I have a new stock pick lined up for you with The Two Fold Formula.
It is SRAX. That’s the symbol for the business to business company Social Reality.
You may not have heard of it, because it is a small cap stock with a market cap just shy of $50 million.
A year ago it surged when it linked itself to the entire Bitcoin/blochain craze by announcing a crypto division and eventual launch of a coin. Many companies were doing this at the time, because Bitcoin players would chase anything that would go up.
RIOT was one such stock.
But Bitcoin topped last December and almost all of the Bitcoin/blockchain stocks collapsed this year. RIOT even made a new low last week. There were also many people who shorted these stocks this summer to profit from the disintegration of a smoke and mirrors sector.
But something funny has happened with SRAX. It didn’t crash. It simply went sideways all summer.
Take a look at the chart.
Notice that the 200-day Bollinger Bands for SRAX have narrowed to suggest that a big move is coming.
On a technical analysis price chart basis the stock has support now at $4.00 and resistance below $5.00, the point of its recent downtrend resistance line connecting its recent highs.
I think it’s likely to bust through that level and go up to $6.00 and maybe even higher, because when this stock does go up it tends to surge.
Now here is the thing the short sellers have piled into the stock and are now short 1.71 million shares when the stock has a trading float of 8.55 million. Yes, that means they are short almost 20% of the float. It has a short ratio over 5.
I believe the shorts are making a mistake of assuming that this company is simply hot air like so many of the other Bitcoin/blockchain companies are when in reality it has a real business with real earnings.
While having a market cap close to $50 million the company posted revenue of $18.85 million in the past twelve months. In fact it has a Wall Street analyst covering it who has a price target of $10.00 on it.
Social Reality is a business-to-business company that has several divisions involved with digital marketing and consumer data management.
On August 7 the company announced that it was selling SRAXmd – a healthcare marketing division with an ad exchange for companies in the space – for $33 million in cash to Halyard Capital. It can also make an additional $9 million on the deal if further revenue conditions are met for SRAXmd by year end.
This is the type of things that makes SRAX different than last year’s Bitcoin/blockchain players like RIOT and the rest that are still crashing. Yes SRAX linked itself to the shady blockchoin crypto world, because that was the hype of 2017, but those short now SRAX probably don’t know the difference between it and the other stocks and that is why I think SRAX can have a short squeeze rally with a chart lined up with The Two Fold Formula.
I explain The Two Fold Formula in great detail in my ebook about it, because it is the single best trading pattern that I have ever used.
To arm yourself with it just click here.