The Coinbase IPO debuted amongst a frenzy of media hype and retail anticipation, and market sat on the edge of its seat wondering at what price the stock would start trading. Estimates generally ranged from $350-450, with some predicting runs to $500 or more.
After nearly 4 hours of waiting for the stock to open trading and seeing the indication price rise from $350 to as high as $383, COIN debuted at $381.00 and strung together (about) 10 green candles to reach a high of $429.54…
… and then carnage ensued.
COIN swiftly dropped down to VWAP at $394.03 and traded sideways for another 10 minutes or so, before dropping into a virtually unfettered slide all the way to a bottom of $310 before bouncing up to $344.78 and then declining to close at $328.28
For those who played this debut with a raising stop loss, or picked off a 10% target with a limit order set at $420, COIN offered an ideal play. For those who held through in hopes of a Day 2 Run, the heat has been intense, and bag holders are digging in for what looks like could be a long hold. However, Day 2 pre-markets have bailed out many hot IPOs that looked like failures on Day 1 – see Unity (U) and C3.ai (AI) for prime examples.
In the long run, however, COIN looks like a solid hold as long as BitCoin and cryptos continue to show strength and further adoption by financial markets. One bullish hypothesis might recognize that insiders dumped on Day 1, while institutional investors held off to see what happened, and once the initial retail demand was satisfied, the stock dropped dramatically. After insiders are done with their initial selloff, expect the big money to move in: without any pending lockup period, pending followup offer, or massive crash in the crypto market, we should see COIN make a run upwards from here.
Featued IPOs for April 15, 2021
There are two IPOs I”ll be focusing on tomorrow. One is ESports Technologies (EBET), which is an eSports and online gambling platform whose underwriter brought UTME to market last week to a massive runup. The key here is the super low float of just 2M shares, and a retail shareholding group that is likely anticipating a series of halts with the hope that they will be able to score a 10x win along the lines of what UTME did off its debut.
The other IPO for tomorrow that is particularly interesting to me is Karat Packaging (KRT) – showing a float of 3.95M shares on the NASDAQ chart, and 5M shares on WeBull. Karat manufactures environmentally-friendly disposable foodservice products (plastic forks and knives) for major chain restaurants including In-and-Out Burger, Applebees, Chipotle, and others.
When a small float stock debuts, there is a very high chance that it will instantaneously trade up into a halt, and sometimes multiple halts. One strategy is to sell a portion of your position coming out of each halt, depending on the Bid Price you’re seeing in Level 2 Data during the halt. I would be very surprised if EBET did not trigger a series of halts, and will begin exiting my position after the second halt, and ultimately will hold whatever is left until Day 2. KRT may not get the same amount of attention, but still likely to get pushed up with any sort of demand, in which case I will play this with a trailing stop loss.
NOTE: This newsletter is intended only for informational purposes and is not financial advice. I am not a financial advisor, and you should trade at your own risk.