Local Bounti (LOCL), mcap=$304m, price $3.23 vs $5.20

Short pitch:
– Indoor farming SPAC, which is riddled with related party transactions and has just spent 100% of SPAC cash to acquire a no-growth leafy greens supplier to the likes of WMT, TGT, KR and ATCI for $120m or 12x gross profit.
– LOCL’s original de-SPAC business will do under $2m and booker $8.5m loss in Q1’22.
– All of this for a $550m market cap.
– Expensive borrow, however lock-up just expired.
– Another SPAC from the same sponsor DMS trades for $1.66.

Valuation: Valuing the recent acquisition at a cost of $120m (already excessive at 12x gross profit for a no-growth produce manufacturer) the core LOCL is implicitly valued at $400M, with only $2m in revenues.

Exp. gain: 60%+ to $1-$2/share

Full LOCL write-up (free guest account required):


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