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IPO Warriors IPO Preview forMarch 28 – April 1, 2022

IPO Warriors IPO Preview for March 28 – April 1, 2022

March 28, 2022

With still no mainstream IPO debuts in sight, low-float IPOs have taken center stage as LPX plays from the September-December deluge of low-float IPOS from 2021 enter the terminus of their lockup periods, and fresh low-float IPOs brave a market that is finally thawing out from the winter chill that brought on the biggest decline since the onslaught of COVID two years ago.

Given last week’s decent performance by LCFY, and strong Day 2 run by AKAN the week before, traders are beginning to pile into the Day 1 dip in hopes of a Day 2 rip; a behavior that eventually could culminate in a debut rally and spark a string of copy-cat plays. Perhaps this is just my fantasy: that we could get back to the kind of ripping IPOs, but we’re certainly due for something that gets hot out of the gate without being pumped to absurd prices before the debut: and I think we have a few candidates that may deliver such an offering.

(And if you want to watch a great video on what the near-term setup looks like on AKAN, check this out from @tradingfitgirl)

+++

Before we jump into the recaps: most of a you are probably aware of the fact that I’ve recently had to evacuate my family (pregnant wife, 2 year old daugher, and 2 dogs) from Kyiv, Ukraine – where we had been living for the past 3 years. A few members of the IPOW community have asked me if they could make a donation or contribution to help out. While I’m doing alright and have savings in my trading account, I try not to touch that money, and this whole episode has been a pretty significant financial hit.

For anyone who would like offer some personal support, I’ve gone ahead and setup a GoFundMe account –

https://gofund.me/400de027

I would also like to encourage those who want to help those in greater need than my own to donate directly to a refugee fund.

Dyakuyu.

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Live Streams this Week:

I’ll be live-streaming the debuts of the following IPOs on the
IPO Warriors YouTube Channel

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This Week’s IPOs:

  • Rail Vision (RVSN) – March 31, 2022 | 1.97M Shares

  • Genius Group (GNS) – March 31, 2022 | 3.27M Shares

  • Expion360 (XPON) – April 1, 2022 | 2.145M Shares

  • Wearable Devices (WLDS) – TBD | 3.6M Shares

  • Qsam Biosciences (QSAM) – April 1, 2022 | 1.7M Shares

  • Iveda Solutions (IVDA) – April 1, 2022 | 827K Shares

+++

Ok, Let’s Jump In:

Rail Vision (RVSN) – March 31, 2022 | 1.97M Shares
Price Range:
$4.13 – $5.87
Offering Size:
$18M
Shares Outstanding:
13.95M

Industry: Imaging Technology / Automation

Overview:
This Israeli company is developing imaging technology software for railway safety and operational systems. They are pre-revenue, with products still in pilot testing stage, so there are no financials available, though it does have some backing from entrenched industry players, such as German train braking producer Knorr Bremse. It has been rescheduled from last week, and is still available for allocation request on WeBull.

Considerations: Given that it’s been available on WeBull for nearly 10 days and still has not been filled, I’m gonna guess that the underwriters will either pull this offering again, sweeten the deal, or foist it on account holders who wish to participate in their next ‘hot’ deal.

Growth Numbers:
– Revenue Growth:
0% for 6 months ending 31, 2021
– Gross Profits:
0% for 6 months ending 31, 2021
– Gross Margin:
0% for 6 months ending 31, 2021

Baseline Financials:
– Cash Flow:
negative
– Net Income:
negative
– Operating Profit:
negative

Notes from the S-1:
– “
Certain of our existing shareholders, including entities affiliated with certain of our directors and beneficial owners of greater than 5% of our share capital, have indicated an interest in purchasing up to an aggregate of $2.5 million of units in this offering at the initial public offering price per unit.”
This is the kind of language that makes me take pause and wonder if they might suppress volume and force a spike in the price off the debut, and why I’ll be looking for possible manipulation of the volume.

Underwriters:
Aegis Capital

IPO Classification:
Low Float IPO

Recent Similar IPOs: MTEK LCFY

Trading Strategy:
This one may be interesting to watch on the debut, although with warrants involved, I can’t imagine that it would demand a premium on the opening trade, and is more likely to drop a bit before it rebounds. If shares are more or less forced onto account holders, I would expect any debut premium will be sold off immediately. If we see a fallout from the debut, then I may try to buy the initial dip-to-bounce play, keeping a tight trailing stop loss, and then look to build a position slowly through Day 1 with some buying power left in reserve to double down for a deeper bottom towards the end of Day 1. Then the play is to sell a Day 2 pop, as we’ve mentioned several times in this newsletter: this is the setup we’re looking for right now.

The only possible curveball is that the float is so low, that if insiders do end up buying a substantial piece of the IPO, they could pinch the debut volume to such a low number that the price gets squeezed. If we see a pre-debut indication balance in double digits, then it might be tempting to jump in for a small play off the debut.
Given that they are having trouble selling even such a small allocation, I’m expecting this to drop to about $2.40 or below before any kind of rally materializes (see LCFY from last week)

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Moderate.

Watch me live-stream this debut on YouTube:
https://www.youtube.com/watch?v=czXNdR9Jgtc

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Genius Group (GNS) – March 31, 2022 | 3.27M Shares
Price Range:
$5.00 – $6.00
Offering Size:
$18M
Shares Outstanding:
25.5M

Industry: Ed-tech

Overview:
This Singaporean company specializes in online and offline educational services, including corporate training for major corporate clients including Deloitte, J&J, Vodafone, Google, IBM, Heineken, Lenovo, DHL, HP, and many other recognized international brands. With over 1.9M students and 9,00 partners on its GeniusU platform, this is a substantial player in the ed-tech space. Unfortunately, COVID has hurt their bottom line, and there are many competitors in the space who have moved into the virtual learning sector.
Their growth numbers are not nearly as impressive as other ‘growth’ companies posted in the 6 months ending June 30, 2021… which is essentially comparing metrics against the worst 6 months of the initial wave of COVID lockdowns. So with revenue up 40% in that period for 2021, I’m just not all that impressed with this company as a growth story: coupled with negative gross profit over the same period, and I just don’t see this as a company that many investors will get excited about buying in on the IPO.

Considerations: Ok, so pay attention… here’s what I wrote last week:
There’s nothing particularly sexy to me about this IPO, as the float is a bit large for a ‘low-float’ play and the underwriter has delivered a mixed bag of hits and misses. I don’t see this as a likely “Stealth IPO” setup, but will keep an eye out for any indication in the pre-debut price matching that would indicate otherwise. It has been rescheduled once already, which generally means they were unable to attract sufficient interest in the IPO, and it is still available on WeBull for retail buyers to request allocations. Not sure what kind of catalyst they could deliver to save this down the road either: perhaps an announcement of a big contract with a major company. Just doesn’t really fit the blueprint for trading low-float IPOs in any regard: UNLESS it turns out to be a stealth IPO (more on that later)”

… alright, so now my opinion on this debut has COMPLETELY changed, you know why? Because Boustead Securities has taken over as the lead underwriter: replacing Think Equity, and reduced the float from 7.27M shares to just 3.27M shares. I guess Think Equity couldn’t fill their order book, but Boustead is taking a different approach, and is distributing shares only to corporate clients. If the float gets choked, or Boustead turns this into a Stealth IPO setup, there is a chance this flies.

Growth Numbers:
– Revenue Growth:
40% for 6 months ending December 31, 2021
– Gross Profits:
-26% in 6 mos ending December 31, 2021
– Gross Margin:
62% (pro forma)

Baseline Financials:
– Cash Flow:
negative
– Net Income:
negative
– Operating Profit:
negative

Notes from the F-1:


– Boustead has anoption to pick up an additional 490k shares within 45 days of the offering.

– 12 month lock-up period for directors, 6 month lock-up period for shareholders

– 5M underlying share options at a weighted average exercise price of $6.41

– “Boustead Securities, LLC may, at its discretion, permit our shareholders to sell shares prior to the expiration of the restrictive provisions contained in those lock-up agreements.” … so yeah, don’t hold onto this if it spikes.


Underwriters:
Boustead Securities

IPO Classification:
Low-float IPO

Recent Similar IPOs: EEIQ AKAN SOPA TKLF HTCR

Trading Strategy:
Gotta watch this one closely in the pre-market debut, if they price it at $5 and it debuts with a premium in the $8-13 range, it could be a stealth setup that rips into a series of upwards halts. If it debuts at a ridiculous price, say, above $20, then I won’t touch it on the debut, and likely will just stay away from it unless it comes down to the $9-10 range from there, and even then, I’ll probably just watch and gasp if it rebounds and runs back up again. Have to assume that whatever insane price it reaches on Day 1 or Day 2, it comes back to earth within a week. If it somehow debuts below the IPO price, then I’ll watch for Day 1 dips to play Day 2 rips, just like any other low-float IPO we’ve seen this year with a few exceptions.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Intrigued

Watch me live-stream this debut on YouTube:
https://www.youtube.com/watch?v=czXNdR9Jgtc

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Expion360 (XPON) – April 1, 2022 | 2.145M Shares
Price Range:
$7.00 – $9.00
Offering Size:
$15.3M
Shares Outstanding:
6.445M

Industry: Energy Storage (Batteries)

Overview:
Based in Oregon, USA, Expion360 manufacturers and markets lithium ion phosphate batteries for RVs and boats, with plans to expand into industrial and home energy applications. It’s products are marketed as a greener alternative to lead acid batteries with vastly superior energy storage capacity. Sales have been skyrocketing, while losses have been expanding to fuel growth.

Considerations: In some ways, this IPO represents a battle between oppositional trends at a pivotal time in the market: on one hand, it is a green energy play with impressive growth numbers, on the other hand it is a growth company with substantial operating losses, negative cash flow, and negative net income. A year ago, this one would have been primed to run hard off the debut simply due to the ultra low float and rampant demand for anything related to electrical and vehicles was soaring. But over the past few months, anything that is being pitched simply on growth and hype has been severely punished if not entirely ignored. So here we have a company whose low float alone is likely to draw interest from day traders, and the green/alternative energy angle is returning to the spotlight as fuel prices skyrocket. I looked up some reviews on their products, and customers seem to be very happy with the company’s service and product quality.

Growth Numbers:
– Revenue Growth:
+187% in 2021 vs 2020
– Gross Profits:
+443% in 2021 vs 2020
– Gross Margin:
36% for 2021

Baseline Financials:
– Cash Flow:
negative
– Net Income:
negative
– Operating Profit:
negative

Notes from the S-1:


– ck-up agreements.” … so yeah, don’t hold onto this if it spikes.

Underwriters:
Paulson Investment Company (I have never heard of them and couldn’t find any recent IPOs listed on the ‘Transactions’ page of their website.

IPO Classification:
Low-float IPO

Recent Similar IPOs: VLCN

Trading Strategy:
I have a feeling that this one might be the one to break us out of our weak debut slump. If the market remains strong through the week, and day traders are looking for something fresh to play, a green-energy-batter-for-vehicles company could be a prime target. It feels like day traders will want to jump into this one if it starts running, but may be a bit hesitant to actually bid on the debut trade. This could result in an ideal setup to take a position off an opening drop, if not buy the debut outright.
Trading setups are generally cyclical, and when a strategy gets abandoned for long enough, it tends to pop up with a vengeance under the right conditions. This might be one of those setups.


Brand Name Recognition:
Moderate.

Debut Trade Conviction Level:
I’m pretty excited about this one, but maybe just because it’s been so long since we had an IPO run off the debut. Can’t take a huge risk off the open, and I’ll be watching the pre-debut balance to gauge my initial reaction.
I should also point out that I’ve submitted an allocation request on WeBull for this offering, and will determine some of the strategy based on how much of my requested share allocation gets filled.

Watch me live-stream this debut on YouTube:
https://www.youtube.com/watch?v=6p3P-84DatA

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Wearable Devices (WLDS) – TBD | 3.6M Shares
Price Range:
$4.00 – $6.00
Offering Size:
$18M
Shares Outstanding: 11.1M Shares

Industry: Electronics

Overview:
This Israeli tech company produces electronic bracelets that use sensors to interpret the movement of your hand, and can be used as an interface between electronic devices. They’ve included a spin on this being used in the context of virtual reality, and expanded that to include applications within the ‘metaverse’. Ok, sounds pretty cool, and it looks like they’ve been selling a lot of them.

Considerations: This one sounds kind a cool, and Aegis capital has some hits on it books among the expected list of losers. It’s low float and low price make it an attractive day trader target, so if social media buzz starts humming around this name it could be worth playing. However, it’s also not listed on most of the IPO calendar sites (yet anyway), so if they haven’t promoted the IPO, and I couldn’t figure out a firm date, we might see this one get pushed back to next week. There is also the risk that the ticker doesn’t get registered with all the trading platforms – something that happens much more often than it should – and if that happens, I won’t touch it off the debut, as this obviously impacts demand in negative ways. At that point, the setup would be to accumulate on Day 1 and cash in when it’s trading on all platforms for the Day 2 run.

Growth Numbers:
– Revenue Growth:
215% for 6 months ending June 30, 2021
– Gross Profits:
-233% in 6 mos ending June 30, 2021
– Gross Margin:
93% (pro forma)

Baseline Financials:
– Cash Flow:
negative – moving towards positive
– Net Income:
negative – moving towards positive
– Operating Profit:
negative – moving towards positive

Notes from the F-1:

– 180 day lockup period

Underwriters:
Aegis Capital

IPO Classification:
Low-float IPO

Recent Similar IPOs: MTEK

Trading Strategy:
I’ll be expecting this one to drop on Day 1 and rally on Day 2, unless I see strong buy-side demand in the pre-debut indication without pushing the price up too high on the debut. If there’s social media buzz around this IPO, and we get a modest debut premium, I’ll likely take a shot at a starter position on the debut, but will be making a game time decision one way or the other.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Moderate.

Watch me live-stream this debut on YouTube:
https://www.youtube.com/watch?v=6p3P-84DatA

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UPLISTINGS:
I’m not going to go too in-depth on these, as these stocks already trade on OTC markets and are simply uplisting to major exchanges, but will include summaries just to give you some ideas.

QSam Biosciences (QSAM) – March 30, 2022 | 1.75M Shares
Price:
$11.50

This company is the license holder for a drug called Samaium-153 DOTMP – a clinical stage novel radiopharmaceutical used to treat cancer and really, I’m not gonna try to pretend I understand where this stands in relation to other treatments. It’s low float, it’s biotech, but I don’t see this getting a ton of attention from traders given the relatively high price point, after performing a reverse-split at a ratio of 1-for-40 shares on March 10, 2022.


Iveda (IVDA) – April 1, 2022 | 827K Shares
Price:
$9.68

This company is provides AI-based video technology, and has recently announced the a UV Germicidal Irradiation product that helps cities disinfect COVID by .affixing their product to HVAC vents. They are slated to perform a reverse split of 1-7 or 1-9 shares depending on the closing of the share price prior to the IPO.
Ok, so this one sounds a LOT like AERC, which improbably debuted at $40 after pricing at $10, and ran to over $100 on very thin volume on Day 1. While I don’t expect a repeat performance, the float is so tiny that really anything could happen.

Watch me live-stream this debut on YouTube:
https://www.youtube.com/watch?v=6p3P-84DatA

Quiet Period Expiration (QPX) Watch:

The SEC mandates that companies and underwriters refrain from making public statements for 40 days after an IPO begins trading. The QPX date marks a time when press releases may be issued that have the potential to move the stock price; especially companies whose price has dropped from the IPO.
These can present great trading opportunities ( I recommend this video here)

Upcoming QPX:

– Smart for Life (SMFL): March 28, 2022

– Meihua International (MHUA): March 28, 2022

Lockup Period Expiration (LPX) Watch:

Most IPOs are subject to a 180 day lockup period before insiders and shareholders who owned shares of a company prior to the IPO can sell their positions. Typically, the dilutionary effect of this event will cause a stock price to drop, as supply increases without any fundamental changes in the value of the underlying company. Many investors will wait for LPX before starting a long term position in a company.

Upcoming LPX:

– Amplitude (AMPL): March 28, 2022

– MELI Kaszek Pioneer (MEKA): March 28, 2022

– Warby Parker (WRBY): March 28, 2022

– Olaplex (OLPX): March 29, 2022

– Exscientia (EXAI): March 30, 2022

– First Watch Restaurant Group (FWRG): March 30, 2022

– Nutriband (NTRB): March 30, 2022

– TDCX (TDCX): March 30, 2022

– Volcon (VLCN): April 4, 2022

Please help promote IPOWarriors and like, follow/subscribe, retweet, share our social media content:

NOTE: this is not financial advice, and I am not a financial advisor: this information is just my opinion and is for informational purposes only. I may have or take positions in the equities mentioned in this article in the next 72 hours. Trading equities is risky. Do your own research,and trade your own trade.

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IPO Warriors IPO Preview for February 21 – February 25, 2022

IPO Warriors IPO Preview for February 21 – February 25, 2022

February 23rd, 2022

With a shortened trading week due to Monday’s holiday, and rising tensions in Eastern Europe, it’s not surprising that there aren’t many IPOs on the calendar for this week, and we may expect a bit of a lull in IPO activity for the next few weeks.

On top of all that, the market is still adjusting valuations on ‘growth’ companies, a label that applies to virtually all companies that are considering going public, as the primary purpose of an IPO is to raise capital for growth and expansion of the company. I initially expected things to be rough in February, and hope that by the end of March we have a more settled market with conditions that pave the way for some of the more anticipated IPOs to emerge. In the meantime, we’ve been focused on lesser-known low-float IPOs: most of which have been losers, with a few that offered nice win opportunities. Due to personal circumstances related to evacuating from Ukraine, I’m unable to do any live-streaming these days, but will do what I can to try and help provide insights as to what to look for, what to avoid, and where there might be opportunities to scalp some profits in this tricky market.

Ok, Let’s jump in:

  • Akanda Corp (AKAN) – February 25, 2022 | 4M Shares

  • Cariloha (ALOHA) – February 25, 2022 | 2.3M Shares

Akanda Corp (AKAN) – February 25, 2022 | 4M Shares
Price Range:
$4.00
Offering Size:
$16M
Shares Outstanding:
28.9M

Industry: Cannabis

Overview:
This UK based company grows, manufactures, and distributes medical grade cannabis products, with facilities based out of Lesotho, Africa, with plans to open distribution in the United Kingdom and globally. They have not yet exported any cannabis products, or received any revenue from the sale of cannabis.

Considerations: This is certainly not something I would invest in based on basic business fundamentals, and don’t think that cannabis has much buzzworthiness to it these days. The market is in a serious funk right now, and if the current sentiment persists throughout the week, then I don’t think this will get much attention. The float is not low enough to be ultra-low float, so unless there is some kind of insider manipulation, I don’t see how this does anything but drop. The only wildcard is that it’s a Boustead offering, an underwriter that, for a time, seemed to produce demand out of thin air for every IPO it brought to market. But we’ve seen a number of poor performers recently, notably with VINE and HTCR getting dumped and/or hit with short seller attacks that provided relatively limited upside for debut trades (and nothing like the ripping halt-fests we used to see in their offerings).
Unless this is some kind of money laundering play for the Kingdom of Lesotho, I believe this is an IPO worth avoiding. Once the total shares outstanding are added to the float, this will become a very thinly traded stock, so beware.

Growth Numbers: No revenues

Baseline Financials:
No revenues

Notes from the F-1:
– Funds will be used to purchase property, plant, and equipment including construction of greenhouses, drying facilities, and an extraction facility.
– Risks: Highly competitive environment, regulations, success in cultivation
– Important to Know:
“the Representative may in its sole discretion and at any time without notice release some or all of the shares subject to lockup agreements prior to the expiration of the Lock-Up Period.”
So basically, the float could balloon at any time.

Underwriters:
Boustead

IPO Classification:
Low Float

Recent Similar IPOs: VINE FLGC

Trading Strategy:
I don’t see an angle here unless there are unknown strings that get pulled in rigging the float pre-debut. Were I able to pay attention to the pre-debut crossing, I’d be watching for low volume in the imbalancing numbers, and normal price action (likely to debut at $3.00 – $4.20): anything abnormal might indicate that something unexpected could happen. Either way, given that this is available for allocation requests on WeBull, I would expect a heavy sell-side imbalance on the pre-debut and an initial drop off the debut. So if you do see something compelling in the IPO pre-trading process, and there’s NOT a heavy sell-side imbalance, it may be worth a play. If there is something compelling in the IPO pre-trading process and you still see a sell-side imbalance, there may be an opportunity to pick off a dip-to-rip play with a debut trade set about 10% below the indication price, but this is pretty risky.
I simply don’t see anything compelling enough about this IPO to make it worth trading, but we’ve seen crazier things happen.

Brand Name Recognition:
None.

Debut Trade Conviction Level:
Very Low.

+++

Cariloha (ALOHA) – February 25, 2022 | 2.3M Shares
Price Range:
$9.00 – $11.00
Offering Size:
$25M
Shares Outstanding:
12.3M

Industry: Bedding/Linens

Overview:
This company makes bedding an apparel from bamboo products, and a core sales strategy involves marketing partnerships with cruise lines. Their growth numbers are weak, with negative baseline financials, and this is another Roth Capital offering.

Considerations: I didn’t like this one when it was scheduled to debut last week, and it’s not looking any better to me this week (even with a reduced price range). Here’s what I wrote last week:
Hard to find something less appealing: I mean, ok, it’s an alternative material that is probably at least billed as ‘eco-friendly’, but when your key marketing partnerships are all but shut down due to ongoing COVID restrictions, and you have nothing attractive in your financials (ok, we got 61% gross margins), why even attempt an IPO? And the underwriter is Roth?! When things are this bad, I start wondering if something’s up. Gonna have to circle back to this one, but topically, it’s not something I’d like to get in bed with.

Growth Numbers:
– Revenue Growth:
+1.2% for 9 months ending September 30, 2021
– Gross Profits:
+6.7% for 9 months ending September 30, 2021
– Gross Margin:
61% for 9 months ending September 30, 2021

Baseline Financials:
– Cash Flow:
negative – improving
– Net Income:
positive
– Operating Profit:
positive

Notes from the S-1:

Underwriters:
Roth Capital

IPO Classification:
Low Float

Recent Similar IPOs: hmm… maybe VINE: it was so bad it had to crash, and crashed on such a low float that it had to eventually get pumped.

Trading Strategy:
This IPO is gonna bomb unless it’s a hidden Stealth setup. It’s bad enough that perhaps a trading group corners it for a day or two and then pumps it..

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
I don’t envision buying this on the debut under any circumstances, unless I somehow convince myself that it’s a Stealth setup. Probably won’t try to accumulate for a Day 2 pump on this one either… but will be watching the chart, Level 2 buying patterns, and feel it out.

+++

Quiet Period Expiration (QPX) Watch:

The SEC mandates that companies and underwriters refrain from making public statements for 40 days after an IPO begins trading. The QPX date marks a time when press releases may be issued that have the potential to move the stock price; especially companies whose price has dropped from the IPO.
These can present great trading opportunities ( I recommend this video here)

Upcoming QPX:
– February 21, 2022: Hillstream BioPharma (HILS)
– February 22, 2022: CFSB Bancorp (CFSB)
– February 28, 2022: Yoshitsu (TKLF)
– February 28, 2022: NSTS Bancorp (NSTS)

Lockup Period Expiration (LPX) Watch:

Most IPOs are subject to a 180 day lockup period before insiders and shareholders who owned shares of a company prior to the IPO can sell their positions. Typically, the dilutionary effect of this event will cause a stock price to drop, as supply increases without any fundamental changes in the value of the underlying company. Many investors will wait for LPX before starting a long term position in a company.

Upcoming LPX:
– February 22, 2022: RenovoRx (RNXT)
– February 23, 2022: SeqLL (SQL)
– February 28, 2022: DoubleDown Interactive (DDI)

Please help promote IPOWarriors and like, follow/subscribe, retweet, share our social media content:

NOTE: this is not financial advice, and I am not a financial advisor: this information is just my opinion and is for informational purposes only. I may have or take positions in the equities mentioned in this article in the next 72 hours. Trading equities is risky. Do your own research,and trade your own trade.

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IPO Warriors IPO Preview for February 7 – February 11, 2022

IPO Warriors IPO Preview for February 7 – February 11, 2022

February 8, 2022

Mainstream IPOs have been on the shelf for most of the year, but the action in IPO Land has been intense due to the plethora of low-float IPOs from lesser known underwriters. While we haven’t seen many that ripped off the debut (HOUR being the lone exception), we have seen impressive Day 2 runs off of what appeared to be disastrous Day 1 drops in many low float plays, including KSCP, MTEK, and NVCT.

We have a long list of low-float IPOs eager to wade into their market debuts this week, and while the trend has been for most of these to fall from the initial trade into a bottom trough, there have been significant gains to be taken for the patient trader who is willing to slowly accumulate a position along the bottom of these baselines, even into the closing minutes of Day 1, and wake up to sell out of their position in early pre-market or catch a rip in regular trading hours. Until this pattern breaks, it seems worthwhile to take a gamble on the lower-float targets should they drop hard on their debuts, and hold into Day 2.

Having said that, I am on the lookout for Stealth IPO setups, given that the PRC is on Chinese New Years holiday while hosting the Winter Olympic games, so it would be an ideal setup for Chinese companies/individuals who want to pull off a money transfer through a stock listing to engage their shenanigans.

This Week’s IPOs

  • TC BioPharm (TCBP) – February 9, 2022 | 5M Shares

  • HeartCore Enterprises (HTCR) – February 10, 2022 | 3M Shares

  • CorpHousing Group (CHG) – February 10, 2022 | 2.3M Shares

  • Austin Gold (AUST) – February 11, 2022 | 3M Shares

  • Direct Digital (DRCT) – February 11, 2022 | 2.187M Shares

  • SQL Technologies (SKYX) – February 11, 2022 | 1.5M Shares

  • Cariloha (ALOHA) – February 11, 2022 | 2.3M Shares

  • The tru Shrimp Companies (BTRU) – February 11, 2022 | 3M Shares

  • Sky Technologies (SKYX) – February 11, 2022 | 1.5M Shares

  • Meihua International Medical (MHUA) – TBD | 5M Shares

  • Ocean Biomedical (OCEA) – TBD | 2M Shares

  • Yi Po International (YBZN) – TBD | N/A



Ok, Let’s jump in:

TC BioPharm (TCBP) – February 9, 2022 | 5M Units (1 Share + 1.25 Warrants)
Price Range:
$4.25
Offering Size:
$22M
Shares Outstanding:
29M

Industry: Biotech

Overview:
This is a British clinical-stage biotech with a proprietary allogenic gamma delta T(GD-T) platform that focuses on immunotherapy treatments for cancer and viral infections (including COVID). Their leading allogenic candidate, OmnImmune is entering Phase 2/3, with secondary candidate ImmuniStim, focused on COVID-19, currently in Phase I trials. Their CAR-T program focuses on solid and haematological cancers, and is still pre-clinical.

Considerations: Well, normally I’d stay away from biotechs, but this one does have a COVID angle, and another candidate entering Phase 2/3, and last week we saw NVCT debut on Friday, drop, and then rip 200% on the following Monday… in fact, the Day 2 run on low float IPOs that busted on Day 1 has been pretty consistent – so perhaps this one is worth picking up a few shares at the end of the day if it’s significantly fallen off it’s opening debut.

Growth Numbers: pre-commercial trials, no financials

Baseline Financials:
– Pre-IPO Cash and Equivalents:
$2.09M
Post-IPO Cash and Equivalents: $24.25M
Accumulated Deficit: £29.6M

Notes from the F-1:
– “
Management believes that the existing cash and cash equivalents will be sufficient to fund the current operating plans through to end of February 2022”
—> Basically, they are desperate for money, so they’re doing an IPO.


Underwriters:
The Benchmark Group

IPO Classification:
Biotech Bust

Recent Similar IPOs: NVCT

Trading Strategy:
I guess we just wait for it to drop off the debut, watch for a baseline, check to see if there’s any sign of accumulators picking up the float, and then be ready to sell the Day 2 run. Although the float may not be small enough, and the price may not be low enough for this setup to be in play. So maybe don’t mess with this one until it drops a bit further and hope for a QPX move. I’m not gonna get involved with this one, but I missed NVCT as well, so don’t take my word on it: I just don’t want to be tied up for a potential Stealth IPO the next day.

Brand Name Recognition:
None

Debut Trade Conviction Level:
None.

+++

HeartCore Enterprises (HTCR) – February 10, 2022 | 3M Shares
Price Range:
$4.00 – $6.00
Offering Size:
$15M
Shares Outstanding:
18.92M

Industry: Software (Japan)

Overview:
This company develops Content Management Systems (CMS), Customer Experience, and digital transformation software for Japanese clients. They claim to be the #1 CMS provider by market cap in Japan, and boast 791 clients including Japan Airlines, Hitachi, RICOH, and Brother. Their growth numbers are respectable and their baseline financials are positive across the board, but what makes this one most interesting is the underwriter and low float… and well, a very loose connection to China through one key excutive… we’ll get into that later.

Considerations: The last low-float Japanese IPO we saw was TKLF, which priced at $4 and debuted at $41+, then swung wildly on Day 1 from a low of $13 back up to $37, so we know these can be volatile, and more importantly, we know it’s possible for a Japanese IPO to be a Stealth IPO. The underwriter is Boustead Securities, who has produced many ‘Stealth IPOs’ that ran up to 5x gains or more from the debut over multiple days, but recently their high fliers have debuted at relative highs, offering no play for retail traders to get in on the debut for an upside play. This one does not appear to be a Stealth debut on the surface: although digging into the F-1 exposed one possibly key connectio to China: the CFO has a Chinese name (… then again, the CFO could be the key link to Chinese money, so I’ll be keeping a close watch on this one, and depending on what I see in the pre-debut IPO crossing, may spot some clues as to whether this is poised to run off the debut or not.)
NOTE: I have put in for an allocation request on WeBull, as pretty much every Boustead IPO has either ripped off the debut or debuted with a hefty premium.

Growth Numbers:
– Revenue Growth:
26% for 9 months ending September 30, 2021
– Gross Profits:
33% for 9 months ending September 30, 2021
– Gross Margin:
48% for 9 months ending September 30, 2021

Baseline Financials:
– Cash Flow:
positive
– Net Income:
positive
– Operating Profit:
positive

Notes from the F-1:
– The name of the CFO is Chinese: “Qizhi Gao”

Underwriters:
Boustead Securities

IPO Classification:
Ultra-Low Float

Recent Similar IPOs: TKLF MYNZ

Trading Strategy:
Well, it’s a Boustead IPO, so we have to keep an eye on it, but recently, we haven’t seen any of their deal offer much upside from the heavily inflated debut premium. I’m somewhat suspicious of this being a Stealth IPO given that we recently saw TKLF debut under the guise of being a Japanese company, and I do think it would make sense for the Chinese money laundering theory, that we should see a couple Stealth setups while China is in the middle of their New Years celebrations on top of the distraction of hosting the Winter Olympics. If we see pre-debut indications around $15, then we could be looking at an ideal Stealth setup for a debut entry. A debut up above $20 is too high to test an upside, and if we see it under $10, then maybe it’s the first foreign Boustead deal that doesn’t really have much of an upside even for their account holders (I’ll still play the debut under $10).

Brand Name Recognition:
None

Debut Trade Conviction Level:
High

+++

CorpHousing Group (CHG) – February 10, 2022 | 4.285M Units (1 share + 1 warrant)
Price Range:
$3.00 – $4.00
Offering Size:
$17.25M
Shares Outstanding:
91M

Industry: Travel Accommodations

Overview:
This company manages short-term vacation rental properties and lists them on 3rd party travel sites, with the intention of setting up their own online booking platform to improve margins.While their revenue growth is up substantially in the last 9 months, we have to bear in mind that these numbers are in comparison to peak COVID numbers, and their gross profit growths significantly negative on unattractive gross margins… all this on top of negative baseline financials.

Considerations: This has one advantage in that it is a low-float IPO that will possibly go live as the ‘next low float IPO’ (that isn’t biotech) before the onslaught of ensuing IPOs on Friday, so maybe that will be enough for day traders to try and play the debut for a down/up reversal akin to MTEK, but the generic low float IPO trade tends to get played out in cycles, and I think that the run from HOUR, to KSCP, to MTEK has brought us to the point where simply being low-float may not be enough. Too many ‘buy-the-dip’ traders will keep the dip from being very pronounced, and not enough buyers left to give it a pop on the rebound. And furthermore, this company sounds pretty lame. Running a bunch of AirBnB rentals with the goal of then starting your own AirBnB is a bit like selling a bunch of products on Amazon and aiming to reduce margins by selling on your own website: sure, your margins will be better on sales in your own channel, but your chances of scaling the total business up to something comparable to Amazon isn’t a serious ambition. There are warrants involved, and they have apparently increased their offering, according to the S-1, to 4.28M Units from what had previously been announced at 2.3M shares, while reducing the price.
I’m not really sure how low it can go from an expected debut of $3.50, but with a warrant to account for, it seems reasonable that it drops below $2.00

Growth Numbers:
– Revenue Growth:
+133% for 9 months ending September 30, 2021
– Gross Profits:
-122% for 9 months ending September 30, 2021
(no, not a typo, it’s a negative number)
– Gross Margin:
2.56% for 9 months ending September 30, 2021

Baseline Financials:
– Cash Flow:
negative – improving
– Net Income:
negative – improving
– Operating Profit:
negative – improving

Notes from the S-1:

– Actual Units offered is 4.285M and includes warrants.
– CEO will own 70% of the stock after the offering

Underwriters:
Maxim Group (they’ve had a lot of low float losers)

IPO Classification:
Mainstream IPO

Recent Similar IPOs: GFS, SKYT

Trading Strategy:
This one has warrants, isn’t that low of a float, but has opted to go so low in price that it begs to ask the question of how low can an IPO debut go? They don’t generally start lower than $4.00 – and given that warrants are involved, pricing at $3.50 seems to make a sub-$3 debut a very real possibility, with a sub-$2 level lurking ominously close. Would an IPO want to get into trouble for failing to meet NYSE listing rules from the get-go?
Another interesting element is that the CEO controls a significant share of the float… so is there some setup in play to ensure this runs significantly out of the gate? If I see something odd in the pre-debut balancing, I may be reeled into this one, but otherwise it’s a sit and wait, maybe accumulate at a baseline on Day 1 for a Day 2 rally – like all the rest.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Moderate.

+++

Austin Gold (AUST) – February 11, 2022 | 3M Shares
Price Range:
$4.00 – $6.00
Offering Size:
$18M
Shares Outstanding:
12.5M

Industry: Gold Mining

Overview:
This company owns the gold prospecting rights to several plots of land in Nevada near existing mines. The CEO has a history of delivering value to clients, with his most recent company being sold for $2.8B (Pretium Resources) at a considerable premium for shareholders.

Considerations: This one was repeatedly rescheduled again and again from November into December 2021 before ultimately throwing in the shovel and delaying the deal until this week. Their website is laughably bad, with no updated information, and some pages showing error messages. Perhaps they feel that with the market in the dumpster, there will be an interest in gold. There was a time when the prototypical pump-and-dump scheme revolved around gold mining companies, so there will be an abundance of skeptics on this one, and the market has not been too friendly to Roth Capital IPOs, so I’m not sure this will get much immediate retail demand. Then again, gold is considered an inflation hedge, and perhaps that brings this one some attention. Maybe one to watch, but unless the temperature of the social buzz around this one gets hot, I’ll be watching it from the sidelines.

Growth Numbers: None: they haven’t even built any mines yet.

Baseline Financials:
Also none

Notes from the S-1:
Didn’t really bother

Underwriters:
Roth Capital (an unloved underwriter who has yet to deliver a debut winner since I’ve been watching their IPOs)

IPO Classification:
Low Float

Recent Similar IPOs: LITM (I guess, I mean, it’s also a pre-operational mining company, but Lithium is hotter than Gold these days).

Trading Strategy:
Can’t imagine much interest in this one off the debut. Perhaps it’s a low-floater that gets accumulated on Day 1 and runs on Day 2? Who knows, that’s been a winning setup for the past 3 weeks, and we saw it again on NVCT from Friday last week to Monday this week. Almost makes sense to buy any low-float IPO that bombs on Day 1 just to see if it rebounds in the following days.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Low..

+++

Direct Digital (DRCT) – Date February 11, 2022 | 2.187M Shares
Price Range:
$7.00 – $9.00
Offering Size:
$20M
Shares Outstanding:
13.57M

Industry: Programmatic Ad Buying/Selling

Overview:
This holding company operates three platforms that provide services in the digital ad management space:

Colossus SSP: is a supply side platform that sells ads for their media customers.

Huddled Masses: creates digital marketing campaigns for clients. Kind of seems like a well-established digital marketing agency.

Orange142: this is the demand side platform that handles data management, audience targeting, content marketing, and analytics for their clients.

They claim 56k sell-side clients (clients selling advertising), and just 158 buy-side clients. So it seems like their primary business is selling ads for their clients, and Colossus SSP appears to be their primary revenue driver.


Considerations: This one was rescheduled from last week… and the week before that as well, and has been downsized from 4M shares to 2.187M shares, so perhaps it was just a response to frigid market conditions, but clearly there has not been all that much demand for their offering as of yet. As for the company, it all feels like a digital marketing company that has built up scalable services platforms to offer services to mid-sized businesses that want to optimize their digital marketing budgets. With very strong growth metrics and positive baseline financials, coupled with a low float, this one could be interesting. (ok, I typed that line last week, now I’m not so sure and feel this could get lost in the crowd of low-float IPOs on the calendar for Friday).
Don’t particularly like that Roth Capital is an attached underwriter, as the market has repeatedly shunned their offerings, seemingly out of spite. So that makes me a bit cautious in taking any risks on this debut.

Growth Numbers:
– Revenue Growth:
+330% for 9 months ending September 30, 2021
– Gross Profits:
+693% for 9 months ending September 30, 2021
– Gross Margin:
53% for 9 months ending September 30, 2021

Baseline Financials:
– Cash Flow:
positive – improving (negative in 2020 and positive in 2019)
– Net Income:
positive – improving (negative in 2020 and 2019)
– Operating Profit:
positive – improving (negative in 2020 and 2019)

Notes from the S-1:
– Risks: restricted use of 3rd-party cookies (specifically by Google), would affect the effectiveness of their platform. While they believe they can adapt and develop alternatives, without specific clarification on how they will do this, I am a little concerned about the long term performance of this company.

Underwriters:
The Benchmark Company (yes, same as FGI), Roth Capital

IPO Classification:
Low Float

Recent Similar IPOs: HOUR PIK STRN
Potential Comps: TTD… sort of a stretch given that TTD is much larger, but they both operate in the same general market, so comps are not unreasonable. DRCT is seeking a far smaller valuation.

Trading Strategy:
This IPO does not have anything that indicates a Stealth IPO setup, and I’m not sure how sexy this will appear to day traders beyond the ultra-low, float, but given the buzz around low float IPOs from the last couple weeks, maybe it can rebound off a Day 1 drop into a Day 2 rip. The $8 debut price leaves plenty of room to fall off the open (like VINE did), so again, we need to be watching the sell-side imbalance on the debut. If we see a heavy buy-side and only a slight increase in the debut indication price, then we may have a strong candidate for a debut run, but anythinog else would indicate a more conservative strategy. This one kind of feels like it could behave like STRN, which had a strong debut run for several days after the IPO, followed by a hard pull back, and then pumped even higher. The potential for a post-dip recovery run is pretty strong if this one doesn’t perform well out of the gate, so waiting patiently for the bottom of a dip, and averaging down as needed to then catch eventual algo or trading group pump could work out. It’s not the lowest float of the day though, so I dunno… not to excited about it in a crowded field (I will end up saying that about each one, so likely I’m wrong on at least one pick here, but better to miss one than catch knives on many)..

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Low. Yeah, I’ve flipped on this one from being “Moderate/High” a week ago, but there clearly wasn’t much demand for this one for the past two weeks, and now it’s slated to debut in a crowded field with other more interesting possible contenders. To me, the play has clearly become to wait for these to dip and accumulate sparingly if they baseline on the hopes of a Day 2 rally.


+++

Cariloha (ALOHA) – February 11, 2022 | 2.3M Shares
Price Range:
$12.00 – $14.00
Offering Size:
$30M
Shares Outstanding:


Industry: Bedding/Linens

Overview:
This company makes bedding an apparel from bamboo products, and a core sales strategy involves marketing partnerships with cruise lines. Their growth numbers are weak, with negative baseline financials, and this is another Roth Capital offering.

Considerations: Hard to find something less appealing: I mean, ok, it’s an alternative material that is probably at least billed as ‘eco-friendly’, but when your key marketing partnerships are all but shut down due to ongoing COVID restrictions, and you have nothing attractive in your financials (ok, we got 61% gross margins), why even attempt an IPO? And the underwriter is Roth?! When things are this bad, I start wondering if something’s up. Gonna have to circle back to this one, but topically, it’s not something I’d like to get in bed with.

Growth Numbers:
– Revenue Growth:
+1.2% for 9 months ending September 30, 2021
– Gross Profits:
+6.7% for 9 months ending September 30, 2021
– Gross Margin:
61% for 9 months ending September 30, 2021

Baseline Financials:
– Cash Flow:
negative – improving
– Net Income:
positive
– Operating Profit:
positive

Notes from the S-1:

Underwriters:
Roth Capital

IPO Classification:
Low Float

Recent Similar IPOs: hmm… maybe VINE: it was so bad it had to crash, and crashed on such a low float that it had to eventually get pumped.

Trading Strategy:
This IPO is gonna bomb unless it’s a hidden Stealth setup. It’s bad enough that perhaps a trading group corners it for a day or two and then pumps it..

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
I don’t envision buying this on the debut under any circumstances, unless I somehow convince myself that it’s a Stealth setup. Probably won’t try to accumulate for a Day 2 pump on this one either… but will be watching the chart, Level 2 buying patterns, and feel it out.

+++

The tru Shrimp Companies (BTRU) – February 11, 2022 | 1.5M Shares
Price Range:
$9.00 – $11.00
Offering Size:
$15M
Shares Outstanding:


Industry: Shrimp Farming

Overview:
This company is being spun off from the Livestok Nutrition Company, and has developed a patented process for farm-raising shrimp that improves viability and reduces grow times. They are building out full-scale farm site in South Dakota under favorable terms, after shunning their hometown state of Minnesota. They also plan to manufacture a shrimp-based biopolymer called “Chitosan” that is used as an ingredient in biomedical and beauty products. This is sort of an interesting company, placing themselves in a market that is largely served by foreign suppliers, so perhaps it will perform well in the long term.

Considerations: Despite my interest in this companies long term prospects, I’m not sure it will attract much initial buying interest given crowded field on Friday when this debuts. It does have a super-low float, so maybe it gets singled out as ‘the one’ to play that day, but I kind of doubt any of these can garner enough attention on their own to pull off a debut run.

Growth Numbers: this company is pre-commercial at this point.

Baseline Financials:
nothing

Notes from the S-1:

Underwriters:
Lake Street/Maxim

IPO Classification:
Low Float

Recent Similar IPOs: this one’s a bit unique

Trading Strategy:
The only thing that makes this interesting for an immediate day trade is the ultra-low float of just 1.5M shares. But I don’t really like the $9.00-11.00 debut price, as there’s simply too much room to fall, and hard to call a bottom if it does drop off the debut. Whereas $4-5 IPOs tend to gain Day 1 support around the $2.80-3.00 level, setting up for a Day 2 run to the high $3s or above, when you start in low double digits, the downside risk tends to persist even when you’re down 30-40%

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Low. Don’t see any incentive to risk an entry on the debut here.

+++

Sky Technologies (aka SQL Technologies) (SKYX) –
February 11, 2022 | 1.5M Shares
Price Range:
$11.00 – $13.00
Offering Size:
$18M
Shares Outstanding:
75M

Industry: Electrical Equipment

Overview:
Products for light fixtures and ceiling fans, including smart device applications that allow their products to be controlled by smart phones, and the company owns of over 60 US and international patented and patent pending technologies.

Considerations: Highly unprofitable and the low float belies a large volume of outstanding shares. Could get pumped, but not all that interesting on the surface.

Growth Numbers:
– Revenue Growth:
-58% for 9 months ending September 30, 2021
– Gross Profits:
I don’t even know how to calculate this, but they had negative profit of -$130,599 for 9 months ending September 30, 2021, which is an improvement, I guess, over the -$241,363 for 9 months ending September 30, 2021
…Suffice to say, their financials are pretty aweful.

Baseline Financials:
– Cash Flow:
negative
– Net Income:
negative
– Operating Profit:
negative

Notes from the S-1:
Products are manufactured in China.
– History of operating losses
– Heavily dependent on licensing the GE brand name for their products


Underwriters:
The Benchmark Company

IPO Classification:
Ultra Low Float

Recent Similar IPOs: AERC – I mean, it also had pretty bad financials, but hadn’t been in business for nearly a decade and their product got COVID buzz, and was clearly manipulated off the debut.

Trading Strategy:
Ok, so if this is somehow like AERC, and debuts at some ridiculous premium, it’s super risky to try and chase it, but it could go flying. Sometimes when a company looks so bad on paper that it’s laughable, it’s a front for something else… This one might actually be THAT bad. I’ll keep an eye on it, but not really planning on touching it.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Low. Don’t see any incentive to risk an entry on the debut here.

+++

Meihua Medical (MHUA) – TBD | 5M Shares
Price Range:
$9.00 – $10.00
Offering Size:
$50M
Shares Outstanding:
0M

Industry: Medical Devices (China)

Overview:
This is the first purely Chinese IPO to debut since the PRC imposed new listing requirements following the DIDI IPO debacle, and while this is not a prominent company, and is unlikely to catch the attention of mainstream Wall St traders, it is a low-float Chinese IPO, and I will be watching it closely. The company manufacturers disposable medical supplies, with modest growth and positive baseline financials, but the financial reporting numbers are rather out of date (citing 2020 vs 2019 financials).

Considerations: Should this one actually complete the IPO process, there will be quite a few eyes on it as the first Chinese IPO since the DIDI debacle (well, LIAN went live too, but a little different). I would think there would be considerable pressure on the company and underwriters not to bring a bomb to the market, but if it doesn’t catch on as a low-float day-trader target, and if it isn’t a Stealth IPO, then there won’t be any buyers and it won’t do well. Also, it would be a pretty ballsy play for the insiders to rip this one with the typical float manipulation we see with Stealth IPOs, given how closely regulators will be watching: then again, China is on New Year’s holiday and hosting the Winter Olympics (not that anyone is really watching), so maybe the setup is primed for a Stealth play.

Growth Numbers:
– Revenue Growth:
+11.8% for 2020 vs 2019
– Gross Profits:
15.4% for 2020 vs 2019
– Gross Margin:
42% for 2020 vs 2019

Baseline Financials:
– Cash Flow:
positive
– Net Income:
positive
– Operating Profit:
positive

Notes from the F-1:

– TLDR (no just kidding, it’s just that this is either a Stealth play, day traders think it’s a stealth play, or it’s a dud): has nothing to do with what’s in the F-1

Underwriters:
Prime Number Capital: they’ve done a bunch of Chinese IPOs, some that went on massive runs months after the IPO, and a few that epically tanked… no massive runs off the debut like we’ve seen other Stealth IPOs pull, but the timing would be pretty good for helping wealthy Chinese get their money out of the grasp of the PRC.

IPO Classification:
Low-Float Chinese

Recent Similar IPOs: well… EBON if we’re lucky, LIAN if we’re not
(haven’t been any purely Chinese IPOs for a while)

Trading Strategy:
This one is tricky: a year ago, all Chinese IPOs were hot: now we’ve gotta be a bit more cautious, though my hunch is that day traders like this one as long as the debut doesn’t get spoiled up to an un-tradeable premium before the opening. So if we get substantial buzz on Twitter, and the debut is like $13-15, perhaps it’s an interesting one to take on the opening debut. If there’s no noise, and the debut is around or below the IPO price, I dunno… could be a flop. I’ll be looking for a constant buy-side imbalance with a healthy, but not overdone premium. Otherwise, probably will just watch.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Cloudy: hope for more clarity on the pre-debut crossing.

+++

Ocean Biomedical (OCEA) – Date TBD | 2M Shares
Price Range:
$7.00 – $9.00
Offering Size:
$18M
Shares Outstanding:
32M

Industry: Biotech

Overview:
Pre-clinical biotech focused on cancer. Look, biotech is not a good industry in which to buy IPOs off the debut, and unless you have some deep insights into medicine, are best left to specialists, of which I am not one.

Considerations: I guess I should give this a little more effort than I usually give low-float pharmaceutical IPOs, given how NVCT performed on Monday after demonstrating the typical ‘biotech bust’ move off the debut. But what can I say, it’s low float, it might get accumulated on Day 1 and pumped on Day 2… or it might not. There are a lot of low-float IPOs slated for Friday, and perhaps the worst of the lot will offer pump-groups to control the float and rip it the following week. With just 2M shares, why not this one?

Growth Numbers: pre-clinical, no growth.

Baseline Financials:
see above.

Notes from the S-1:

Underwriters:
Roth Capital (as if I needed another reason not to play this)

IPO Classification:
Biotech Bust

Recent Similar IPOs: NVCT IMMX NRSN

Trading Strategy:
I know, you’re gonna look at those two examples above and start getting excited, but you’ll see that none of them warranted a debut buy-in, and while IMMX and NVCT offered nice Day 2 rips, NRSN has been in a constant downward trend ever since the IPO debut. If you’re feeling a bit of FOMO on OCEA, consider holding off for an opportunity to start a position at $3.20, with the plan to add more than you started with if it dips below $3.00… saving some for additional adds as low as $2.20 if the rip never comes. Or just do like I do, and don’t trade biotechs (NOTE: I did buy some NRSN today at $1.75 because I feel the downside from here is minimal, and they are scheduled to report on several studies at conferences in March 2022, so I’m hoping for some positive news to drive these up.).
As for a more clearly defined trading strategy: add on Day 1, sell any rip on Day 2. Otherwise, wait for a dip below $2.30 to take a play on the QPX around 40 days after the IPO.


Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Don’t do it. If anything, look to find the bottom on Day 1 if you want to try to catch a Day 2 run.


+++

Yi Po International (YBZN) – Date TBD | Float TBD
Price Range:
TBD
Offering Size:
TBD
Shares Outstanding:


Industry: Parking Lot Management

Overview:
This Chinese technology company provides an app that helps drivers find parking spots. They have pretty impressive financials: strong growth, although the numbers are compared to the first 6 months of the pandemic, but still, profitable across all baseline financials. None of that really matters of course: this is a Boustead deal for a Chinese company, and that’s a recipe for explosive moves.

Considerations: I’m not sure this one will be on the calendar for this week, but if they sneak it onto the schedule, and it doesn’t get left off any trading platforms, I’ll be watching closely for a reasonable debut price (as in, prices at $5, debuts at $15). If we get a debut above $20, we probably have to let it go, but anything less and we could be looking at a Stealth IPO setup. Unfortunately, the recent trend has been for these to open trading at like $40, as we saw with TKLF, which gives us retail traders no chance at getting in on an opening rip: and playing a bounce like we saw when TKLF dropped from $30 to $13 before ripping back up to $37 is a dangerous affair (TKLD now trades around $4)… this is not a stock in which you want to exceed your time limit.

Growth Numbers:
– Revenue Growth:
+72.6% for 6 months ending June 30, 2021
– Gross Profits:
+99% for 6 months ending June 30, 2021
– Gross Margin:
74% for 6 months ending June 30, 2021

Baseline Financials:
– Cash Flow:
positive
– Net Income:
positive
– Operating Profit:
positive

Notes from the F-1:
– The only thing I’m really looking at in the SEC filing is for the name of the underwriter… it’s Boustead: ok, put this on watch.

Underwriters:
Boustead

IPO Classification:
Low Float Chinese Stealth IPO

Recent Similar IPOs: TKLF CPOP SOPA

Trading Strategy:
Quite simply, if the debut price is around or under $15, you buy a couple thousand shares, wait for the first couple halts, and start exiting your position. Then if it peaks at like $30+ and drops to a baseline, buy back in at the baseline, and sell the end of day run. You can try your luck again in the early Pre-market the next day if it drops to around $30 again for a Day 2 run up to $70+ (look, I know how ridiculous this all sounds, but it’s happened many times).
If the debut price is like $30+ you can’t touch it. Take your chances with playing any dips from there: sometimes they do bounce, other times, they are simply a deflated balloon. The end of the ride is generally below $2… so keep that in mind if you start asking yourself, “But, how much lower can it really go?”


Brand Name Recognition:
Low.

Debut Trade Conviction Level:
High. As in, from the IPO price, this will almost definitely go sky-high. But if the spike already occurred before the stock starts trading, you have to let it go. is a

Quiet Period Expiration (QPX) Watch:

The SEC mandates that companies and underwriters refrain from making public statements for 40 days after an IPO begins trading. The QPX date marks a time when press releases may be issued that have the potential to move the stock price; especially companies whose price has dropped from the IPO.
These can present great trading opportunities ( I recommend this video here)

Upcoming QPX:
– February 7, 2022: TPG Group (TPG)
– February 16, 2022: Hour Loop (HOUR)
– February 16, 2022: Vigil Neuroscience (VIGL)
– February 16, 2022: CinCor Pharma (CINC)
– February 21, 2022: Hillstream BioPharma (HILS)
– February 21, 2022: Credo (CRDO)

Lockup Period Expiration (LPX) Watch:

Most IPOs are subject to a 180 day lockup period before insiders and shareholders who owned shares of a company prior to the IPO can sell their positions. Typically, the dilutionary effect of this event will cause a stock price to drop, as supply increases without any fundamental changes in the value of the underlying company. Many investors will wait for LPX before starting a long term position in a company.

Upcoming LPX:
– February 8, 2022: Southern State Bancshares (SSBK)
– February 9, 2022: DatChat (DATS)
– February 9, 2022: Dermata Therapeutics (DRMA)

Please help promote IPOWarriors and like, follow/subscribe, retweet, share our social media content:

NOTE: this is not financial advice, and I am not a financial advisor: this information is just my opinion and is for informational purposes only. I may have or take positions in the equities mentioned in this article in the next 72 hours. Trading equities is risky. Do your own research,and trade your own trade.

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IPO Warriors IPO Preview for January 31 – February 4, 2022

IPO Warriors IPO Preview forJanuary 31 – February 4, 2022

February 1st, 2022

After last week and Monday of this week saw recent low-float IPOs KSCP and FGI go on explosive runs, day traders are likely to be on the lookout for the next low-float IPOs to trade. This could bring back the debut play, with less of a drop off the open that we saw in the last two low float IPOs, while still a bit of tentativeness to keep the debut premium in check.

The market has warmed up this week, and cash is flowing a bit more freely, with eager traders likely looking to make up for recent losses. So things could get frothy if anything catches fire.

+++

If you joined me last week for the live-trading debut on $KSCP and $CRDO (where I pointed out the likelihood of a delayed pop on KSCP) then I hope you took away some ideas for trading this (CRDO also jumped once the market thawed out today)…

I will try to live trade some of the IPOs this week, but won’t know for sure until the day of the IPOs, so be sure to subscribe to the IPOWarriors YouTube Channel for updates:

https://www.youtube.com/channel/UCS5j-KpdsZlLEaReHXIDqqQ

+++

Ok, Let’s jump in:

Maris Tech (MTEK) – February 2, 2022 | 3.1M Units (Share + Warrant)
Price Range:
$4.20 – $5.80
Offering Size:
$18M
Shares Outstanding:
6.67M

Industry: Electronic Components

Overview:
This Israeli company manufactures hi-tech electronic components that are used in video, audio, and wireless communication devices, with both civilian and military applications. Their products are specifically defined as incorporating AI, being ultra-compact, and technologically advanced: used in military drones, satellites, autonomous driving, etc. and are a combination of hardware and software technologies.

Considerations: There is high demand for electronic components and AI driven analytical software related to video, as their growth numbers attest, and as long as they can maintain their upstream supply chain, business should continue to grow. More importantly, this IPO is priced to run, and the low float of just 3.1M shares is sure to catch day traders attention. The company, at least on the surface, is sexy enough to make for an interesting story (FGI took a few days, but ran and it sells kitchen sinks)… so I get the sense that day traders are gonna key in on this one. The only curve ball to me is the warrants, which often skew the debut price. As long as the market continues it’s upbeat rebound bounce into the pre-debut on this one, I think we have a solid setup for an opening run.

Growth Numbers:
– Revenue Growth:
+151% for 6 months ending June 30, 2021
– Gross Profits:
+178% for 6 months ending June 30, 2021

Baseline Financials:
– Cash Flow:
negative – improving
– Net Income:
negative – improving
– Operating Profit:
negative – improving

Notes from the F-1:
– Risks: Have faced recent challenges in retaining employees due to COVID
– Risks: Increased lead time to obtain components: supply chain disruption
– Insider options lockup period is 12 months

Underwriters:
Aegis Capital

IPO Classification:
Ultra Low Float – Electronics

Recent Similar IPOs: VLCN

Trading Strategy:
The company has a sexy story on the surface, and the ultra-low float is likely to get the attention of everyone who missed KSCP and to some extent, FGI. The market has rebounded this week, so spirits are high and day traders will be looking for something to trade. If there are other low-float plays that run in pre-market (watch out for recent low-float biotechs that post any kind of headline), then perhaps the spotlight gets taken away from MTEK, but if there aren’t any other parabolic movers in the market, this one could become the primary focus of day traders attention.
My debut trading strategy will ultimately be determined by the following factors:

– IPO Pricing and Allocation Fills: I put in a request for $100 on WeBull… if they price this at $5.80 or above, and only give partial allocations, then we’re looking a solid setup for an opening run. Pricing below $5.80 and full allocations means we may see an opening drop, particularly if we see any kind of debut premium.

– Debut Premium: Given that there are warrants involved, we shouldn’t see too high of a debut premium: if any at all, but if we do, we need to be cautious of an opening drop either immediately off the debut, or if there is a halt up off the debut, then following the halt. Ideally, we see some tentativeness in buying the debut to keep this from opening at any kind of dangerous level: an opening trade at or slightly above the IPO price would likely present a favorable debut buy-in opportunity.

– Buy-Side/Sell-Side Indication: If we see a heavy sell-side indication in the pre-debut IPO crossing, then I recommend waiting for an expected drop on the debut. These IPO debuts can often produce halts in either direction, which can reverse just as quickly. I probably won’t tempt fate on any kind of high debut premium, but if this indicates that it will go live within $1 of the IPO price (on either side), I’ll be leaning on the buy-side/sell-side indication to dictate my opening move. A heavy sell-side presence, and I’ll try to undercut by 9%: hoping to get in right before a halt to the downside in anticipation of a reversal off the bottom (as we saw with FGI on the debut). Even if it drops slightly from there and baselines lower, you have reason to hold out for an eventual pop, and can even average down in that case and hold for the Day 2 run (or in the case of FGI, Day 5)…. If we see a buy-side indication, with a debut price near or slightly above the IPO price, I think we’re in a good setup for an upward run off the debut (similar to what we saw with HOUR).

The unknown variable is how the warrants will play into the debut pricing and opening trade action, as many allocation recipients are likely to flip their common shares at the opening trade if we see any kind of debut premium.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
High.

+++

Direct Digital (DRCT) – Date TBD | 2.187M Shares
Price Range:
$7.00 – $9.00
Offering Size:
$20M
Shares Outstanding:
13.57M

Industry: Programmatic Ad Buying/Selling

Overview:
This holding company operates three platforms that provide services in the digital ad management space:

Colossus SSP: is a supply side platform that sells ads for their media customers.

Huddled Masses: creates digital marketing campaigns for clients. Kind of seems like a well-established digital marketing agency.

Orange142: this is the demand side platform that handles data management, audience targeting, content marketing, and analytics for their clients.

They claim 56k sell-side clients (clients selling advertising), and just 158 buy-side clients. So it seems like their primary business is selling ads for their clients, and Colossus SSP appears to be their primary revenue driver.


Considerations: This one was rescheduled from last week, and has been downsized from 4M shares to 2.187M shares, so perhaps it was just a response to frigid market conditions, but clearly there has not been all that much demand for their offering as of yet. As for the company, it all feels like a digital marketing company that has built up scalable services platforms to offer services to mid-sized businesses that want to optimize their digital marketing budgets. With very strong growth metrics and positive baseline financials, coupled with a low float, this one could be interesting.
Don’t particularly like that Roth Capital is an attached underwriter, as the market has repeatedly shunned their offerings, seemingly out of spite. So that makes me a bit cautious in taking any risks on this debut.

Growth Numbers:
– Revenue Growth:
+330% for 9 months ending September 30, 2021
– Gross Profits:
+693% for 9 months ending September 30, 2021
– Gross Margin:
53% for 9 months ending September 30, 2021

Baseline Financials:
– Cash Flow:
positive – improving (negative in 2020 and positive in 2019)
– Net Income:
positive – improving (negative in 2020 and 2019)
– Operating Profit:
positive – improving (negative in 2020 and 2019)

Notes from the S-1:
– Risks: restricted use of 3rd-party cookies (specifically by Google), would affect the effectiveness of their platform. While they believe they can adapt and develop alternatives, without specific clarification on how they will do this, I am a little concerned about the long term performance of this company.

Underwriters:
The Benchmark Company (yes, same as FGI), Roth Capital

IPO Classification:
Low Float

Recent Similar IPOs: HOUR PIK STRN
Potential Comps: TTD… sort of a stretch given that TTD is much larger, but they both operate in the same general market, so comps are not unreasonable. DRCT is seeking a far smaller valuation.

Trading Strategy:
This IPO does not have anything that indicates a Stealth IPO setup, and I’m not sure how sexy this will appear to day traders beyond the ultra-low, float, but given the buzz around low float IPOs from last week, this one could get interesting, especially if MTEK runs. The $8 debut price leaves plenty of room to fall off the open (like VINE did), so again, we need to be watching the sell-side imbalance on the debut. If we see a heavy buy-side and only a slight increase in the debut indication price, then we may have a strong candidate for a debut run, but anythinog else would indicate a more conservative strategy. This one kind of feels like it could behave like STRN, which had a strong debut run for several days after the IPO, followed by a hard pull back, and then pumped even higher. The potential for a post-dip recovery run is pretty strong if this one doesn’t perform well out of the gate, so averaging down and holding for an eventual algo or trading group pump could be a prudent move if this slips on the debut. The bigger concern I have for this one is that if we see a strong performance by MTEK, the debut premium could get blown up to a rice that doesn’t provide for any further upside, but if the market remains in an uptrend going all the way through to Friday, there could be enough excitement around having another low-float IPO to trade for this one to run.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Moderate/High. Play the debut conservatively, and be prepared to average down if it drops. There will be resonance from MTEK on this one, but I don’t think the company is as ‘sexy’ despite a smaller float, and a lot could change before the end of the week.

+++

Samsara Vision (SMSA) – February 4, 2022 | 4.16M Shares
Price Range:
$5.00 – $7.00
Offering Size:
$30M
Shares Outstanding:
22.49M

Industry: Medical Equipment

Overview:
Not to be confused with the recent IPO for Samsara (IOT), this company has developed an implantable miniature telescope technology that is embedded into the eye for treating vision loss due to macular degeneration. Which sounds pretty cool and futuristic, however, it is still in the early commercial stages in Europe and has not gone through the FDA certification for use or sale in America.

Considerations: The underwriter is ThinkEquity, a pretty well established third-tier underwriter whose offerings have been hit-and-miss. I don’t see any reason why this one should run right off the debut, and the float is not as low as DRCT, which also debuts on Friday. This one might be better put on a watch list for opportunities to accumulate into the quiet period.

Growth Numbers: Not really applicable as they are just in the early commercial stages of European market rollout and still have to go through FDA approval for US markets

Baseline Financials:
Also not really applicable.

Notes from the S-1:
– Risks: Have not started FDA approval.

Underwriters:
ThinkEquity

IPO Classification:
Low Float

Recent Similar IPOs: IINN BEAT MYNZ

Trading Strategy:
I don’t see any reason to play this one off the debut. Unless all low-float IPOs are catching fire throughout the week, and social media is ablaze with this one, the float isn’t quite low enough, and the product not really the kind of thing that captures the attention of general retail buyers. I get a feeling that some day traders will want this one to be more than it can deliver, and drive the debut price up only to have the rug pulled on the debut. This one has already been postponed at least twice, so expect full-allocations on WeBull, and allocation recipients are likely to bail at the first sign of weakness. From where I’m sitting – albeit days before the debut – this one has QPX play written all over it. Wait for it to drop for a couple days to the sub-$3 level and accumulate on hopes that a headline gets dropped once the Quiet Period Expires.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Low. Unless allocations turn out to be minimal and social buzz is humming, I think this one is a wait and watch.

+++

Arcellx (ACLX) – Friday 4, 2022 | 8.25M Shares
Price Range:
$15.00 – $17.00
Offering Size:
$160M
Shares Outstanding:
136M

Industry: Phase I Biotech

Overview:
It’s a Phase I biotech developing cell therapies for cancer and other diseases. As a rule, I don’t touch these, and when I have broken that rule, it has never worked out. I will probably break that rule again at some point in the future, and expect I will lose money on it again (I am typing this for my own reference to remind myself to NEVER play pharmaceutical biotech IPOs).

Considerations: I know nothing about cell therapies for cancer, so I have no input other than 9 out of 10 biotech IPOs fall off the debut. If you’re looking to trade this at all, let it fall, wait… fall further, wait.. fall further… and then go trade something else.

Growth Numbers: N/A

Baseline Financials:
N/A

Notes from the S-1:
– Risks: Failure to achieve FDA approval, failure to raise money to get through FDA, and so on… biotech is tough, especially pharmaceuticals.

Underwriters:
BofA Securities and others

IPO Classification:
Biotech Bust

Recent Similar IPOs: AMLX VIGL (ironically, both of these have done relatively well since their IPOs, but both sank hard off their IPO debuts)

Trading Strategy:
I simply don’t trade these.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Couldn’t be any lower

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IPO WARRIORS IPO PREVIEW FOR JANUARY 24 – JANUARY 28, 2022

IPO Warriors IPO Preview for January 24 – January 28, 2022

January 24th, 2022

Last week’s IPO slate gave us a full-spectrum of low-float IPOs ranging from sketchy Stealth IPOs, to boring bancorps, to biotech busts, and a warrant offering… but no mainstream debuts. This week gives us at least one brave company willing to test the IPO conditions, and not much else.

It’s still early in the year, and market conditions have been poignantly adverse to growth stocks: and given that IPOs pretty much designed to raise capital for companies to help fund growth and expansion, we’ shouldn’t be too surprised to see a thin IPO calendar in this climate. But there are still plenty of profit taking opportunities amongst the low-float, second (and third) tier underwritten offerings: which in many ways, provide more volatility and win potential than their mainstream counterparts. With this in mind, we venture forward.

+++

Note: You’ll notice that I’ve updated the format of the IPO listings in this newsletter to include richer statistics and deeper analysis, I’ve also added the upcoming Quiet Period Expiration (QPX) and Lockup Period Expiration (LPX) list at the bottom of the newsletter with breakdowns on what opportunities I’m looking for there.

+++

Ok, Let’s jump in:

FGI Industries (FGI) – January 25, 2022
Price Range:
$6.00 – $8.00
Offering Size: $23M + $17M in underlying warrant included in the Units
Float: 2.5M Units (shares + warrants)
Total Shares Outstanding: 9.5M Shares

Industry: Home Improvement Products

Overview:
This company sources kitchen and bath products from China and distributes them through a global network of suppliers. They have distribution arrangements with The Home Depot, Lowe’s, and Furguson, and sells private label products for Home Depot and Furguson. Their products target the middle and upper end of the retail price points. They are focusing on increasing profit margins developing new sales channels and increasing their share of branded products.

Considerations: Sure, people have been renovating their homes like crazy, so I guess this is a good industry to be in. But they are profitable and generating growth, with distribution partners including The Home Depot and
On the surface, this one looks a bit like a potential Stealth IPO setup, with a clear Chinese connection and ultra low float. But while we have seen a couple of recent IPOs underwritten by The Benchmark Company that have made explosive runs directly off their IPO or shortly thereafter (BFRI and AERC), we don’t have any pattern history of the kind of dubious setup like we’ve seen consistently demonstrated by certain other underwriters (like what we saw with TKLF last week: a Univest offering.
This one has already been rescheduled twice, and had warrants added, so it doesn’t really feel like a Stealth IPO setup to me, in which case, the need to add warrants makes me think there’s not a ton of demand, but already it’s gotten the attention of low-float/day-traders so I definitely see potential..

NOTE: I have put in for a tiny allocation request on WeBull and will report my fill on Tuesday morning to measure allocation size.

Growth Numbers:
– Revenue Growth:
+31% for 9 months ending September 30, 2021
– Gross Profits:
+15.6% for 9 months ending September 30, 2021
– Gross Margin:
20% for 9 months ending September 30, 2021

Baseline Financials:
– Cash Flow:
positive – declining (positive for past three years)
– Net Income:
positive – improving (positive for past three years)
– Operating Profit:
positive – improving (positive for past three years)

Notes from the S-1:
– Incorporated in the Cayman Islands
– Heavy short term debt: $13M in short-term loans
– Immediately after the offering, 9,500,000 ordinary shares will be issued and outstanding, of which 74% will be held by insiders and affiliates of FGI and 26% will be held by public investors (2,875,000 ordinary shares will be issued and outstanding if the underwriters exercise in full their option to purchase additional ordinary shares and/or warrants, of which 71% will be held by insiders and affiliates of FGI and 29% will be held by public investors).
– Risks: supply chain and materials exposure
– Risks: dependence on China as primary source of products
– Risks: top ten customers contribute majority of sales
– Risks: current legal proceedings to preserve exclusive distribution rights with Huida (ongoing for 10 years).

Underwriter:
The Benchmark Company, Northland Capital Markets

IPO Classification:
Ultra Low Float | Potential Stealth IPO

Recent Similar IPOs: HOUR, TLKF (?)

Trading Strategy:
The setup on this one is not to be played based on fundamentals, which are actually not bad to begin with, but in my opinion it is simply a low-float debut that may get pumped by insiders, or may just get pumped by day traders looking for a low-float target to trade: HOUR ran on pure trading momentum: 50M shares traded on its debut with a 1.5M share float. Compare that to about 3M shares traded on day one for TKLF with a 6M share float and you can see these are in fact quite different animals.

If this starts trading with any kind of hefty debut premium, it’s likely a Stealth IPO, and could go ballistic if the price isn’t blown up to a ridiculous level. A reasonable Stealth IPO debut price is in the $14-18 range, and would indicate multiple halts upward (it could also crash out, so keep a close watch on the buy-side/sell-side imbalance). If the debut is at or below the IPO price, which is likely due to the price of warrants being factored in, then it’s almost certainly not a Stealth IPO setup.

The play at that point is to gauge whether the low-float will be seized upon by day traders on Day 1, or whether this dies off before trading groups and algos boost it for what I would then expect to be a short lived pop. If the market doesn’t offer any other day trades on Tuesday, and this one does proceed with its debut, it could be an attractive day trade so long as it doesn’t get pumped to a ridiculous price on the debut. I don’t really love the potential $8 IPO price though: feels much safer when these are offered in the $4-5 range.

Watch for a buy-side vs sell-side imbalance in the pre-debut crossing, and gauge retail allocation sizes to determine whether we should expect an opening dump or run on the debut. A ladder-trade or ‘wait-and-see’ entry might make more sense, given how warrants often cause some pricing confusion in these setups.


Brand Name Recognition:
Basically none.

Debut Trade Conviction Level:
High. I like that it could be a Stealth IPO, but I sort of doubt it, I actually like it more as a pure low-float debut that could debut at a level that leaves room for day traders to pump it on Day 1.

+++

Credo Technology Group (CRDO) – January 27, 2022 | 25M Shares
Price Range:
$10.00 – $12.00
Offering Size:
$345M (the company is raising $275M with insiders selling additional shares)
Shares Outstanding:
148.7M

Industry: Semiconductors

Overview:
This semiconductor manufacturer produces components designed to optimize high-speed data transfer solutions in wired data communications applications. Basically, microchips that speed up data transfer, improve power and cost efficiencies, and optimize bandwidth in the data infrastructure market.

Considerations: Given the global shortage in semiconductors and exponentially growing amount of data being generated by every facet of business, this company is perfectly situated for high product demand and growth.

Growth Numbers:
– Revenue Growth:
+45.8% for 6 months ending October 31, 2021
– Gross Profits:
+25.5% for 6 months ending October 31, 2021
– Gross Margin:
56.89% for 6 months ending October 31, 2021

Baseline Financials:
– Cash Flow:
negative – improving (positive fye 2020)
– Net Income:
negative – improving (positive fye 2020)
– Operating Profit:
negative – appears stable

Notes from the S-1:
– Incorporated in the Cayman Islands
– Blackrock and associated funds have indicated an interest in purchasing
$120M in shares from this offering.
– Generated positive net income of $1.3M for fiscal 2020
– Risks: expected cost increases to fund R&D
– Risks: fluctuating revenue and operating costs
– Risks: limited customer base – 3 customers accounted for 54% of revenue in fiscal 2021. 4 customers accounted for 73% of revenue in 6 months ending 10/31/2021

Underwriters:
Goldman Sachs, BofA, Cowen, Mizuho, Needham, Stifel

IPO Classification:
Mainstream IPO

Recent Similar IPOs: GFS, SKYT

Trading Strategy:
It’s highly conceivable that this IPO gets pulled altogether: the market has been on a severe downtrend and we’ve really only seen one mainstream IPO go live so far, with TPG Group opting for a relatively conservative debut that ensured that IPO buyers and retail traders were given access at prices that provided enough breathing room to offer modest immediate gains.
If they do proceed with their IPO this week, that’s certainly a sign of strength given the participation of Blackrock and other institutional backers. I would not expect this to price above range, but if we see a premium in the debut price above about 20% I would be pretty cautious. While JP Morgan debuted TPG at a price that ensured it wasn’t immediately sold off, we did see a heavy buy-side imbalance at $33.00 in the pre-debut balancing and they held that as the debut price until a sufficient number of sellers decided to pair demand. Goldman, on the otherhand, tends to milk every incremental buy-side offer for a maximum debut price, and in a weak market, that may not leave much room for upside movement once the shares start trading. This isn’t really a household brand name, but like SKYT and GFS – two semiconductor manufacturers that IPOd last year on opposite spectrums of size and scale, we could see run in the days following the IPO if we see debut pricing inline with or just slightly above the IPO price.
To summarize, I’d like to see this one priced at $11-12, and debut between $13-16. Even with strong demand, I would expect some opportunity to catch a dip off the debut before a possible upside move, so a ladder-entry (setting incremental limit orders at and below the indication price), is probably a solid move for a starter position, with some ammo held in reserve to average down on a dip. If the market continues to crash throughout the week, this one will probably get pulled anyway. If we’re starting to see some recovery, this could be an ideal time to enter for a longer swing trade.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Moderate. In a strong market, perhaps this does well, so if the market is on the cusp of turning around, it could be a very fair price at the debut. Unless Goldman pumps it into the debut, I expect limited downside with moderate upside potential.

+++

Direct Digital (DRCT) – Date TBD | 4M Shares
Price Range:
$7.00 – $9.00
Offering Size:
$36M
Shares Outstanding:
15.38M

Industry: Programmatic Ad Buying/Selling

Overview:
This holding company operates three platforms that provide services in the digital ad management space:

Colossus SSP: is a supply side platform that sells ads for their media customers.

Huddled Masses: creates digital marketing campaigns for clients. Kind of seems like a well-established digital marketing agency.

Orange142: this is the demand side platform that handles data management, audience targeting, content marketing, and analytics for their clients.

They claim 56k sell-side clients (clients selling advertising), and just 158 buy-side clients. So it seems like their primary business is selling ads for their clients, and Colossus SSP appears to be their primary revenue driver.


Considerations: This all feels like a digital marketing company that has built up scalable services platforms to offer services to mid-sized businesses that want to optimize their digital marketing budgets. With very strong growth metrics and positive baseline financials, coupled with a low float, this one could be interesting. The IPO date hasn’t been set yet, which makes me wonder if they will actually debut this week, but one to put on our radar.
Don’t particularly like that Roth Capital is an attached underwriter, as the market has repeatedly shunned their offerings, seemingly out of spite. So that makes me a bit cautious in taking any risks on this debut.

Growth Numbers:
– Revenue Growth:
+330% for 9 months ending September 30, 2021
– Gross Profits:
+693% for 9 months ending September 30, 2021
– Gross Margin:
53% for 9 months ending September 30, 2021

Baseline Financials:
– Cash Flow:
positive – improving (negative in 2020 and positive in 2019)
– Net Income:
positive – improving (negative in 2020 and 2019)
– Operating Profit:
positive – improving (negative in 2020 and 2019)

Notes from the S-1:
– Risks: restricted use of 3rd-party cookies (specifically by Google), would affect the effectiveness of their platform. While they believe they can adapt and develop alternatives, without specific clarification on how they will do this, I am a little concerned about the long term performance of this company.

Underwriters:
The Benchmark Company (yes, same as FGI above), Roth Capital

IPO Classification:
Low Float

Recent Similar IPOs: HOUR PIK STRN
Potential Comps: TTD… sort of a stretch given that TTD is much larger, but they both operate in the same general market, so comps are not unreasonable. DRCT is seeking a far smaller valuation.

Trading Strategy:
This IPO does not have anything that indicates a Stealth IPO setup, and I’m not sure how sexy this will appear to day traders beyond the low, but not ultra-low, float, so I will be monitoring social media chatter to see if there appears to be much interest in this ticker leading up to the IPO. The $8 debut price leaves plenty of room to fall off the open (like VINE did), so again, we need to be watching the sell-side imbalance on the debut. If we see a heavy buy-side and only a slight increase in the debut indication price, then we may have a strong candidate for a debut run, but anythinog else would indicate a more conservative strategy. This one kind of feels like it could behave like STRN, which had a strong debut run for several days after the IPO, followed by a hard pull back, and then pumped even higher. The potential for a post-dip recovery run is pretty strong if this one doesn’t perform well out of the gate, so averaging down and holding for an eventual algo or trading group pump could be a prudent move if this slips on the debut.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Moderate/High. Play the debut conservatively, and be prepared to average down if it drops. The float isn’t ultra-low, but small enough to run at some point, and the company appears to be solid across growth and financials.

+++

Samsara Vision (SMSA) – Date January 28, 2022 | 4.16M Shares
Price Range:
$5.00 – $7.00
Offering Size:
$29M
Shares Outstanding:
15.38M

Industry: Medical Devices

Overview:
A medical device company developing a second generation version of their implantable microsope device that is inserted into the patient’s eye to help correct age-related vision problems (macular degeneration – AMD). They have 14 US patents and 97 total active patents, some of which are set to expire as early as 2023, with the most broad patent slated to expire in 2038.


Considerations: Still in early commercial testing in Europe, and hasn’t started the FDA process. Not an IPO debut I’m interested in playing, but one to keep an eye on if it drops for a potential QPX play.

Growth Numbers:
– Revenue Growth:
N/A ($31,000 revenue in 2021 vs $0 in prior year)
– Gross Profits:
N/A ($26,000 GP in 2021 vs $0 in prior year)
– Gross Margin:
Estimated at 85-90% for their primary device

Baseline Financials:
– Cash Flow:
negative
– Net Income:
negative
– Operating Profit:
negative

Notes from the S-1:
– Risks: Failure to get FDA approval would make it impossible to capitalize on US Market.

Underwriters:
ThinkEquity

IPO Classification:
Low Float Biotech (aka Biotech Bust)

Recent Similar IPOs: IINN BEAT
Potential Comps:

Trading Strategy:
Just another low-float IPO that has been rescheduled a few times and offered on WeBull for allocation request for a while. Likely to sell off initially, and probably not worth trying to scalp a pop on Day 1, though I would expect trading

Brand Name Recognition:
None.

Debut Trade Conviction Level:
Low. I don’t recommend buying the debut on anything biotech, but at least it’s not a pharmaceutical. Could get pumped later in the day or on Day 2 if trading groups gobble it up and pump it, but a more likely play would be to wait for it to dip below $3 over the next couple weeks and then hope for PR after QPX.

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IPO Warriors IPO Preview for
January 17 – January 21, 2022

IPO Warriors IPO Preview for January 17 – January 21, 2022

January 18th, 2022

A shortened week in an market that’s as cold as weather outside my place has brought a chill to the mainstream IPO market. Not to despair, the throngs of second and third tier underwriters are still pumping out their mixed bag offerings of low-float IPOs that range from typical medical/biotech firms to Stealth IPOs fronting for dubious enterprises (we already had TKLF today – the newsletter on that one went out Monday night in case you missed it)…

Anyway, not a lot of financial analysis needs to go into these low-float plays, they either run hard on build up hype, debut overheated and crash, or fail to attract any attention at all and just dump out of the gate. I’ll provide the setups and attempt to forecast what I expect from each setup, but bear in mind that these are extremely risky setups, and you should play them accordingly.

Let’s get started:

Jupiter Neurosciences (JUNS) – January 19, 2022 | 3.33M Shares
This IPO was scheduled for Tuesday, and has since been pushed back to Wednesday, but it’s pretty late in the evening now and no pricing has been announced, so I think it’s probably delayed again. I don’t generally play biotech IPOs on the debut, but these setups have given opportunities to wait for a dip and take a position around the quiet period expiration.
The story on this one is they have developed a patented platform that targets neuroinflammation with applications to Alzheimer’s and COVID applications. It is significant to note that their Phase I trials were backed by a grant from the prestigious National Institute on Aging. The underwriter is Dawson James Securities, which is not as sketchy as some of the other lesser-known 3rd tier underwriters, but it also has Roth Capital alongside it, which has been shunned by many investors. Still, my thinking is that this company looks legit on the surface and could be an interesting setup once the price fades down.
The play I am starting to recognize on these low-float biotechs that price in the $4-10 range and have legitimate medical applications is to wait for the share price to trail off into the quiet period, and then start a position down below $2.60 and add on dips until they issue a press release and play the pop. I’ll be keeping an eye on this one.

Four Springs Capital Trust (FSPR) – January 20, 2022 | 18M Shares
Here we have an IPO with top-tier underwriters (Morgan Stanley and Goldman Sachs along with a host of others)… so this is a mainstream debut for a REIT that specializes in single-tenent offices for small professional service operators like dentists, consultants, lawyers, etc. They own 122 properties and hold interests in another 34. I see headlines indicating attempts to go public since 2017, and generally don’t find these setups to be all that volatile on their debuts, so not something I’m too interested in trading or following. But it will be interesting to see how this one performs on the debut: until we see strong IPO debuts for solid companies, we’re not going to get many companies with brand-name recognition braving the current market conditions.

Rhodium Enterprises (RHDM) – January 20, 2022 | 7.7M Shares
This is a crypto mining operation that owns proprietary technology for mining and uses liquid cooling technology to optimize their bitcoin mining operations. As most of us know, bitcoin has come way down from it’s recent highs, and I’m not sure the market is going to be too excited to jump right into a new crypto mining debut. However, if you’re bullish on the future of bitcoin, this might be an interesting miner for a long term investment, though I’d be hesitant to buy off the IPO, as it would surprise me to see this move up off the debut. If you want to start a position here, consider waiting and watching for a dip to build a position. I doubt crypto mining plays will gain momentum until we see a sustained rally in BTC, so perhaps this ticker is best suited for a watchlist alongside IREN and SDIG for possible rallies in recent crypto miner stocks following an upside bounce in Bitcoin.

FGI Industries (FGI) – January 21, 2022 | 2.5M Units
On the surface, this one had a bit of a Stealth IPO look to it going into last week: just 2.5M shares, and clear connections to China, but I received a notification in regards to my allocation request on WeBull for FGI shares that informed me of an update to the prospectus that has now added warrants to the shares: effectively doubling the float and throwing a variable into the debut trade that generally has diminished the running power of low-float IPOs. Th underwriter: The Benchmark Company, does not have any real history of running Stealth IPOs – though AERC’s IPO appears to have been manipulated in some ways, and BFRI got pumped pretty hard once the quite period expired… so maybe this one has something up it’s sleeve. I put in an allocation request for $100 just to get a sense of what kind of fills they give, but am not convinced one way or another that this is a typical Chinese Stealth play… yet. I’ll dig a little deeper later in the week, and even if it’s not a Stealth Setup, it could still run purely on ultra-low float, but the warrants introduce a level of confusion that might throw off a strong debut run.

Samsara Vision (SMSA) – January 21, 2022 | 4.16M Shares
Not to be confused with the recent IPO for Samsara (IOT), this company has developed an implantable miniature telescope technology that is embedded into the eye for treating vision loss due to macular degeneration. Which sounds pretty cool and futuristic, however, it is still in the early commercial stages in Europe and has not gone through the FDA certification for use or sale in America. The underwriter is ThinkEquity, a pretty well established third-tier underwriter whose offerings have been hit-and-miss. I don’t see any reason why this one should run right off the debut. Again, this one might be better put on a watch list for opportunities to accumulate into the quiet period.

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