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RECAP OF LAST WEEK AND RESULTS:
Pinterest: We called PINS to reach $75 within a month from a price of $71.83. They hit the target on Wednesday, March 17th.
General Motors: We called GM to reach $62-64 a share within the month from a price of $59.25. The target was reached on Wednesday where it reached $62.21 a share.
Momentous Space: We called SRAC to reach $22 within a month. It fell a bit from $15.90 to $13.50. We expect it to rise substantially upon ARKX opening their ETF to invest in space companies. We will address ARKX and why we believe some stock will experience surges in share price in our newsletter this week.
IN THIS ISSUE
Speculation that they may pass more subscribers than Netflix.
Down from all-time highs of $59 a share. Is it the right time to buy at $32 a share?
Ark Invest is a popular company that billions of dollars have flowed into over the past year. They are opening a space ETF that will hold positions in companies they believe are disrupting the space industry.
“The Walt Disney Company, commonly known as Disney, is an American diversified multinational mass media and entertainment conglomerate.” This is one of our favorite stocks that we currently own and one of our go-to recommendations when people ask us what to put their money in. This stock has had a decent run over the last 5 years, increasing 96%. The reason we wanted to talk about this stock again is because of the news of the parks reopening, as well as the speculation that Disney+ will take over Netflix in subscribers by 2024.
We want to first take a look at the income the parks were bringing in. “Parks, Experiences and Products revenues for the quarter increased 8% to $6.7 billion, and segment operating income increased 17% to $1.4 billion. Operating income growth for the quarter was due to increases from merchandise licensing, Disneyland Resort, and Disney Vacation Club.” This was from their annual report for 2019. Now the report from 2020 looks like this: “The most significant impact of COVID-19 on fiscal 2020 operating results was an estimated detriment of approximately $6.9 billion on operating income at our Parks, Experiences and Products segment due to revenue lost as a result of the closures or reduced operating capacities.” A much different story between the two. We think as Disney begins to open the doors to their parks they will slowly start to move back towards being profitable. People will still be cautious with COVID-19 so we don't expect the number of people going to the park to absolutely explode, but we also expect this change to stop cutting into their revenue.
Now let's look at the real reason we love this stock. Parks are amazing and a good source of income normally, but Disney+ is what gets us really excited. Even if the pandemic picked up speed and started again, Disney would still be sitting on Disney+. Netflix has over 200 million subscribers while Disney+ is sitting under 100 million. The difference is Disney+ hasn't even been out for 2 years yet and Netflix started its streaming services in 2007. Netflix did have to lead the way in the streaming world, but even then it doesn’t come close to how fast Disney+ is growing. Disney didn’t even expect to grow that quickly. “When it launched in late 2019, Disney predicted subscribers would grow to between 60 and 90 million by 2024. Disney Plus has quickly surpassed those numbers, reaching the 95 million mark by early January.” Disney+ has since adjusted those targets and with the amount of new content they are producing we don't think they will have a hard time hitting them.
Current Price: $191
One Month Target: $200
One Year Target: $225
Two Year Target: $275-300
This stock should be in everyone's portfolio in our opinion.
Virgin Galactic: SPCE
Virgin Galactic is a stock we picked out because we want a winner before it becomes a winner. This company could potentially disrupt the space industry in how we get humans to space. The technology of deploying a payload from a rocket in mid-air has been proven by Virgin Orbit which is Virgin Galactic’s sister company founded by the same CEO, Richard Branson.
Company share prices went up wildly to $59 before their test flight in February. News dropped that the flight test had been delayed another two months due to technical issues with the craft which caused the price to plummet. We could definitely see some short-term pain in regards to the stock price as the company is starting to stagger and move slowly with its milestones.
If however, they can get back on track with their schedule, we should see the company rise in price as they improve confidence and get a few steps closer to generating revenue. Their next upcoming test flight is in May. Be on the watch for the stock price as we are 2-3 weeks away from their flight window. If no more delays from the company, we will most likely see a small run-up.
Current Price: $33
One Month Target: $30
One Year Target: $60
Two Year Target: $120
Within a year, we will see this company head higher as long as they can keep their promises with their schedule.
Ark Invest Space Exploration: ARKX
We have covered this ETF before but want to take a deeper look into the current status of the space industry. This ETF will be opening earliest by March 29th. We can't see what they are investing in right now, as they have a quiet period which allows them to purchase assets without the public knowing. That way the performance of their ETF isn't affected.
The space industry has fallen around 30% from its recent highs. We are urging you to look into the space industry because we think the opening of this ETF will spark higher interest in space companies. This will lead to an overall increase in the value of space stocks.
ARK Invest has become the most popular ETF in the stock market as billions of dollars flowed to them. Their ETFs have an annual fee of .75%. That means if you started with $10,000 in their ETF, you would pay $75 dollars annually. They are a good look for your 401(k) brokerage since they have lower fees than most mutual funds and have been shown to have the "Midas touch." As a company, all their ETFs have doubled in the past two years. This makes them a solid place to store some of your money as investors will look to a 1 trillion-dollar market by 2030. Currently, the space industry is valued around 350 billion. By just holding ARKX when they open, you could expect to receive higher annual profits than the 8% a year the stock market has returned over the past 30 years. They could triple by 2030.
Individual companies in this ETF could more than double in some instances. Two companies we think will be in their holdings Momentous Space (SRAC) and SpaceX. Both companies are disrupting the space industry by doing things in a uniquely innovative way.
You could call SRAC the UPS of space. They deliver satellites and cargo to a destination in space with a proprietary water propulsion technology. SRAC has the ability to refuel in space and tug multiple satellites to their needed positions. In our opinion, SRAC will become a leader in space infrastructure since they are working with SpaceX to launch their product for testing. SRAC's launch with the SpaceX Falcon 9 rocket is scheduled for June this year.
Another reason you should look at buying ARKX is they left a portion of their funds to buy into private space companies. Potentially, ARKX could have private holdings in SpaceX. Since you can't buy stock in SpaceX, this will be the most direct way to get access to holding a portion of SpaceX. SpaceX will be the dominant leader in the space industry as they have a reusable rocket technology that knocks off millions of dollars in cost.
Estimated IPO Price When ARKX Opens: $25
One Month Target: $30
One Year Target: $40
Two Year Target: $50
Final thoughts on ARKX: This will be a leading space ETF for many years since they are really the first to market on finding disruptive companies and investing in them. The US government's creation of the Space Force will lead to companies competing for contracts. We think SpaceX and Momentous Space will have plenty of opportunities to infuse cash. The space industry will soar as it is becoming more viable for money-making.
Space is vast. So much is yet to be done and created. ARKX has the researchers and analysts who will be very adept in picking companies with a potential to become large cash cows. Regardless, space is just heating up, and right now is an excellent time to get in if you have not already.
Selling a put credit spread could be a winner here. The link below is for SRAC, since ARKX is not yet available. However, we think long term credit spreads could return over 80% of your positions.
All stocks talked about we have invested in, and do not intend to give advice nor recommend acting upon the information.
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Until next week,
and the Optifinancial Team
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