December 22, 2021

Good morning traders,

Welcome back to The Daily Setup. Markets were up yesterday as omicron concerns faded (can we just make up our minds?). Here’s what’s on the docket today:

  • Bionfrontera’s short squeeze
  • Nikola is fined by the SEC
  • Nordstrom considers a spinoff

This will be the last newsletter for the week, as everyone at HQ will be taking a few days off to celebrate the holidays. We’ll be back in your inbox next Tuesday morning.

Happy Holidays and enjoy the weekend.


Biofrontera, Nikola, and Citrix


Biofronterrific’s Tuesday

Biofrontera, a biopharma company specializing in the treatment of precancerous skin lesions, had the best day of its f*cking life yesterday. The stock absolutely exploded Tuesday morning, with shares rocketing up from $4.70 to $9.00 before leveling off in the afternoon for a 112.87% gain. It’s like it’s, well, the cure for cancer. 

  • This insanity likely has nothing to do with BFRIW’s product, though. Instead the surge seems to be the result of a short squeeze after the company hit a short interest of 74% last week. Combine that with a low float and you’ve got r/WallStreetBets slobbering all over its conditioned paws.
  • The US unit of the German company has had a brief but real volatile history, with shares straight-up tripling in value over the course of a week in November. So it’s sort of par for the course.

As mentioned above, none of what’s happening right now has much to do with Biofrontera’s product or fundamentals. It’s little more than another vessel through which short squeezers can wage a war against short sellers. Since they’re not concerned with the details of the technology so much as each other, spikes and dips are unpredictable. That’s not the kind of gambling I’m into, so I will likely stay away from this one till share value levels out.


Nikola is fined nickels by the SEC

-amount Nikola was actually fined

The SEC continues to do what it does best… by not making a strong statement when it comes to fining companies that commit fraud. It was announced Tuesday that EV truck “developer” (and we use that term lightly), Nikola, was fined $125M to settle a fraud case claiming that the company misled investors about its technology, product orders, and the details of its planned partnership with GM. So basically the entire company. Investors, not the defrauded ones obviously, clearly liked the announcement as shares of NKLA rose +1.84% on the day.

  • Nikola (NKLA), which went public via SPAC (because of course it did), on June 4, 2020 reached its ATH of $93.99 5 days later.
  • In September 2020, famed short-seller, Hindenburg Research, published a scathing article detailing the company’s fraudulent activities, one of which suggested, “videos of the company’s truck speeding down the road were filmed while an unpowered prototype was rolled downhill.”  You can’t make this sh*t up.
  • CEO Trevor Milton, stepped down as board chairman and CEO, and later was arrested. For some reason he doesn’t include his arrest on his LinkedIn.
  • Shares of NKLA are down 90% from their ATH, yet the company still maintains a market cap of $3.8B…’merica, amirite?

Settling this lawsuit is a step in the right direction for Nikola, however, the company will have to start doing things that typical car companies do if they want to see their stock increase on a regular basis… like actually manufacturing and delivering vehicles. Buyers have consistently used the $9.00 level as support since its IPO. I’ll be watching for a move higher on increasing volume before I consider a long position in the company.


Single Citrix has two potential


Citrix the moment anyone flashes some Washingtons

Shares of Citrix Systems Inc. rose 13.63% yesterday after news broke that Elliot Investment Management and Vista Equity Partners were making a joint bid to acquire the SaaS company. This would be great for Citrix if it went through, because the cash earned from the deal would allow the company to fund its transition to the cloud without having to revamp its sales execution (read: prostitute themselves to clients, too).

  • Both potential buyers have been grooming Citrix for a while. Elliot bought a 10% stake in Citrix back in September when they announced they were exploring a potential sale, and Vista sold Wrike, Inc. to Citrix for $2.25B at the beginning of this year. After they fatten you up, that’s when they eat you.
  • It’s not a done deal, though. Citrix already tried selling themselves back in 2017, throwing themselves at the feet of Bane Capital and Thoma Bravo to no avail because their begging asking price was too high. So they’ve gotta tread carefully here.

Citrix has been hurting this year. Even factoring in the news of a potential buyout, the computing company’s shares have dipped 25.93% YTD. Their future probably depends on some kind of deal going through, but odds of success are high since both potential buyers have already been involved with Citrix for a while now. The healthier the deal, the healthier Citrix’s prospects.

Real Money for Fake Money

Token Talk

^VC’s idea of currency conversion in 2021

According to financial data and software company, Pitchbook, venture capitalists invested a record $30B in digital in 2021. This should come as a surprise to absolutely no one seeing as everyone on Twitter these days seems to be an expert digital asset trader/investor. Their words, not mine. According to CoinGecko, the total digital currency market value in 2021 increased to roughly $2.3T as of December 17th.

  • The previous record for VC digital asset investment was $8B in 2018.
  • DapperLabs, Moonpay, and Sky Mavis all reached multi-billion dollar valuations this year.
  • According to research firm CoinTelegraph, “The market for NFTs, digital art tied to the blockchain, is set to hit a record $17.7 billion by the end of the year.

Whether you believe in the digital revolution and associated products or think they’re fraudulent investments, the reality is that the digital currency market isn’t going anywhere. Like the Dot-Com boom in the late 90’s, many coins/digital products will ultimately fail, but the most innovative, adaptable, and well-capitalized will prosper and bring continued technological advancements.

Nice Rack!

Rumor has it

Shares of Nordstrom (JWN) spiked +3.03% in Tuesday’s trading session following an announcement that the company had reportedly hired consulting group AlixPartners, “to help it review a potential spinoff of its off-price Nordstrom Rack business.” Activist investors of department stores have been pressuring companies this year to spin off their e-commerce business from their brick and mortar business in order to gain greater valuations.

  • Macy’s and Kohl’s have faced similar pressure from activist investors Jana Partners and Engine Capital respectively. Macy’s, like Nordstrom, also hired AlixPartners back in November. Enjoy those sloppy spinoff seconds Nordstrom.
  • Saks Fifth Avenue, which is preparing for an IPO in 2022, successfully completed (according to industry executives) what Nordstrom, Macy’s, and Kohl’s are being forced to consider.
  • Nordstrom’s shares are down 33.68% YTD.

Yesterday’s announcement and subsequent rally in Nordstrom’s stock price feel like the “buy the rumor” phase. Keep an eye on JWN moving forward as any decision the company makes in regard to AlixPartners’ suggestions will surely bring volatility. I will be keeping JWN, Macy’s (M), and Kohl’s (KSS) on my watchlist (and last minute Christmas shopping lists) for any signs of future direction in the sector.

Link Roundup 📿

Other News

Other News Link Roundup

  • Fortress Transportation may be about to take off (Read)

  • Widespread burnout might force employers to treat workers like human beings (Read)

  • FDA finna drop authorizations for Pfizer and Merck pills this week (Read)

  • EU trusts Microsoft not to get anti-competitive with Nuance acquisition (Read)

  • Binance partners with Dubai to make digital assets’ wild west the Middle East (Read)

Easier said than done, via @WallStMemes

Jeff Bishop

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