Shares of Bridger Aerospace (NASDAQ:BAER) stock opened higher by over 140% as attention on the company continues to surge. In August, it was announced that Bridger would become a public entity by merging with special purpose acquisition company (SPAC) Jack Creek Investment Corp. The transaction valued BAER at a pro forma enterprise value of $869 million. Without any redemptions, Bridger would have added about $345 million to its balance sheet.
Following the announcement, Bridger became a publicly traded entity on Jan. 25. Since then, shares are down by about 20% from its pre-merger price of $10.19. In the past five days, BAER is up by more than 90%.
The company operates a fleet of aircraft to combat wildfires across the nation. As of December, Bridger operated 20 aircraft and plans to add nine more this year. Its flagship plane is the CL-415EAF, or “Super Scooper,” which received its name because it can scoop up water from natural sources.
BAER Stock Gains Attention as Meme Stock
A small float for BAER can help explain the recent volatile moves. Bridger had originally estimated there to be 110.9 million shares outstanding. That would include “34.5 million shares from shareholders of the JCIC SPAC, 39.6 million from existing Bridger shareholders, and 6.9 million for the Jack Creek sponsor.” However, in a Form 8-K filed on Jan. 24, the company disclosed that there were only 43.8 million shares outstanding. That’s attributed to massive shareholder redemptions. Of the 34.5 million shares held by shareholders, 34.25 million shares, or 99%, were redeemed for cash.
With a lower float, share prices are much more prone to volatile moves. That’s exactly what has happened. Still, a push upward driven by a low float doesn’t exactly help explain the company’s long-term prospects, which is the ultimate driver of price.
In 2020, flight, standby and other revenue totaled $13.41 million. That figure ballooned to $39.84 million the following year. For 2022 and 2023, the company guided for revenue of $75 million and $106 million, respectively, in an investor slide deck released last August.
Revenue growth seems healthy, but concentration risk is still very apparent. As of Dec. 31, the top two customers accounted for 92% of revenue. As a result, revenue could take a massive hit if these customers decide to sign with a competitor.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
