While ‘Bulge Bracket’ banks (top tier underwriters) have been starved of any IPO action in 2022, with Chobani announcing the withdrawl of it’s IPO after initially filing to go public last November, the demand for lesser-known companies offered by second-tier underwriters has been white hot ever since HKD re-wrote the history books. And just when it seemed like the trading cycle had peaked in terms of hype and euphoria around the low-float setup, little known ATXG sneaked onto the calendar as an uplisting, and again reset expectations as to the possible limits for an IPO to achieve in a single day of trading, running from a low at $12.95 to an after-hours high of $1,999.99 in a single trading session. Sympathy moves in SHPH and BIAF have already shown the FOMO/MOMO effect that this even has had in refueling the fire in IPO trading, and we’re likely to see this trend continue again, until we stack up a few losers, as we had done going into last week.

Even deals with warrants have run: SHPH wasn’t really a warrants deal: the warrants executed automatically at the open of trading the commons, so it more like 2-shares-for-1 unit. But BIAF was a 2x warrants deal, that one ripped on the open. Granted, it was hot on the heels of SHPH and ATXG, but if that one can run, there’s reason to think that the next IPOs in the lineup can run as well. But does that make it a risk-free setup to go request as much of an allocation request as possible for the upcoming IPOs offered on WeBull? Perhaps, but there are certainly some potential pitfalls, and we’ll be breaking those down in this week’s detailed analysis.

The bigger elephant in the room is the distinction between the standard low-float IPOs and the Chinese/Asian IPOs: and within the latter, those that are truly ‘Stealth IPO’ setups vs those that are just riding the coat tails of the trend and using this opportunity to dump shares on US retail traders. While it still makes sense to allocate for as many shares as possible for any offerings brought to market by ‘usual suspect’ underwriters for these setups, the debut trade is getting far more risky, but with proper risk management and by following the clues we get in pre-debut indications and with background color we gather from the Street, we can make better informed decisions on how to trade these (presuming we’re only able to get limited to no IPO allocations).

The last point worth making here at the start of the week, is that we’re very likely to see additional IPOs added to the calendar by Friday: as underwriters scramble to be the next in line: with a window of opportunity to capture this unique moment in the IPO trading frenzy, which is likely to bring us increasingly dubious offers in addition to the possibility of highly lucrative Stealth setups added at the last minute. We’ll have to stay on our toes to catch the winners and avoid the losers, but it’s well worth the effort in this market: you gotta cast lures while the fish are biting!

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This Week’s IPOs:

• Jupiter Neurosciences (JUNS) – September 7, 2022 | 2.5M Shares
  

• Wearable Devices (WLDS) – September 9, 2022 | 3.6M Units

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Ok, Let’s jump in:

Lockup Period Expiration (LPX) Watch:

Most IPOs are subject to either 90 or 180 day lockup periods 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.
Conversely, with low-float IPOs, we often see press releases and other announcements dropped going into, or slightly following LPX, presumably as insiders attempt to drive up the share price before they are able to exercise their warrants and sell their shares.

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The IPO market had been ripping for weeks: with virtually every low-float debut providing substantial, if not massive, upside win potential save for a single outlier (silly LUCY… they thought $7.50 with a warrant was gonna run?). And coming into last Friday, it appeared that the streak was still ripping: STBX provided savvy traders with an easy upside run, and gave patient bottom-feeders a nice upside move at the end of the day, but likely burned less experienced traders who chased the open and got burned on the fallout. MOB offered a rare upside move for an IPO with warrants: likely benefiting somewhat from having a sorta cool business but more likely simply the only IPO between STBX and the white-hot JZ debut.

Then Friday happened… JZ gave 0 or 1 share allocations to WeBull traders,leaving them on the sidelines from a practical perspective, bumped AMTD off the deal, and still managed to debut at an astonishing $126.. and STILL moved up from there! But with just 14k shares traded on the debut, inexperienced traders who chased in at $150+ and didn’t take profits out of the next halts quickly found themselves in seriously red positions. PXMD ripped off the open, showing some hope for the trade to continue, but not sure how many traders outside of IPOWarriors really went big on that one. ONFO and JFBR proved that gravity does still exist in low-float IPO Land. And to top it all off, Friday’s Fed announcement seems to have garnered a cold reception from the market.

Generally speaking, stocks that rally during a cold market experience shorter lived and more tempered moves to the upside: especially for IPO trades. But on the other hand, there generally aren’t as many pumps in focus when the market is cold: so IPOs can get more attention under those circumstances. I still think day traders are keyed in on low-float IPOs, but I do wonder whether newcomers to the IPO trading game who get stuck chasing setups they don’t fully understand will double down and do the research to better understand the winning setups or whether they go in search of the next trending setup.

Join the IPOWarriors Discord Channel for daily trading activity:
Live IPO trading and commentary on upcoming IPOs will be reserved for Premium Members within the #premium-members-room.

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This Week’s IPOs:

• Hempacco (HPCO) – August 30, 2022 | 1M Shares + 1.79M shares in the reseller offering)
  

• bioAffinity Tech (BIAF) – August 30, 2022 | 1.29M Units
  

• Wearable Devices (WLDS) – September 02, 2022 | 3.6M Units

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Ok, Let’s jump in:

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WeBull’s fumble of the GCT debut may have hurt the debut trade for IPO flippers who managed to gather up allocations on this one, but it certainly did wonders to keep the low-float IPO train firmly on the tracks with a full head of steam. High volume on the opening print is a bit of a red flag, and GCT did not demonstrate any constrained float in the debut: an initial drop was saved by WeBull traders once the ticker was enabled on the platform, but had it been functional from the debut, we almost certainly would have seen a much higher debut on more volume, which could have resulted in a less profitable setup for those arriving even a few minutes late to the party. Alas, we’ll never know for sure, and as a result, the lucrative gains won by everyone who bought on Day 1 and sold on Day 2 or even 3 will be carried into the next trade (along with stronger FOMO by those who missed out.

With the rest of the market in a bit of a cooling-off period, we should expect low-float IPOs to remain in focus, and with many traders still figuring out how to get into the trades as early as possible, the opportunity to enter on the debut print ahead of chasers still appears to be a relatively reliable strategy, though there will be a tipping point at which one of these does not have a constrained float, debuts at an unsustainable level, halts up anyway, and then fails to attract chasers. I don’t think we’re there yet, but will continue to adjust position size according to debut premium, and volume will be the lead indicator guiding my entry.

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This Week’s IPOs:

• Starbox (STBX) – August 23, 2022 | 5M Shares
  

• Mobilicom (MOB) – August 24, 2022 | 2.15M Units
  

• PaxMedica (PXMD) – August 25, 2022 | 1.545M Shares
  

• Wearable Devices (WLDS) – August 25, 2022 | 3.6M Shares
  

• Jeffs Brands (JFBR) – August 26, 2022 | 2.5M Units
  

• Hempacco (HPCO) – August 26, 2022 | 1M
  

• Jianzhi Education (JZ) – August 26, 2022 | 5M Shares

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Ok, Let’s jump in:

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Just when I thought we may have reached the peak of the low-float IPO hype cycle, MEGL managed to be resuscitated, FRZA ran back into double digits, and even REBN and CHG made short lived pre-market runs. On top of all that, at least two new targets have emerge as “the next HKD/MEGL/TGL”… as the list of successful debuts grows, the mentality amongst day traders that these setups are inherently going to rip once they start trading becomes further entrenched. As long as there are more traders willing to pile into these trades than traders who know how to get in ahead of the crowds: either by getting allocations of the actual IPOs or buying the debut on the opening print before most unfamiliar traders are even aware of what’s happening, and said crowds then follow en masse: then the trade will continue to produce at least one surge to the upside.

But if this hysteria continues unabated, at some point we’re going to get a debut price that is too rich for the “second wave” of traders to stomach. That there were substantial buyers for MEGL at $100, $160, and even $235 was pretty shocking: then again, when the ceiling for HKD was $2,555, perhaps it shouldn’t be all that surprising. As long as there is actually a constrained float behind a deal, then we can expect the limited number of tradable shares (in addition to the low float) to provide the huge supply/demand imbalance that triggers these runs. It’s doubtful that we see another HKD, simply none of the upcoming deals are going to be handled the same way, and because short sellers aren’t likely to get baited into another disaster scenario, and also because unlike HKD, everyone is piling into these trades on the front-side. But we are still likely to see high debut premiums, high volatility in IPO debuts, and opportunities to capture significant profits on well-executed trades. But as we’ve seen in some of the more recent debuts, the potential for significant downside clearly exists, and recognizing the underlying structure of the IPOs that are more likely to succeed is critical in trading this environment.

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Remember to join the IPOWarriors Discord Channel for daily trading activity:
Live IPO trading and commentary on upcoming IPOs will be reserved for Premium Members within the #premium-members-room.

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This Week’s IPOs:

• Innovative Eyewear (LUCY) – August 15, 2022 | 980K Units
  

• PaxMedica (PXMD) – August 19, 2022 | 1.545M Shares
  

• Gigacloud Tech (GCT) – August 19, 2022 | 2.45M Shares
  

• Starbox (STBX) – looks like it’s actually next week after all.

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Ok, Let’s jump in:

The IPO market is rocking: HKD set the market for low-float stocks on fire, and MEGL delivered an encore that has carried the momentum to a new level in insanity. The flames quickly spread to virtually every recent low-float IPO on the market, and the hype surrounding this basket of stocks does not appear to be abating any time soon.

But as with every cycle in the stock market, once a play becomes too predictable, the setup gets ruined. In the case of IPOs, when too many buyers pile into the opening print, we see ridiculous debut premiums at unsustainable levels that can force a halt up, followed by a violent sell-off that triggers “the halt of death” scenario, whereby the opening price from the halt is significantly lower than the halted price, and further downside comes as buyers panic sell out of their positions.

Recognizing that there is much more than simply a low-float behind the setups we saw with HKD and MEGL will allow us to recognize the difference between these and othe setups, so as to avoid some of the potential pitfalls in the next slate of IPOs on the calendar. At this point in the cycle, we’ve got a lot of confidence and enthusiasm from traders who banked on MGAM, MAIA, and even BRSH following HKD’ massive run, not to mention MEGL, which may have done the disservice of convincing many traders that these types of debut runs are normal off insane debut premiums.

So the goal of this week’s analysis is to help identify which, if any, IPO debuts have a shot at delivering massive gains, which ones are more likely to set greed traps, and which are outright losers (and where we might still find opportunities to profit from trading the swings in all setups).

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Remember to join the IPOWarriors Discord Channel for daily trading activity:
Live IPO trading and commentary on upcoming IPOs will be reserved for Premium Members within the #premium-members-room.

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This Week’s IPOs:

• bioAffinity Tech (BIAF) – July 22, 2022 | 1.5M Units
  

• Forza X1 (FRZA) – August 11, 2022 | 3M Shares
  

• CorpHousing Group (CHG) – August 12, 2022 | 4.285M Units
  

• Jianzhi Education Tech (JZ) – Possibly this week | 5M Shares
  

• Onfolio (ONFO) – Also maybe this week | 1.77M Units

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Ok, Let’s jump in:

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