IPO Trading Review for the Week of October 31, 2022 – November 4, 2022

Written by hammondish on November 6, 2022. Posted in Uncategorized.

IPO Trading Review for the Week of October 31, 2022 – November 4, 2022

November 6th, 2022

The low-float IPOs keep getting rescheduled, and last week’s Fed announcements tanking the market didn’t help their causes at all. However, it does look like we’ll have a couple of IPOs get to the starting line this week, and Chinese variants continue to update their F-1 filing. A couple of uplistings are on-watch for potential Stealth plays as well, and early pre-market PR drops have produced some substantial wins: so there’s plenty of opportunities out there in IPO land despite the dearth of new issues.

Another opportunity that appears to be in-play for Monday’s trading session, is the 3 day bounce off negative reactions to Fed announcements: particularly in recent mainstream IPOs in the growth/tech space. Two that I have consistantly watched and played again-and-again are Unity (U) and SentinelOne (S) – both are at all-time-lows off the last round of fed-induced FUD, and each has rebounded hard off the bottoms of previous dips. It’s rather well accepted that recent IPOs tend to drop hardest and fastest in a broad market decline, and rebound/rally fastest on the way back up.

With no IPOs to review from last week, I’ll just jump into the recent IPOs that ran on pre-market PR drops.

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Ok, Let’s take a look at what happened last week in IPO Land:

Recent IPO Runners:

We often see recent IPOs, especially the low-float variety, make monster runs after consolidation following their IPO. Often, these moves coincide with their 90 and 180 day lockup expiration periods (“LPX Plays”): this is a play we actively track and discuss in the weekly preview newsletter.

Forza X1 (FRZA)
Catalyst: Water testing their boat and boat reservations
Type: IPO
IPO Date: August 12, 2022
IPO Price: $5.00
LPX Date: November 12, 2022 (based on 90 day lockup)
LPX Period: 90 days
Historical LPX Notes: This one popped on the IPO debut as it went live amidst the post-HKD eurphoria.
Outstanding Shares: 10.45M
Close day before vol: $1.69
High of the Day on vol: $2.76
Recap: This one was on watch going into LPX, and the back-to-back PR drops made it an easy spot on the Day 2 pump. I was able to patiently wait for a pullback off the initial move up to $2.31 to take a position on the drop just below $2.00 and rode it up to my target of $2.50 (exiting at $2.55 with a trailing stop).
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Virax Biolabs (VRAX)
Catalyst: New product announcement
Type: IPO
IPO Date: July 21, 2022
IPO Price: $5.00
LPX Date: October 21, 2022
LPX Period: 90 days
Historical LPX Notes: VRAX was a bit of a Boustead Specail when it debuted at $20.00 and bounced around for the first two weeks of trading on relatively low volume. It jumped again at the end of August with a spike on November 1, 2022 and has since declined from there until last weeks pump.
Free Float: 4.35M (read below regarding last Friday’s offering)
Shares Out: 11.37M
Close day before vol: $1.68
High of the Day on vol: $2.66.
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Huadi International (HUDI)
Catalyst: Announced plan to enter new energy industry, with discussions announced with Sichuan Local Government
Type: IPO
IPO Date: January 22, 2021
IPO Price: $5.00
LPX Date: NA
LPX Period: NA
Historical LPX Notes: This wasn’t so much of an LPX play, as far as I’m aware of, as what appears to be a Stealth IPO-type squeeze. HUDI has been volatile ever since it initiated a choppy climb from the $3 range up to $35 in October 2021. Since then, it has bounced around rather unpredictably
Free Float: 3.24M
Shares Out: 13.24M
Close day before vol: $30.84
High of the Day on vol: $192.88.
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Not Quite a Stealth IPO, but a last-minute, under-the-radar debut to watch

August 12th, 2021

So, it’s been a while since we saw a ‘Stealth IPO’ show up, and this one doesn’t necessarily look like one of those shady money-laundering schemes we’ve seen in the past, but it did show up last minute with little-to-no promotion or fanfare… and it’s got my attention.

I always find it odd when a company chooses to IPO without bringing much attention to themselves, especially a NASDAQ listing that doesn’t even show up on the NASDAQ.com website and almost appears to be intentionally avoiding the spotlight.

However, most of the stealth IPOs we saw in the past were Chinese companies that appear to have been involved in some kind of money laundering scheme, and from the looks of it, this one has nothing to do with China.

And on the surface, it doesn’t look like the usual suspects of Boustead Securities/Sutter Financial or Network 1 Financial are involved as the underwriters… however, upon further investigation – I DID find some loose threads connecting the underwriter of this deal to our favorite underwriters…

You see, the lead underwriter of this IPO is EF Hutton (formerly Kingswood) – and Kingswood has used the same law firm (Ortoli Rosenstadt) as Boustead securities has used on several IPOs, including UTME.

Anyway, what excites me about this one is the fact that:

We’ve had a really boring week in IPO land, and I’m just itching to have something to get excited about
This ticker has a very low float of just 2.9M Shares
The company in question provides, according to their website, “a blockchain, cybersecurity, and social media company that not only focuses on protecting our privacy on our devices, but also protecting our information after we have shared it with others”. I literally can’t think of any missing buzzwords that I’d like to add, except maybe “NFT”

Ok, so the company I’m talking about it called Datchat – the ticker is DATS, and they are slated to debut their IPO on the NASDAQ tomorrow.

Thing is, there’s no hype around this one at all as of this writing, but if word gets out, and with little else worth playing in the IPO field, it could blow up rather quickly under the right conditions. For me, it’s worth getting in on the debut and seeing what happens throughout the day or into next week. It’s a super-risky play if there’s any kind of debut-premium, but it’s also the kind of setup that might make it very worth getting into early.

NOTE: I am not a financial advisor, this is not financial advice, just information. I may take a position in this equity within the next 72 hours. Good luck!

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