PreMarket Prep Stock Of The Day: Tattooed Chef

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

Sometimes an issue can get hot early on in the message boards and then cool off. With no news at the moment on the plant-based food company Tattooed Chef Inc. TTCF, its price action makes Wednesday's PreMarket Prep Stock of the Day. 

Tattooed Chef's SPAC Trajectory: Tattooed Chef went public in a special purpose acquisition company deal between Forum Merger II and Ittella International that was approved in October. It began trading on the Nasdaq in November.

The volatile price action was similar to other SPACs in the pre-acquisition mode. Until May 2020, the issue traded at the $10 area and ebbed and flowed with the crazy action in the SPAC market.

Interestingly, the issue made its all-time one month before the official announcement, as speculators drove many of the SPAC stocks much higher in rallies not based on any fundamental information.

The SPAC Announcement And Price Action: On Oct. 15, the formal announcement was made midday between the two parties in the SPAC deal. For that day, it appeared to be “sell the news,” as the issue swooned from $26.18 to $24.20.

Some optimism over the deal lingered the following day, as the issue rallied to $27.20, its highest level since the all-time high, and ended the session higher by over $1 at $25.13.

The Goose Is Cooked: Investors who sold Oct. 15 and 16 were quickly rewarded when the issue collapsed over the next few days to $17.50 and ended the Oct. 22 session at $19.55.

The rebound off that low capped on Nov. 9 at $20.95, and the low for the decline was made in December at $14.09. The stock rebounded to end the year ar $22.89.

Stock Is Volatile, Has Gone Nowhere In 2021: Tattooed Chef came near its all-time high in January, peaking at $27.20. The extended decline of that rally found support above the December low ($14.02) at $15.42, and the stock staged another rebound.

With all the whipsaw action, the issue ended Tuesday’s session under its year-end close ($22.89) at $21.28.

The Premarket Pump, Price Action: Perhaps based on Tuesday’s strong session ($17.70 to $21.28), once again on news, the issue peaked at $22.29 in premarket trading Wednesday and was at the level off the open.

As of 1:30 p.m. Wednesday, the rally off the open stalled and reversed course. The ensuing decline found support just above the top of Tuesday’s range ($21.16) at $21.22.

The stock rebounded to end the session 2% higher at $21.45. 

If the issue can clear the current high as well as its June 16 high ($22.43), the next daily high is not until its June 15 high ($24.25).

Photo: a Tattooed Chef enchilada in the box. Courtesy of the company.