ISPO stock is about to crash

$ISPO – Inspirato is a relatively new stock and has recently began trading on the markets. ISPO became public via a SPAC merger on February 14th, 2021. Since then, it has gone from $9 to a high of $108 per share just 3 short days later. This pump resulted from a low float and high retail interest. However, since then it had dropped over 65%, until today. Today (Feb 25th) ISPO is currently up by 74%, and is still 42% down from their ATH, but does this make ISPO a buy? ISPO Stock Financials: ISPO is currently trading at a 2.9B market cap, however is this reasonable given their financials? Short story short, the answer is no. Their net income is projected to be -$18M which is down from 2020’s net income of -$540k. However, in 2021 their Free Cash Flow is projected to be $22.3M, which has increased greatly since 2020’s of $7.7M. Furthermore, they have enough cash to cover their long term debt, which is nice. Overall, their financials are somewhat good, but are not nearly good enough to justify their current price. ISPO Stock PIPE Investors: As part of their SPAC deal, there were 8.8M shares distributed to their PIPE investors at $10/share. These shares are most likely to be available for sale on August 13th, 2022, and if ISPO can maintain these prices, I wouldn’t be surprised if they sold the majority of their holdings. Currently, there are 47M shares outstanding, which means that their PIPE investors could dilute the stock up to 19% on August 13th, which would be catastrophic for the price of their stock. SPAC Environment: Over the last couple of years, the vast majority if SPAC mergers have fell flat within the months/years after going public via their SPAC. I think that this could be the case for ISPO given that they are a subscription-based luxury travel company. Overall, I am not sure how much demand there is in this market as it is very niche. Furthermore, I think that their subscription model for travelling is quite odd given that people tend to only ravel a couple of times per year, and would not want to pay monthly subscriptions unless it saved them more money than their subscription costs (which could be the case but I do not know given that they do not list their prices). ISPO Subscription Pricing: The monthly subscription however is $600/month plus a $600 initiation fee, for a total of $7,800 for te first ear, and $7,200 for each of the following years. This subscription does not even cover the nighly rates, but just gives you access to their homes, hotels, and exclusive experiences. The other subscription is $2,500 per month with $2,500 initiation fee, for a total of $32,500 for the first year, and $30,000 for each of the following years. This is inclusive of the nightly rates but is very expensive. I have come across a great article that breaks down their costs, and shows how their customers are actually losing money by paying for ISPO subscriptions. Citing actual cases where their ISPO costed more than booking the same place on Hotels.com due to their subscription pricing model. The article is lined here Overall thoughts on ISPO Stock: I think that ISPO is going to end up like a lot of other SPAC’s, down over 80% from current prices. I think the best way to play this is to short it and to sell when the morning of the PIPE lock-up expiry.

back

ISPO stock is about to crash

bearish

$ISPO - Inspirato is a relatively new stock and has recently began trading on the markets. ISPO became public via a SPAC merger on February 14th, 2021. Since then, it has gone from $9 to a high of $108 per share just 3 short days later.

This pump resulted from a low float and high retail interest. However, since then it had dropped over 65%, until today. Today (Feb 25th) ISPO is currently up by 74%, and is still 42% down from their ATH, but does this make ISPO a buy?

ISPO Stock Financials:

ISPO is currently trading at a 2.9B market cap, however is this reasonable given their financials?

Short story short, the answer is no. Their net income is projected to be -$18M which is down from 2020's net income of -$540k. However, in 2021 their Free Cash Flow is projected to be $22.3M, which has increased greatly since 2020's of $7.7M. Furthermore, they have enough cash to cover their long term debt, which is nice. Overall, their financials are somewhat good, but are not nearly good enough to justify their current price.

ISPO Stock PIPE Investors:

As part of their SPAC deal, there were 8.8M shares distributed to their PIPE investors at $10/share. These shares are most likely to be available for sale on August 13th, 2022, and if ISPO can maintain these prices, I wouldn't be surprised if they sold the majority of their holdings.

Currently, there are 47M shares outstanding, which means that their PIPE investors could dilute the stock up to 19% on August 13th, which would be catastrophic for the price of their stock.

SPAC Environment:

Over the last couple of years, the vast majority if SPAC mergers have fell flat within the months/years after going public via their SPAC. I think that this could be the case for ISPO given that they are a subscription-based luxury travel company. Overall, I am not sure how much demand there is in this market as it is very niche. Furthermore, I think that their subscription model for travelling is quite odd given that people tend to only ravel a couple of times per year, and would not want to pay monthly subscriptions unless it saved them more money than their subscription costs (which could be the case but I do not know given that they do not list their prices).

ISPO Subscription Pricing:

The monthly subscription however is $600/month plus a $600 initiation fee, for a total of $7,800 for te first ear, and $7,200 for each of the following years. This subscription does not even cover the nighly rates, but just gives you access to their homes, hotels, and exclusive experiences.

The other subscription is $2,500 per month with $2,500 initiation fee, for a total of $32,500 for the first year, and $30,000 for each of the following years. This is inclusive of the nightly rates but is very expensive.

I have come across a great article that breaks down their costs, and shows how their customers are actually losing money by paying for ISPO subscriptions. Citing actual cases where their ISPO costed more than booking the same place on Hotels.com due to their subscription pricing model. The article is lined here

Overall thoughts on ISPO Stock:

I think that ISPO is going to end up like a lot of other SPAC's, down over 80% from current prices. I think the best way to play this is to short it and to sell when the morning of the PIPE lock-up expiry.

read-time
3 min
10.00
Target Price
10/ 10
Confidence
2-6 Months
Timeframe
catalyst icon
Earnings Release
catalyst icon
News
catalyst icon
SEC
Filing
catalyst icon
Sentiment
catalyst icon
Other Catalyst

Access the latest tools and discussion channels with an account

reddit-sentiment

Reddit Sentiment
Analysis

portfolio-balancer

Portfolio Balancer
with brokerages

sec-dashboard

SEC Dashboard
with NLP

*/}aiodd-ad
next