Sunday, July 6, 2025

What a Wild Ride! Market Update from Shark Water Trading

July 6, 2025

Fellow traders and investors, been offline for a bit but what an absolutely WILD ride this market has been! If you've been following along, you know we've experienced one of the most dramatic market cycles in recent memory, and for those who played it right after Liberation Day, the rewards have been absolutely spectacular.  I've successfully replaced most of my W2 take=home pay with passive income since April.  My dividend payers are AGNC, ORC, YMAX, GIAC and WTPI.  My only Long-term holding at the moment is NTLA.  I continue to hold cash in a MM for the next bumps in the road. I sell PUTS with that and then some intraday covered-calls on NTLA.  Probably done with the covered calls if the new base holds on NTLA.

All-Time Highs After the Storm

The market has been nothing short of a roller coaster, but we're now sitting at all-time highs! By June 27, 2025, the S&P 500 and the NASDAQ closed at all-time highs, with the S&P 500 gaining 0.5%, to close at a record 6,173.07. What makes this even more remarkable is where we came from.

Remember Liberation Day on April 2nd? That was when President Trump announced his sweeping tariff policies, sending shockwaves through the markets. The S&P 500 has tumbled more than 12% in the immediate aftermath, with some calling it one of the worst sell-offs since the pandemic. But here's the thing about markets - they hate uncertainty, and once that uncertainty started to clear, we saw an absolutely explosive recovery.

The Liberation Day Opportunity

For those brave enough to buy during the Liberation Day crash, you've been handsomely rewarded. The S&P 500 has been on a wild round trip: The index shed $9.8 trillion in market value from its previous record on February 19 to its low point on April 8, before recovering all of those losses across the past two and a half months.

The key was recognizing that President Donald Trump said on April 3 regarding his tariffs that events were "going very well", as the "markets are going to boom, the stock is going to boom, the country is going to boom". Smart money listened and positioned accordingly.

Income Powerhouses Leading the Charge

ELF Beauty - The Cosmetics Rocket Ship

Talk about a comeback story! ELF Beauty has been an absolute monster, and anyone who bought the Liberation Day dip is sitting pretty. Full year Fiscal 2025 net sales grew 28%, reflecting another year of industry-leading growth, and the company just announced an agreement to acquire rhode, a fast-growing beauty brand founded by Hailey Bieber for $800 million plus earnouts.

The Street is loving it, with the average price target is $122.00 with a high forecast of $150.00 and a consensus rating of Strong Buy which is based on 13 buy ratings, 3 hold ratings and 0 sell ratings. This isn't just growth - it's profitable, sustainable growth in a defensive consumer staple category.

OKLO - Nuclear Renaissance in Full Swing

Holy smokes, OKLO has been absolutely on fire! Oklo has been on an absolute tear, soaring 559.6% as of this writing over the past year. The nuclear energy renaissance is real, and OKLO is perfectly positioned.

With Sam Altman's OpenAI announcing the Stargate Project in January, investors raced to purchase Oklo, recognizing that the OpenAI plan to develop data center infrastructure could be a potential boon for the company. The data center boom is massive - Research from Dell'Oro Group estimates that global spending is expected to soar from $430 billion on data centers in 2024 to $1.1 trillion by 2029.

Gene Editing Stocks - The Future is Now

The gene editing space has been quietly building momentum, and these names are starting to show serious promise:

CRISPR Therapeutics (CRSP) continues to lead the pack with its revolutionary gene-editing platform. Bank of America has a "buy" rating and $86 price target for CRSP stock, and the company's partnership with Vertex on sickle cell disease treatments could be game-changing.

Intellia Therapeutics (NTLA) has been making waves with its in-vivo gene editing approach. In 2021, Intellia and its partner, Regeneron Pharmaceuticals announced the first clinical data supporting the use of in vivo (in the body) CRISPR-Cas9 gene editing in humans. Bank of America has a "buy" rating and $43 price target for NTLA stock.

Editas Medicine (EDIT) rounds out the big three, focusing on both in-vivo and ex-vivo approaches. The gene editing market is projected to explode, with analysts at Precedence Research expect the gene-editing market to grow 15.7% annually and reach $40.1 billion by 2034.

RKLB - Rocket Lab's Stellar Performance

Rocket Lab has been absolutely crushing it! RKLB stock has risen by 10.03% compared to the previous week, the month change is a 30.22% rise, over the last year Rocket Lab Corporation has showed a 670.19% increase. This space play has been one of our biggest winners.

Rocket Lab reported Q1 2025 revenue of $122.6 million, with $87 million driven by its high-margin Space Systems segment, and the company has $1.067 billion backlog, over 56% convertible within 12 months. With the space economy projected to triple, RKLB is perfectly positioned for the long haul.

The analysts are bullish too, with a median price target of $29.50 (ranging from $19.51 to $45.00) and the overall analyst consensus for RKLB is bullish. Out of 20 Wall Street analysts, 10 rate it as Buy, 4 as Hold, and 0 as Sell.

Rate Cuts on the Horizon

Here's where things get really interesting for the second half of 2025. The Fed is in a tough spot, but the consensus is building for rate cuts. Goldman Sachs economists raised their forecast for Federal Reserve interest rate cuts to three this year and increased the probability of a U.S. recession to 35%.

Asked how the Fed will respond to not only higher prices from tariffs and weakening growth and employment, 65% say the central bank will cut rates. This is huge for income-producing portfolios and growth stocks alike. Lower rates mean higher valuations and more capital flowing into risk assets.

Tariffs and Recession Risks - What's Really Happening

Let's address the elephant in the room. Yes, tariffs are inflationary and create economic headwinds. Goldman expects the average U.S. tariff rate to rise 15 percentage points in 2025, which is significant. However, markets are forward-looking, and much of the tariff impact has already been priced in during the Liberation Day sell-off.

The recession probability has increased - The odds of recession in the next year rose to 53%, up from 22% in January - but here's the key: J.P. Morgan Research has reduced the probability of a U.S. and global recession occurring in 2025 from 60% to 40% as trade tensions have eased and some tariff policies have been walked back.

Even if we do see economic weakness, "We're most likely not going to go into a serious recession, because the Fed can take action to prevent that" as Jim Cramer noted. The Fed has plenty of ammunition to support the economy.

The Bottom Line

We're living through one of the most dynamic and opportunity-rich markets in years. Yes, there's volatility, but that volatility creates opportunity for those willing to do the work and stay disciplined. The companies we've highlighted - ELF, OKLO, the gene editing names, and RKLB - aren't just riding market momentum. They're fundamentally strong businesses positioned in secular growth trends.

For income-focused investors, the combination of potential rate cuts and strong fundamental performance from dividend-growing companies creates a compelling setup. For growth investors, the innovation happening in nuclear energy, space technology, and gene editing represents generational opportunities.

Stay nimble, stay disciplined, and remember - in markets like these, fortune favors the bold and the prepared.

Trade safe, trade smart, and ride the waves!

The Shark Water Trading Team


Disclaimer: This content is for educational and informational purposes only. Always do your own research and consult with a financial advisor before making investment decisions. Past performance does not guarantee future results.

Tuesday, June 3, 2025

Wolfspeed Update

 Wolfspeed Semiconductor and Bankruptcy: What’s Happening

Current Status

Wolfspeed, a leading U.S. silicon carbide (SiC) semiconductor manufacturer, is preparing to file for Chapter 11 bankruptcy within weeks due to an unsustainable debt load of around $6.5 billion.

The company’s stock has collapsed, dropping over 70% in a single day after reports of the impending bankruptcy, and now trades below $1 per share, down from a peak of $140 in 2021.

Key Issues

Wolfspeed’s financial troubles stem from:

Heavy debt from building new manufacturing facilities in North Carolina and New York.

Delays in receiving $750 million in federal CHIPS Act funding, which is contingent on refinancing existing debt.

Slowing demand for SiC chips in electric vehicles and industrial markets, plus intense price competition from Chinese rivals.

Operational delays and underutilization at new plants, leading to significant losses and layoffs (about 25% of workforce cut since late 2023).

Bankruptcy Plan

Wolfspeed is pursuing a “prepackaged” Chapter 11 bankruptcy, aiming to reorganize its debt with the support of key creditors like Apollo Global and Renesas Electronics.

The company rejected multiple out-of-court restructuring offers, including proposals for debt-to-equity swaps by major lenders.

Leadership Changes

The CEO and CFO have both recently been replaced as part of efforts to stabilize the company.

Outlook

Wolfspeed’s bankruptcy is intended to allow the company to continue operating while restructuring its finances, not to liquidate.

The company still holds a leading share in the SiC substrate market but faces mounting pressure from global competitors and uncertain federal support.

Thursday, May 29, 2025

ELF Beauty: The $55 to $90+ Rocket Ship That Should Have You Retiring

If you listened to our previous calls around $55, you're looking at 60%+ gains and a potential early retirement fund.


What a ride it's been for ELF Beauty (NYSE: ELF) shareholders! As we write this on May 29th, 2025, the stock is trading at $90.50, representing a stunning +49.89% gain in just the past month alone. But here's the kicker – if you were paying attention to our previous analysis when we flagged this beauty disruptor around the $55 mark, you're sitting on gains that could literally fund your early retirement.

The Meteoric Numbers That Tell the Story

Let's break down the financial fireworks that have sent ELF into the stratosphere:

Recent Stock Performance:

  • Current price: $90.50 (+9.28% in past 24 hours)
  • Monthly surge: +49.89%
  • Weekly gain: +15.50%
  • 52-week range: $49.40 - $219.77

But the real story isn't just in the stock price – it's in the blockbuster business fundamentals that are driving this rocket ship to new heights.

The Billion-Dollar Catalyst: Rhode Acquisition

On May 28th, 2025, ELF dropped a bombshell that sent shares soaring +25% in a single day. The company announced its acquisition of Hailey Bieber's Rhode skincare brand for $1 billion – and this isn't just any celebrity beauty deal.

Why This Deal is Pure Gold:

  • Rhode generated $212 million in net sales in just three years with only 10 products
  • Rhode was the #1 skincare brand in earned media value (EMV) in 2024, with 367% year-over-year growth
  • The brand more than doubled its consumer base over the past year
  • Partnership with Sephora launching across North America and UK this year

As ELF CEO Tarang Amin put it: "I've been in the consumer space 34 years, and I've been blown away by seeing this brand over time. In less than three years, they've gone from zero to $212 million in net sales, direct-to-consumer only, with only 10 products. I didn't think that was possible."

The Earnings Beat That Exceeded All Expectations

ELF's Q4 2025 earnings report wasn't just good – it was spectacular:

Key Financial Highlights:

  • Q4 revenue: $332.6 million
  • Full year revenue: $1.31 billion
  • Annual sales growth: 28% (fastest pace of any large beauty company)
  • International sales exploded 66% year-over-year

Even more impressive, ELF's consensus earnings forecast from 11 analysts was $0.57 per share, and the company has been consistently beating expectations while expanding globally at breakneck speed.

Remember Our $55 Call? Here's Your Retirement Math

For those who've been following our analysis since we first highlighted ELF around the $55 mark, let's do some quick retirement math:

The Numbers Don't Lie:

  • Entry point: ~$55
  • Current price: $90.50
  • Gain: 64.5%
  • Analyst price target: $116.88 (additional 29% upside)

Real-World Example:

  • $10,000 investment at $55 → $16,450 today
  • $50,000 investment at $55 → $82,250 today
  • $100,000 investment at $55 → $164,500 today

If analysts are right about the $116.88 target, that $100K investment could be worth $212,500 – more than doubling your money in less than a year.

Why This Isn't Just Another Beauty Stock

ELF isn't your typical cosmetics company. It's a digital-first disruptor that has cracked the code on Gen Z and Gen Alpha consumers:

The Disruption Playbook:

  • Multi-generational appeal: #1 brand among Gen Z and most purchased brand among Gen Alpha and millennials
  • Viral marketing that turns products into social media phenomena
  • Value-oriented "dupes" of high-end products at accessible prices
  • Aggressive international expansion (Netherlands, Belgium launches in 2025)

The Rhode Synergy: "What we saw in Rhode was another like-minded disruptor. I see Hailey as much more than a celebrity, she is one of the most thoughtful founders I've ever met." – Tarang Amin, ELF CEO

The Market is Taking Notice

Wall Street analysts are bullish, and for good reason:

  • Goldman Sachs sees the Rhode deal "as a strategic positive as it further expands ELF into skincare with a prestige brand, and diversifies its customer base"
  • Analyst estimates range from $70 to $120 per share
  • Market cap: $5.17 billion and growing

The Retirement Reality Check

Look, we're not saying you should quit your day job based on one stock pick. But if you've been riding the ELF train from our $55 call, you're experiencing the kind of gains that can fundamentally change your financial trajectory.

The beauty of this play:

  1. We called it early when the stock was undervalued
  2. The fundamentals delivered with explosive growth and smart acquisitions
  3. The runway is massive with international expansion and the Rhode integration
  4. The trend is your friend with Gen Z/Alpha driving sustained demand

What's Next for ELF?

The Rhode acquisition isn't just about adding a celebrity brand – it's about strategic expansion into the prestige skincare market while maintaining ELF's accessible positioning. With analyst projections of revenue reaching $277.3 million by 2028 and continued international growth, this could be just the beginning.

Key catalysts ahead:

  • Rhode integration and Sephora launch
  • European expansion into Netherlands and Belgium
  • Continued market share gains in core demographics
  • Potential for additional strategic acquisitions

The Bottom Line

If you traded this right from our $55 call, you're not just looking at impressive gains – you're looking at life-changing returns. ELF Beauty has proven that it's not just another cosmetics company; it's a generational disruptor that has successfully navigated market challenges while positioning itself for explosive growth.

For those still on the sidelines, the current price of $90.50 might still represent value, with forecasts suggesting potential upside to $116.88. But remember – the easy money was made by those who recognized the opportunity early.

To our readers who followed our $55 analysis: Congratulations. You didn't just pick a winner – you picked a retirement accelerator.


Disclaimer: This analysis is for informational purposes only and should not be considered personalized investment advice. Past performance does not guarantee future results. Always conduct your own research and consider your risk tolerance before making investment decisions.

Sunday, May 25, 2025

A Nuclear Stock Short




 

Trump's Nuclear Renaissance: Analyzing the Current Surge in Nuclear Power Stocks

Bottom Line Up Front: President Trump's aggressive nuclear policy push has triggered massive gains in nuclear stocks, with companies like OKLO and ASPI seeing 20-30% single-day jumps. While the long-term fundamentals support nuclear growth driven by AI energy demands, investors should be cautious of the speculative nature of this rally and the execution risks ahead.

The Presidential Nuclear Push

On May 23, 2025, President Donald Trump signed four sweeping executive orders designed to usher in what the White House calls a "nuclear renaissance." These orders represent the most significant nuclear regulatory reform actions taken in decades, specifically targeting the bottlenecks that have stymied nuclear development for years.

Key Policy Changes:

  • Streamlined NRC Process: The Nuclear Regulatory Commission must now issue licensing decisions within 18 months, addressing what Trump called the agency's "risk aversion"
  • Federal Land Authorization: Departments of Energy and Defense can now build nuclear reactors on federal property, potentially bypassing traditional regulatory hurdles
  • AI Infrastructure Focus: Nuclear reactors powering AI data centers are designated as "critical defense facilities"
  • Domestic Uranium Push: Aggressive expansion of U.S. uranium mining and enrichment to reduce foreign dependence
  • Bipartisan Foundation: The ADVANCE Act passed the Senate 88-2, showing rare political consensus on nuclear energy

Energy Secretary Chris Wright framed this as "Manhattan Project 2," emphasizing the urgency around AI's unprecedented energy demands.

The Immediate Market Response

Nuclear stocks exploded higher following Trump's orders, with gains reminiscent of meme stock rallies:

Friday's Nuclear Stock Surge:

  • Oklo (OKLO): +23.54%
  • Nano Nuclear Energy (NNE): +30.29%
  • Uranium Energy (UEC): +24.61%
  • Centrus Energy (LEU): +20.40%
  • NuScale Power (SMR): +19.59%
  • Energy Fuels (UUU): +19.1%

Even established players like Constellation Energy, the largest U.S. nuclear operator, gained 2% on the news.

Spotlight on OKLO: The AI-Nuclear Convergence

Company Snapshot:

  • Current Price: $48.87 (Market Cap: $6.8B)
  • Year-to-Date Return: 113%
  • Recent Performance: 30% gain this week alone

OKLO has emerged as the poster child for next-generation nuclear technology, backed by OpenAI CEO Sam Altman (who recently stepped down as chairman to avoid conflicts of interest). The company's Aurora powerhouses represent small modular reactors (SMRs) designed specifically for the AI age.

Key Developments:

  • Switch Partnership: Signed a 20-year agreement to supply up to 12 gigawatts of nuclear power to data centers
  • Idaho Progress: Completed borehole drilling for site characterization at Idaho National Laboratory
  • Timeline: Targeting late 2027 or early 2028 for first power production
  • Pipeline: Holds approximately 14 GW in non-binding agreements with data centers and industrial operators

The Reality Check: OKLO generated zero revenue in Q1 2025 and reported an operating loss of $17.9 million, a 142% increase year-over-year. The company remains purely developmental, with commercial operations still years away.

ASP Isotopes (ASPI): The Uranium Enrichment Play

Company Profile:

  • Current Price: $8.59 (Market Cap: $477.4M)
  • 2024 Revenue: $4.14M (857% increase from 2023)
  • Focus: Advanced isotope enrichment technology

ASPI operates in the critical but complex world of uranium enrichment, developing proprietary Aerodynamic Separation Process (ASP) and Quantum Enrichment technologies. The company has strategic significance beyond just power generation.

Strategic Positioning:

  • TerraPower Partnership: Signed term sheet with Bill Gates' nuclear company for HALEU (High Assay Low-Enriched Uranium) production
  • South African Operations: First Quantum Enrichment facility operational in Pretoria
  • Medical Applications: Producing Ytterbium-176 for cancer treatments, addressing critical supply shortages
  • National Security Angle: One of few Western suppliers of enriched uranium, reducing dependence on Russian sources

Challenges: The company faced short-seller attacks in late 2024, though management has vigorously defended its operations and partnerships.

The Fundamental Drivers: AI's Insatiable Energy Appetite

The nuclear surge isn't just about political support—it's driven by unprecedented energy demands from artificial intelligence infrastructure.

The Numbers:

  • AI Power Requirements: Anthropic estimates 50 gigawatts of new power capacity needed by 2027—equivalent to 50 nuclear plants
  • Data Center Growth: U.S. power consumption expected to reach record highs in 2025-2026 after two decades of stagnation
  • Tech Company Commitments: Microsoft, Google, and Amazon have all announced major nuclear power agreements

Why Nuclear for AI:

  • 24/7 Reliability: Unlike solar and wind, nuclear provides constant baseload power
  • Zero Carbon: Meets tech companies' climate commitments
  • Scalability: Can provide the massive power requirements data centers demand
  • Grid Independence: Co-location possibilities reduce transmission constraints

Market Reality Check: Separating Hype from Fundamentals

While the long-term nuclear story is compelling, the current market euphoria raises red flags for prudent investors.

Warning Signs:

  • Speculative Nature: Most gains are based on executive orders and promises, not operational improvements
  • Pre-Revenue Companies: Many nuclear stocks generate little to no revenue, trading on future potential
  • Historical Volatility: Nuclear stocks have experienced multiple boom-bust cycles over decades
  • Execution Risk: Building nuclear facilities involves massive capital requirements, regulatory hurdles, and construction delays

The Motley Fool's Travis Hoium captured the skepticism: "The bounce is almost entirely built on speculation because most of these companies are either very low revenue or pre-revenue... This isn't the first time the nuclear industry has gone through hype cycles."

Is This Rally Sustainable?

Bull Case Arguments:

  • Bipartisan Support: Rare political consensus on nuclear energy's strategic importance
  • AI Megatrend: Structural demand growth from data centers and AI infrastructure
  • Energy Security: Reducing dependence on foreign uranium supplies
  • Climate Goals: Nuclear as essential bridge to carbon-free energy
  • Regulatory Reform: Streamlined approval processes could accelerate deployment

Bear Case Concerns:

  • Valuation Disconnect: Stock prices far ahead of fundamental progress
  • Construction Challenges: Nuclear projects historically face delays and cost overruns
  • Competition: Natural gas and renewables plus storage remain cheaper alternatives
  • Regulatory Reality: Even with reforms, nuclear licensing remains complex and time-consuming
  • Capital Intensity: Massive funding requirements for actual reactor construction

Investment Implications: A Cautious Approach

The nuclear rally presents both opportunity and risk for investors. While the fundamental drivers—AI energy demand, energy security concerns, and climate goals—are real and lasting, the current stock prices appear to be pricing in best-case scenarios.

For Conservative Investors: Consider established players like Constellation Energy or Cameco that have existing operations and revenue streams, rather than pure-play development companies.

For Growth Investors: OKLO and ASPI offer exposure to cutting-edge nuclear technology, but with significant execution risk. Position sizing should reflect the speculative nature of these investments.

Timing Considerations: The current surge appears driven more by policy announcements than operational progress. Historical patterns suggest nuclear stocks often give back dramatic gains when reality sets in.

The Verdict: Short-Term Surge, Long-Term Potential

Trump's nuclear executive orders have created genuine momentum for an industry that has struggled for decades. The combination of AI-driven energy demand, bipartisan political support, and regulatory reform creates a more favorable environment than nuclear has seen in years.

However, the 20-30% single-day gains in nuclear stocks reflect speculative enthusiasm more than fundamental improvements. While companies like OKLO and ASPI are positioned to benefit from the nuclear renaissance, investors should expect significant volatility as the gap between promise and performance plays out over the coming years.

The nuclear story is compelling, but success will ultimately depend on execution—building actual reactors, generating real revenue, and proving these technologies can scale economically. Until then, this remains a sector where hope trades ahead of reality.

Investment Takeaway: The nuclear renaissance is real, but the current rally appears to be getting ahead of itself. Investors should consider the sector's long-term potential while remaining mindful of near-term volatility and execution risks.