Nomi Prins of Rogue Economics has released a new stock teaser centered around a “tiny firm” that is supposedly “saving Amazon” from rising energy costs.
In short, Prins says she’s found a small electric truck company that has a “billion-dollar deal with Amazon,” and that “represents the opportunity of a lifetime” for investors.
“… this represents the opportunity of a lifetime – the chance to invest in this small firm now, before the world at large hears about it… and – in specific terms – I truly believe you have the chance here to see fifty times your money or more, in the very near future.”Source: https://secure.rogueeconomics.com/?cid=MKT670856&eid=MKT670953&assetId=AST260575&page=2
Long story short, it’s part of a pitch for a warrant investing service called Rogue Strategic Trader, which costs $1,750 to join. I’m pretty confident I know what company she’s referring to, though, so you don’t have to join the service just to find out.
In this post, I’ll break down what Prins is predicting and show you what “tiny firm” I think she’s tracking based on the clues she shared.
Breaking Down Nomi Prins’ “The Tiny Firm Saving Amazon” Teaser and Warrant Pick
Here’s the headline for Nomi Prins’ pitch to set the tone, which is dubbed “The Running on Empty Summit.”
“AMAZON IS RUNNING ON EMPTY
“A fuel crisis at Amazon could soon force shares of this tiny firm (that you can play for under $1) into the stratosphere.”
What’s it all about?
In short, Prins claims that Amazon’s business is “running on empty” largely due to the rising price of fuel and suggests that the company she’s teasing makes a technology that could help Amazon operate their vehicles “without ever paying a penny for gasoline.”
As for the part about the company’s shares being “forced” to go up…
Take that with a grain of salt.
But the gist of what she’s saying, at least from what I can gather, is that several other small companies Amazon has partnered with over the years have seen their stock prices rise as a result of the partnership, and she suggests that this is “happening again.”
Here’s how Prins put it:
“Inflation is to blame.
“… it’s especially the soaring price of fuel… the cost of transporting their goods… that has their business running on empty.”
“Amazon’s history is littered with huge challenges like this…
“And each time they’ve survived and come away stronger and more profitable than ever before…
“By (and this is important) partnering with a much smaller company.
“And most of the time – guess what happened to the shareholders of that tiny firm?
“They made a fortune.
“Made out like bandits!
“Now, it’s happening again.”
Specifically, Prins talked about how, over the years, the investing arm of Amazon has bought warrants in different companies that have helped them solve a problem of some kind and sent these companies lots of business, which she says “forced” their value to go up.
“Amazon has this history of getting warrants in tiny firms…
“Sending them a LOT of business…
“And forcing their value to go way up.”
I’ll get more into what warrants are and how these tie in with what Prins is pitching, but for now, let’s look at the company she’s teasing.
Long story short, Prins is pitching an electric truck company that she claims focuses on building electric vehicles with features that matter to companies like Amazon.
And as a result, she says that the company has managed to develop an electric truck that will “do the job” of transporting goods without costing too much.
In other words, she more or less states that this company is the “answer” (or at least part of the answer) to helping Amazon lower its transportation-related costs.
“Instead of spending all their energy on quote unquote ‘cool’ features that get a lot of attention on Twitter… but hold up assembly lines… they’ve spent their resources on features that actually matter to their customers, to corporations like Amazon.
“They’ve lowered maintenance costs by 60%.
“They’ve created simple designs that do the job without costing too much.
“They’ve created a way to transport goods – all over the globe – with zero gasoline or diesel fuel involved. This firm’s vehicles are 100% electric.”
What company is she teasing?
It looks like she’s teasing Lion Electric (LEV), a Canadian-based electric vehicle manufacturer that specializes in electric trucks and school buses.
Why do I say that? Well, I was initially tipped off about this company when Prins dropped the following clue about the company’s $1.1 billion deal with Amazon.
“Amazon is about to pour $1.1 billion into this small firm’s trucks.”
That clue appears to relate to a deal Amazon and Lion Electric struck in June 2020, which was originally reported on in January 2021, from what I can tell.
And the reason that hint tipped me off to Prins’ pick being Lion Electric was that it reminded me of a teaser I looked into earlier this year by Dave Forest of Casey Research (dubbed “Bezos’ 7th Deal“), which also centered around Lion Electric warrants.
In any case, as the presentation continued, Prins said that she was not recommending a stock but instead is recommending a “warrant play.”
“… we’re not touching this firm’s stock or options.
“We’re using the same security that Amazon gets.
“These special shares? They are called warrants.
“They have unique ticker symbols… but if you know the right one… you can just type it into your brokerage account and buy it just like a stock.”
What the heck is a warrant?
This Business Insider article does a great job of breaking down warrant investing, so I recommend checking that out if you want a full explanation.
But the gist is that warrants allow investors to purchase a company’s shares at a set price on or before the warrant expires. And they are similar to options in that they allow you to more or less “control” more shares with less upfront capital.
For example, let’s say that shares in Company XYZ are trading at $5 a pop and that there are warrants available at a strike price of $10. Let’s also say that the price of each warrant (which allows you to buy one share) is $1 and that an investor has $1,000 to invest all up.
On the one hand, the investor could simply buy 200 “regular” shares of the company (200 x $5 a share) with that capital.
Or on the other hand, with warrants, an investor can essentially “lock in” the ability to buy 1,000 shares at $10 a share IF the stock reaches $10 or higher on or before the warrant expires. And it only costs the investor $1 per warrant to do so.
So, if Company XYZ ends up trading at $15 in the future, for example, the investor could then buy 1,000 shares at $10 and make a cool $4 profit on each share ($15 per share minus the $10 paid per share and the $1 for the warrant).
However, if the price does not go above the strike price of the warrant upon expiry, then the investor loses whatever they’ve invested in the warrants.
There is more to it than that, and I’m sure there are people who could explain it a lot better than I could since I’m not a warrant investing expert.
But that’s my understanding of how warrants work anyways.
What “warrant play” is Prins recommending?
I can’t say for sure what Prins is recommending, as I have not read the report she’s put together that details her recommendation. But assuming she is teasing Lion Electric, which I believe she is, then she’s likely talking about this Lion Electric warrant.
This warrant entitles the holder to purchase LEV shares at $11.50 on or before the expiry date (which appears to be in 2026) and is currently trading at less than $1, which matches the “you can play for under $1” clue in the presentation.
I won’t comment on whether or not I think buying warrants in this company is a good idea. My goal with these posts is not to give anyone advice about what they should or shouldn’t do, it’s to help demystify the pitch and figure out what is being teased.
And there are significant potential risks involved with warrant investing, so I recommend doing your own research on all of this before rushing into anything.
In any case, I do think this is an interesting strategy from Amazon’s perspective.
As Prins pointed out in the presentation, Amazon has a history of partnering with smaller companies that can help it solve a problem of some kind (like a logistics problem, for example), agreeing to give them business in the future, and buying their warrants before the stock rallies off the back of the partnership announcement.
As for Lion Electric, the deal it has with Amazon appears to have been reported in January 2021, which was around the time its shares skyrocketed.
For whatever reason, it has traded down significantly since then, which has likely not been helped by the overall selloff in tech we’ve seen this year.
Still, according to a writeup on electrek.co regarding the company’s Q2 performance, Lion Electric “continues to see strong demand for its EV models” and delivered 105 vehicles in the second quarter (90 buses and 15 trucks). So while the stock has been beaten down pretty badly this year, the company has seen increasing demand for its EVs.
And according to electrive.com, Amazon has agreed to procure “up to 2,500 all-electric Lion 6 and Lion 8 trucks” from Lion Electric by 2025. So there’s that, too.
Of course, none of this means you’ll make money betting on the company’s warrants (or stock), much less see 50x gains as Prins suggests is possible in the presentation.
At the end of the day, nobody knows how well ANY stock will do in the future, so there is always a risk in speculating in the market.
That’s why, to me, it’s so important to do your own due diligence instead of just following someone’s picks and never invest more than you can afford to lose.
In any case, assuming you agree with my research, at least now you know what Prins is teasing. So I hope this has helped. Thanks for reading!