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U.S. Well Services Closes Another Weak Quarter And I'm Still Bearish

Dec. 01, 2021 3:42 PM ETProFrac Holding Corp. (ACDC)17 Comments


  • The company booked a loss of $15.2 million in Q3 2021 as interest expenses topped $10 million.
  • Net debt is over $300 million and the shareholders’ equity is deep in the red.
  • The fracking fleet sector has significant capital requirements and many companies, including U.S. Well Services, have struggled to generate profits even during good years.
  • I continue to be bearish, and the short borrow fee rate stands at 14.4% as of the time of writing.

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Investment thesis

In May and August, I wrote bearish articles on U.S. Well Services (NASDAQ: USWS). The company doesn’t seem to be in danger of insolvency anymore but it posted weak results for Q3

This article was written by

Gold Panda profile picture

Gold Panda has been working as an M&A analyst for over 11 years. He's been investing since 2007. Preferring value to growth, he tends to take a relatively conservative approach in his investing. His focus is on small and micro-cap stocks, which he believes is the area which offers the greatest opportunity to exploit market mis-pricings.

Gold Panda is part of the team that runs the investing group Microcap Review. He provides a real-time portfolio to the group. Microcap Review focuses on three areas of opportunity in the micro-cap space: arbitrage and special situations, net-nets and undervalued stocks. Learn more.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (17)

alpha drip profile picture
@Gold Panda how do you like the risk reward at current levels? Thanks
Gold Panda profile picture
@alpha drip still terrible, over $100 million shareholders' equity deficit
alpha drip profile picture
@Gold Panda makes sense - thank you!
Thomas Prescott profile picture
I think it is screaming buy. It has a current ratio of about 1 and a price to sales ratio of 0.1 vs about 1.5 for oilfield services sector. Price has been trending down or flat while the rest of the sector has made a recovery from the pandemic dip with that recovery accelerating recently.

It has a good chance of benefitting from increased completion activity resulting from renewed demand for oil and gas coupled with underinvestment in new production in the last several years. If one looks at a typical production decline curve, it is clear that new wells must be drilled and completed just to maintain current production.

Further, the electric fracing fleet may a selling point for production companies looking to present themselves as green by lowering CO2 emissions associated with completions.
@No Ka Oi Looks like rats leaving a sinking ship?

Thomas Prescott profile picture
@Invetrts My initial position is up over 100% since I purchased on at $0.83 on February 3rd.
@No Ka Oi Nice, you should take the profit and run. It's a trashy business but a good proxy beta for $OIH.
More warrants issued: ir.uswellservices.com/...
Extremely oversold but it can easily go to $1 or $2 in a couple of days.
@Gold Panda It's almost a meme stock, going up 40-50% on almost no news...
Gold Panda profile picture
@Invetrts not really, haven't seen it mentioned much on reddit or twitter
Been interested in this company, but only watching from a distance. Can't figure out what the Wilks brothers master plan is. They have large stakes in almost every single firm in the entire sector, including USWS, and are planning an IPO of ProFrac. Maybe one monster roll-up of all of them - USWS, FTSI, ProFrac, NEX, PUMP, etc.?
Gold Panda profile picture
@CPA022784 could be, the sector needs consolidation
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