Kandi Caught; DoorDash Deals; Options Starters
Are you ready, kids?
Aye, aye captain!
Ohhhh, who answers reader feedback down in Kentucky?
Mister Great Stuff!
Absorbent and yellow and porous is he!
Mister … wait. What?
Sorry, my kids are distance learning lately, and it’s a bit distracting. Today is Reader Feedback day at Great Stuff! The day we dig through our mailbag and suck the marrow out of life.
Actually, it’s not that dramatic … or is it? We answer your questions on stocks and the market, discuss your investing topics and general market rants … pretty much anything you want to talk about is fair game.
Have a question you’d like us to answer? A rant you just can’t hold in? A stock idea you’re just dying to share with someone? Let us know at GreatStuffToday@BanyanHill.com.
Who knows … maybe you’ll end up in next week’s Reader Feedback!
So, Great Ones, without any further ado, let’s get to today’s featured presentation:
For those of you that think you go into a Tryptophan-induced coma from eating Turkey, sorry, it’s just a myth. Many things we hear or read about cause us to formulate opinions and beliefs, and are also many times misleading and just plain wrong.
Like the post Thanksgiving attack by the short-selling Hindenburg on EV car manufacturer Kandi Technologies KNDI this week. This is not the first time that they have mounted a targeted assault on EV manufacturers, and the ripple effect was felt throughout the entire EV sector, especially the Chinese manufacturers.
It’s sad that a short-seller can make unsubstantiated claims only to bring the stocks that they have short interest in down. Can you say manipulation, boys and girls?
There ought to be a law against making false accusations that result in the accuser benefiting from the accusation. One can only hope that, like the original Hindenburg that was filled with hot air, that this one too will burst into financial flames.
— Dick K.
Welcome, Dick! Thanks for writing in. It’s good to hear from you again, buddy. Though, I’m not sure you’ll like what I have to say today about Chinese electric vehicle (EV) maker Kandi Technologies (Nasdaq: KNDI).
Let’s clear the air first. I agree with you completely on the whole hedge fund short-seller business. I’ve said it before, and I’ll say it again: I don’t think it should be legal for anyone to short a stock and then publish a hit piece designed to make that stock fall in value.
This is especially true for powerful hedge funds with easy access to mass media.
Neither of us has the influence to pull this scheme off, and I have my own newsletter! Plus, it’s against SEC regulations for Great Stuff to even attempt such a thing. I can’t own any stock or asset that I recommend here. Period. So, how is it OK for Hindenburg?
Side note: If this were Citron Research, we wouldn’t be having this discussion. Hindenburg’s research makes Citron look like a kindergartner with a crayon. Just saying…
Hindenburg’s report makes me nervous because Kandi has been sanctioned by the Chinese government for self-dealing before.
Self-dealing, as I’m sure you all know, is when you sell something to yourself to make it look like revenue. In short, the company hasn’t actually sold anything … just moved it around and fudged the numbers.
It makes me nervous because U.S.-listed Chinese companies aren’t held to the same accounting standards as U.S. companies.
In fact, the U.S. House of Representatives just unanimously passed a bill that would delist any U.S.-listed Chinese company in three years unless they agree to supervision by the Public Company Accounting Oversight Board.
The Holding Foreign Companies Accountable Act passed the U.S. Senate back in May, and President Trump is expected to sign it. It’s illegal in China for businesses and auditors to submit to foreign regulators, so this is bad news bears for pretty much all U.S.-listed Chinese stocks … Alibaba, JD.com and Nio included.
In the words of Bill Clinton: I feel your pain, Dick. Especially if you hold KNDI shares.
My advice to all Great Stuff readers is to be extremely cautious investing in any Chinese stocks in the U.S. market right now. We don’t know how the incoming Biden administration will handle this situation.
This is double-plus true for Kandi investors, as it may not be legal in China for the company to provide enough financial information to disprove these allegations — be they true or false. Pretty convenient, huh?
Again, thanks for writing in, and good luck, Dick. You’re going to need it.
What you won’t need luck to find, however, is a little-known California company … started by one of Tesla’s original employees, known as “Employee No. 7.” Yet, it holds all 100 patents on a “superbattery” that could power a whole American city for free!
Thank you to all the longtime writers and first-time scribers today! We see you cranking out the gains over there, Harlie.
To the late risers and did-not-repliers … better luck next week! Why not drop us a line right here, right now? You know we’ll be back again with another edition of Reader Feedback before you know it.
For now, let’s dive into hot tamales, anthrax and options masochism — erm, fandom. If you have somehow not seen the glory of options trading yet, we will find you, and we will convert you.
Anyway, here’s DoorDash.
I’m not going to reveal who I am nor give any private information about the company, but I will give you knowledge on how DoorDash operates and why it’s a winner.
I am an employee for DoorDash at one of their corporate offices. Most analysts are only aware of the one side of DoorDash which is known as Marketplace… The other side to DoorDash is called “Drive.” Drive is what has been propelling DoorDash and this part of DoorDash will make the company profitable.
Drive is our delivery arm that works exclusively with companies and do their deliveries. We have contracts with Walmart, Safeway, Albertsons, PetSmart, Wegmans, Applebee’s and a ton more. A customer places an order with a particular company through their website and our Dashers pick up the order and deliver it.
These companies pay us a lot of money per order and the dashers make minimal money. Just look at how Walmart’s online business has skyrocketed. That is due to us. DoorDash makes all of their delivery. The Drive side of DoorDash has helped us a great deal this year.
Thanks for writing in, you Dasher who shall not be named!
This is eye-opening Stuff to people unfamiliar with the company’s other half. I mean, knowing this doesn’t sway me on the stock, but I appreciate every inside scoop we get.
Until we get specifics on who’s making and spending what, it seems to me there will be an inflection point for all involved to ask: “What the heck am I doing this for?”
Sure, small businesses probably see DoorDash delivery as a Godsend. But the company’s future relies on if these deliveries from shops and grocers are here to stay like the work-from-home market is — which, while growing, let’s be real that even a Target run is high-danger excitement for some right now.
How long will high-frequency places like Walmart keep shelling out money to DoorDash before setting up something cheaper in-house? The gig economy’s profit margins are already razor-thin to begin with, and every big-spending corporate client is a revenue lifeline floating in the breeze.
Once DoorDash goes public, you can bet that analysts will gobble up data on those profit margins like they were Thanksgiving … tamales?
Don’t forget that tamales are quickly making their way towards replacing Ham!
— Ted B.
I completely forgot about that this year! It’s more of a Christmas/New Year’s tradition for our family, but it’s become more popular at Thanksgiving in the past 10 years. I love tamales, and you know no Kentuckian messes around with “low-fat” anything.
Thanks Ted; now here’s Ted.
Isn’t it true that 70% to 80% of all options contracts expire worthless?
— Ted H.
Short answer: Nah.
Semi-short answer: Only about 10% of options contracts are even exercised, meaning you decide to use your right to buy or sell the underlying stock.
The majority of contracts are closed out before they expire — between 55% and 60% depending on your source. If you’ve traded options on your own or with the options experts here at Banyan Hill, this is probably you.
But if options trading sounds to you like the Jenga of market timing, that’s why it pays to have a guide. Learn more here!
Hardly anyone actually holds until the expiration date, whether it’s to take a gain off the table or cut loose a loss.
The rest do expire worthless, which sounds like an absolute travesty until you realize that, well, maybe they shoulda coulda woulda sold sooner … which you could also say about any stock trade too.
Get That Bread
What about selling the puts and calls? Can I make money doing that?
— Bob in Miami
Oh, Bob. Where do we start? You bet your right cheek you can make money selling puts and calls!
Not only that, if you thought trading one option was a blast … just wait till you start stacking them.
Now, both you and our friend Calvin in the inbox were curious about venturing deeper into the options market.
You know I could ramble about options nitty-gritty all day, so it’s time for y’all to ketchup, mustard. Check out our guide to selling options right here!
Spreading the Disease
Hello Great Stuff,
What do you think about EBS? I’m in at $112. Thank you,
— Liz V.
EBS is back, all in, we’re gonna win. Check it out … here we go again! (Turn it up!)
Apparently, Emergent Biosolutions (NYSE: EBS) set out to bring the noise to the biopharma vaccine market. Of course, it showed up to the COVID-19 vax race party too, because who wouldn’t?
In terms of actual products on the market … who’s buying Emergent’s smallpox and anthrax vaccines right now?! Is it you? (I knew it was you all along!)
Stock wise, I think EBS got a bump from COVID-19 prepping. Now that the vaccine is coming, it’s dying off.
EBS has dropped sharply, which, now that I think of it, was probably your reason for writing in… The stock now sits on support at $80 (a round number for psychological support) and its 50-week moving average, but only tech traders really follow that trendline.
Liz, if you rode EBS this far down from its peak, a rebound might happen, given that the pandemic still has a way to go, and demand should remain for a bit.
However, this level of demand won’t last beyond the pandemic. EBS isn’t Zoom; Random viruses aren’t the new norm like working from home is. If EBS breaks below $80, you should probably sell, even if it means taking a loss.
But that’s just my two cents. At least, I hope random viruses aren’t the new norm…
Final Thoughts on Flying
Hey GS, I think the LUV CEO said it right. His job is to get people up in the air and then down again safely. When he opens the airplane doors, we have to navigate lockdown rules, COVID testing and quarantine rules…
— Cleve T.
I am comfortable to fly. My wife is not. So, no-fly.
— Tim P.
At 77, I have had a great life. I don’t worry about dieting.
— Art S.
See? I told you it takes all kinds of thoughts to brew up a helping of Reader Feedback. And personally, I stopped worrying about dieting when we started talking about tamales, but to each their own…
If you have more to share with us here — or if there’s a stock or sector you want to see covered specifically — by all means, write to us! We’ll catch up with you in the next installment of Reader Feedback.
Until next time, be Great!
Editor, Great Stuff
I’ve been investing for more than 25 years. I started my career on Wall Street in 1991 as an assistant portfolio manager at Bankers Trust. I quickly advanced to prominent positions at Deutsche Bank and ING, managing multimillion-dollar accounts. In 2006, the owners of a $6 billion firm named Kinetics Asset Management recruited me to manage their hedge fund.