AI SPACs and IPOs on the Move - BFRG, PRST, CXAI. Buy their Warrants

Three recently-listed AI stocks have been hot over the past couple of weeks along with Guardforce AI Co., Limited (GFAI). These are Bullfrog AI Holdings, Inc. (BFRG), Presto Automation Inc. (PRST) and CXApp Inc. (CXAI). Today is PRST's day so far as it's up over 30%. The best way to play these stocks are the warrants, listed as BFRGW, PRSTW and CXAIW respectively. Just look at what has happened to GFAIW. It has moved from a few pennies to over $0.40. The problem is GFAI had a 1-for-40 reverse split, causing the strike price of the warrants to move into the hundreds of dollars. This won't be the case for these other three stocks. If they move like GFAI has, these warrants will be worth multiple dollars. 

BFRG/BFRGW: These warrants have a strike price of $7.80. This is an IPO rather than a SPAC so these warrants are very straightforward with no early redemption clauses and a five year time to expiry. Since the stock price is right around the strike price of these warrants, they offer great leverage potential, like a call option that's just slightly out of the money. These warrants are very cheap, trading around $1.20. Put this into perspective, Marathon Digital Holdings, Inc. (MARA) is trading around $9.50 right now. A $10 call option on it expiring in January 2025 is trading at around $5.00. BFRGW has an additional three years to expiry beyond that. If BFRG is to double from $7.50 to $15, these warrants will move from $1.20 to $7.20. 

PRST/PRSTW: These warrants have a strike price of $8.21 and it takes two warrants to exercise for one share. So for instance, if the stock price moves to $18.21, the warrants aren't worth $10, but $5. The warrants also have an early redemption call price of $16.50, where the company can reduce the time to expiry from 5 years to 30 days. This could create issues and downward pressure on the stock price, but $16.50 is a long way away and there would be a lot of upside from here in this scenario. These warrants are extremely cheap at around $0.10 while the stock price is in the mid-$3's. If this stock runs like GFAI or like how CXAI did a few days ago, these warrants will be life-changers at these prices. 

CXAI/CXAIW: When we said that if these stocks run like GFAI did, these warrants will be worth multi-dollars. There is a caveat on CXAI as these warrants traded only around $0.40 when CXAI ran to over $20 a few days ago. These warrants aren't exercisable yet. So they suffer from the issues that many SPAC warrants do that trade well below their intrinsic value even if the stock price runs well beyond the $11.50 strike price immediately after listing. Expect these warrants to become exercisable in the next couple of weeks as the company works to register the required filings. 90 days after these warrants become exercisable, the company has the option to redeem them early at $0.10 each if the stock price is above $10. There is also an early redemption clause similar to PRST's warrants but at $18 instead of $16.50. The warrants are currently trading at $0.14. If the stock price stays above $10 and the company chooses to redeem them for $0.10, the worst case downside scenario is this $0.10 redemption floor. If CXAI rises again before the warrants become exercisable, the warrants likely move to the $0.40 region again and if it moves above the $11.50 mark after they become exercisable, they should be worth substantially more than $0.14. Take a look at what happened to Intuitive Machines, Inc. (LUNR) and its warrants LUNRW this week. The stock price shot up to over $13 on April 19 and the warrants rocketed up from $0.30 to $1.00 in response. Even as the stock pulled back to $9.00, the warrants are now priced just under $0.50. Given the price of CXAIW of $0.14, these warrants have great upside potential in these circumstances. 




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