November 30, 2021

Jack logs off Twitter

Good morning traders,

Welcome back to The Daily Setup. Markets were up yesterday, as investors seemingly forgot about the new omicron variant. Here’s what’s on the docket today:

  • Krystal Biotech gains over 120%
  • Jack Dorsey is leaving Twitter
  • There’s a new crypto exchange in Switzerland


Krystal Biotech, Jack leaves Twitter, and Moderna


Krystal Poppin’


Shares of Krystal Biotech Inc. (KRYS) more than doubled during Monday’s trading session after the biotech company announced positive topline results from their GEM-3 Pivotal Trial of VYJUVEK(TM). This non-invasive, topical, and redosable gene therapy is the first of its kind for the treatment of dystrophic epidermolysis bullosa. According to Founder and CEO Suma Krishnan, dystrophic EB is referred to as “the worst disease you’ve never heard of.” The disease is a genetic structural deficiency in the skin that causes blistering wounds. The stock closed Monday up a whopping 121.35%.

  • VYJUVEK(TM) is the first gene therapy that can be reapplied because it does not trigger an immune response.
  • Krystal, the leader in redosable gene therapies for rare diseases, plans to file a Biologics License Application (BLA) with the FDA in the first half of 2022. This is the first step in getting VYJUVEK(TM) to patients in need.
  • The company’s treatment is the only genetically corrective approach to dystrophic EB to successfully complete a double-blind Phase 3 trial.

KRYS traded between $68-$85 for much of February 2021 through May 2021. Today’s rally, which spiked as high as $103 before closing at $88.35, puts the stock right at the top end of that previous range. It will be interesting to see if there is some consolidation around the $85 area before making an extended move in one direction or the other. I plan to keep Krystal Biotech on my watchlist as any additional news on VYJUVEK(TM) is sure to cause volatility. My mantra is volatility breeds opportunities.


Hit the Road Jack

Twitter (TWTR) co-founder and CEO Jack Dorsey abruptly resigned on Monday, saying that the company was ready to move on from being founder-led. He will remain a member of the board until sometime in 2022. The move comes on the heels of another surprise resignation, with Lincoln Riley leaving Oklahoma to take the USC job, so it has become apparent that both men are scared of the SEC.

  • Twitter named CTO Parag Agrawal as the new CEO, while Salesforce COO Bret Taylor will become chairman of the board.
  • Dorsey is still CEO of payments technology company Square (SQ) (for the time being anyway).
  • Shares were down 2.8% on Monday which has to be good for Jack’s ego, because how embarrassing would it be to announce your resignation and have the stock go up?

The new CEO is a 37-year-old software engineer who will be charged with leading the company into its next phase, which is widely expected to be a push to decentralize social media content to be viewed on a number of platforms. Fantastic, just what the world needs, broader access to the digital feces flinging fracas that is Twitter.


Omi-crushing it 

Kyle Mooney Good Job GIF by Saturday Night Live - Find & Share on GIPHY

Moderna re: their announcement that they eventually plan to crush it.

Moderna continued its substantial rally on Monday after announcing plans to produce large quantities of vaccines that target the Omicron variant by early 2022. On top of that, the biotech company reported that it’s currently testing whether a higher dose of its extant booster shot is already sufficient to kick Omicron’s a*s. Shares spiked following the news and were up 11.80% when markets closed, extending Moderna’s multi-day gains to over 30%.

  • The reason for Moderna’s confident timeline is that its vaccine-like Pfizer-BioNTech’s- is mRNA-based, and mRNA vaccines can be adapted to new virus variants really quickly. We’re talking 100 days kind of quick.
  • Moderna needed this. Over the past three months, global recovery from the pandemic and Pfizer’s dominance in the pill-based vaccine market wiped out around 45% of Moderna’s share value, so for them Omicron’s arrival is… uh… good?

In the short term, Moderna’s in a good position to continue this rebound (read: they can pump out hundreds of millions of vaccine doses every month), but only time will tell whether they or Pfizer-BioNTech have a better vaccine for Omicron. In the long term, Moderna’s oddly situated to be a victim of their own success: if they manufacture a vaccine that successfully targets Omicron, they’ll make themselves obsolete and cause share value to eventually decline. Miss Cleo would probably say long-term growth is probably not in the cards for them.

Watches and NFTs, That’s What Switzerland Does

Token Talk

Switzerland: No longer neutral on NFTs.

The bridge between traditional financial assets and cryptocurrencies is being built every passing day, and Switzerland is doing its part. A new crypto exchange called the SIX Digital Exchange (SDX) is now live, and its parent company SIX Group operates the Swiss National Stock Exchange.

  • SDX plans to tokenize previously non-liquid assets such as art and real estate via NFTs.
  • The move is wild for a country known for a culture of staid and sober banking, investors can now theoretically pick up a CryptoPunk NFT along with shares of Nestle and Novartis.
  • The first transaction of the new SDX exchange was the issuance of a $162M digital bond that ran on a blockchain ecosystem.

Whether or not NFTs become an asset class that rivals equities and fixed income remains to be seen, but it is becoming clear that investors and traders will need to at least have some cursory knowledge of the technology. After all, it’s a brave new world out there as evidenced by the fart which was sold as an NFT earlier this year.

I’ll Give You 3 Options

Rumor has it

Shares of plastics packaging maker, Berry Global (BERY), rallied 7.7% Monday on news that activist investor Ancora Holdings sent a letter to management. The letter outlined three possible actions the company could take to increase their share price. Ancora, which owns roughly 1% of the company (is that all?), believes Berry’s stock should be trading around $100, which is funny because I believe I should be People magazine’s Sexiest Man Alive, but we can’t always get what we want.

Ancora argues that $BERY, which trades at less than nine times 2022’s estimated earnings, should be trading closer to its competitors’ valuation multiples. Direct competitors Sealed Air (SEE) and Amcor (AMCR) trade at 15 and 14 times 2022 earnings respectively.

Ancora’s suggestions and I use that term loosely, are as follows:

  1. Buyback approximately $1B shares which is the equivalent of about 11% of the company.
  2. Sell the roughly $2B Berry has in real estate in a sale-leaseback transaction.
  3. Sell the entire company, which Ancora estimates could fetch $100/share.

Berry’s stock has now eclipsed its previous 10-year high of $70.90 which was established in May of this year. It remains to be seen whether the stock can hold these levels, but a prolonged stay above the previous high could bode well for investors of the company. I’m keeping an eye on news coming out of Berry regarding whether they decide to move forward with any of Ancora’s suggestions. It is possible this is the “buy the rumor” phase and any action Berry takes could be the latter half of the ol’ adage

Jeff Bishop

One of the best traders anywhere, over the past 20 years Jeff’s made multi-millions trading stocks, ETFs, and options. He is renowned as an incredible trader with a deep insight and a sensitive pulse on the markets and the economy. Jeff Bishop is CEO and Co-Founder of RagingBull.com.

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