Why Bridger Aerospace (BAER) Is the Latest Meme Stock
Source: Dmitry Demidovich/ShutterStock.com
shares of Bridger Aerospace (NASDAQ:BEAR), the stock opened over 140% higher as attention on the company continues to grow. In August, it was announced that Bridger would merge with Special Purpose Acquisition Company (SPAC) Jack Creek Investment Corp. would become a public body. The transaction valued BAER at a pro forma enterprise value of US$869 million. Without repayments, Bridger would have added approximately $345 million to its balance sheet.
Following the announcement, Bridger became a public company on January 25. Since then, shares are down about 20% from their pre-merger price of $10.19. In the past five days, BAER is up more than 90%.
The company operates a fleet of aircraft to fight forest fires nationwide. As of December, Bridger was operating 20 aircraft and plans to add nine more this year. Its flagship is the CL-415EAF, or “Super Scooper,” so named for its ability to scoop water from natural springs.
BAER stock is gaining attention as a meme stock
A small float for BAER can help explain recent volatile moves. Bridger originally estimated 110.9 million shares outstanding. That would include “34.5 million shares from JCIC SPAC shareholders, 39.6 million from existing Bridger shareholders and 6.9 million for the Jack Creek sponsor.” However, in a Form 8-K filed Jan. 24, the company said it had just 43.8 million shares outstanding. This is attributed to massive redemptions. Of the 34.5 million shares held by shareholders, 34.25 million shares, or 99%, were redeemed for cash.
With a lower float, stock prices are much more prone to volatile movements. That’s exactly what happened. Still, a bullish push driven by a low float doesn’t exactly help explain the company’s long-term prospects, which is the ultimate price driver.
In 2020, flight, standby and other revenue totaled $13.41 million. That number rose to $39.84 million the following year. For 2022 and 2023, the company has estimated revenues of approximately $46 million and $109 million, respectively.
Revenue growth looks healthy, but concentration risk is still very evident. As of December 31, the top two customers accounted for 92% of sales. As a result, revenue could plummet if those customers decide to sign with a competitor.
At the time of publication, Eddie Pan held no position (neither directly nor indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are governed by InvestorPlace.com Posting Policies.