish on PHUN, buy the stock not the warrants. But this is a good sign for the stock. Hedge funds are clearly NOT using warrants to try to short the stock because the prices don't make sense. You're not going to pay $6 to buy warrants to short a stock at $8 when the strike price of the warrants is $11.50. It could be the opposite effect where the funds are so bullish on PHUN that they are buying up PHUNW. The stock price has to reach $40 before buying the warrants over the stock right now starts to make sense:

BENE right now doesn't have any issue as the warrants are trading at a normal price one would expect for a call option of a similar strike price. You can buy the stock or the warrants and be bullish on it. Though the warrants offer more upside. The chart below shows stock price, warrant price, strike price of warrants and the percentage the warrants would gain if the stock price were to double. For instance, if DWAC was to double to $188.40 by the time the warrants became exercisable, the warrants would be worth $176.90, more than a 6x or 500% gain from Friday's closing price. BENEW also has a similar type of return if the stock doubled. In contrast, PHUN could double and the warrants would be worth less than their open market price. Obviously no one would exercise them and instead just trade them at their premium. 

However, if you're looking for the best meme SPAC warrant pairing right now, it's actually HLBZ. Looking at the chart, of the three meme SPAC stocks of a few weeks ago, HLBZW offers the best value. The stock price is trading HIGHER than OPAD or IRNT, but the warrants are CHEAPER. This time all the warrants are exercisable so the warrants will move with the stock. If HLBZ gets back to $40, the warrants will be worth $28.50. Same with the other two stocks. 

HLBZ is on the brink of a short squeeze. How can we tell? On October 15 the stock spiked to $15.40 before pulling back. The warrants should have traded at $3.90 but stayed under $3. The stock moved so fast that the hedge fund shorts couldn't keep up and had to use their inventory of warrants to dampen the stock price by getting people to short the stock and buy the cheap warrants and take advantage of the arbitrage or exercise the warrants to cover with the newly issued shares. When HLBZ files its next SEC filing it might put a note in disclosing how many warrants got exercised. 

What happened to HLBZ is exactly what happened on ALF and we told people to get into that one before it ran from $7 to $20 and the ALFIW warrants from $2 to $15. Read our blog on ALF here. The same thing can happen to HLBZ/HLBZW.

The Undiscovered MAGA Meme Stock

DWAC skyrocketed on the Trump social media platform news and PHUN and BENE followed. But there is one stock that is a secret MAGA stock everyone is overlooking. 

GeoVax CEO David Dodd is a regular contributor and thought leader on vaccines on Trump-friendly right-wing news media outlet Newsmax. Here he is in July explaining how a one-shot vaccine that GOVX is working on is necessary instead of the constant booster shots that are going to be needed with the current vaccines in the market.  

As the vaccine GOVX is working on is done in a more traditional way, it's a marathon not a sprint, and that's why you don't hear a lot of updates about it yet. This is why GOVX is under-the-radar, because the stock market demands constant news updates while the company is working on its vaccine stealthily and in a responsible way. 

This video was from December where Dodd explains why people are hesitant to take the vaccine and what can be done about it:

The United States has had a vaccine hesitancy issue that is skewed towards conservative-leaning people. The CEO of GOVX understands why that is as the media tries to make this a political issue instead of a health based one. People with legitimate concerns are ostracized by the liberal media with the answer being vaccine mandates. This is never going to work and people will resist harder. What the Unites States needs is a MAGA vaccine - a one shot vaccine made the traditional way that's not based on MRNA technology and is not produced by a multi-billion dollar pharmaceutical company - that conservatives will trust. As CEO David Dodd is a Trump-friendly right-wing thought leader on vaccines, GOVX is the right company to make this MAGA vaccine. 

Once Trump's social media platform is operational, GOVX can translate its thought leadership on vaccines from right-leaning news media outlets to the right-leaning social media platform. It will get a lot of eyeballs. We predict that because of DWAC's performance, the Trump social media outlet will be heavily skewed towards stock market players and GOVX will be ideally suited as the next MAGA meme stock, if not sooner. 

GOVX has only 6 million shares outstanding and a couple more million in GOVXW warrants. If it gets caught up in the MAGA meme craze at just a small percentage of DWAC or PHUN, the stock and warrants could easily go to $100. It has a short interest of about 8% so there is some squeeze potential too.