Tellurian (TELL) has broken out of a multi-month trading range. This company´s aim is to build a huge LNG export facility in Louisiana to ship the commodity to the world. As an investment, the firm has major funding risks. This is a sizable project which is expected to generate significant cash/flow if indeed the project can get completed. Furthermore shareholders will also be hoping that it does not come in way over budget.
We understand why value investors may not be attracted to this company because of its lack of any real earnings plus the fact that significant capital will need to be raised to pay for the project. This obviously raises risk a lot especially if the price of natural gas for example were to drop sharply in the coming quarters ( We remain bullish though on Nat.Gas).
However, from a market´s standpoint at present, the fundamentals are bullish. How do we know this? Because the price is going up. As technicians, that is really all we have to know. If prices are rising, the fundamentals are bullish, if it is the opposite, they are bearish.
The beauty of sharp moves in price is that this causes implied volatility to spike which in turn increases the prices of the stock´s options. We expect the breakout to hold which means price has now no business dropping under $1.80 per share approx once more.