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Ok, first off, this trade is a baby rocket trade. You won't make it to the moon with this one, but it'll likely refuel your thrusters. I'm thinking about a 20-40% bagger๐๐ as opposed to the 1000% MEME baggers ๐๐. It's not pumpable, squeezable, whatever you wanna call it since there's a cap on how high the stock can go. $29 if buyout goes through, $26 probs if we get some good news. There's no crazy upside hype. It's a stock with pretty clear cut risk and reward.
So what is Magnachip. Magnachip, $MX, is a semi-conductor company based in South Korea that produces OLED display drivers as well as power management integrated circuits. Their OLED tech goes into smartphones, TVs, as well as automobiles. Their power integrated circuits are used in automotive, 5g, and the energy industry. The company pulled in about 500M in revenue last year and has been around for 15 years and owns a portfolio of approximately 1,200 registered patents and pending applications. So it's not a non-sense vapor-ware company.
Magnachip is supposedly such a good investment that two firms have offered to buyout Magnachip one at $29 and one at $35.
Note that Magnachip is trading at $21 right now. ๐ฎ๐ฎ๐ฎ๐ฎ๐ฎ๐ฎ๐ฎ
The reason why $MX is trading at $21 right now as opposed to $29 is because the US government (as well as South Korean government) has stepped in to 'review' this buyout. They don't want to lose another semiconductor company to China. Wiseroad Capital is a Chinese private equity firm. And China = Very Bad. So buying $MX means you take on the risk that the deal falls through cuz US gov thinks China = Bad.
With that said, even with that risk, IMO, it makes sense to buy $MX ๐๐. Here are a few reasons.
Do I think the deal will go through? Honestly, I'm just an ape so no idea. But note that most of Magnachip's sales are to Samsung as well as to companies in China.
Meaning, it rarely sells to companies in the US. In other words, from a trade and technological standpoint, the US doesn't stand to lose much if China does end up owning the company. South Korea, could stand to lose out. But Wiseroad was willing to give up 84M if South Korea does not approve the deal.
So when is the deal expected to go through? Some say by the end of this year. But recently, the US announced that it plans to be done with it's part of the review by 9/13.
As for when South Korea will be done? Who knows. I'd imagine it would be shortly after . OR, South Korea may have even been ok with it in the first place, and are just waiting for the US. Who knows.
But the deadline to keep in mind is 9/13, and obviously it could be A LOT SOONER. Personally, I'm thinking, if the buyout gets OKed, $MX goes to $26 after confirmation and then goes to $29 eventually. But, if it falls through, it may eventually be bought out for even more! Someone was willing to pay $35 at one point.
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Disclosure: I am long $MX. Fellow WSBs should carefully consider their investment objectives and risks before yoloing into $MX. Opinions and statements regarding the financial markets are based on current market conditions and constitute my judgment. They are subject to change without notice. My bullish sentiment is my opinion and was reached after doing intensive due diligence on the industry and company.
Also, DM or comment for sources. Seems like posts get removed if they have links. I've decided I'll just screenshot sources and if you want the link, just comment below.