A week that delivered a brutal blow to the SPY and major indices was shrugged off by the mid-week low-float IPOs that delivered substantial win opportunities, including a traditional Stealth IPO setup that was so user friendly that just about everyone who traded it made money (so long as they didn’t hold beyond the open on Day 2).
The rest of the week continued to deliver tradeable IPO debuts with minimal downside though the plays clearly started to appear to get played out. I doubt that market conditions helped much: as many traders were either busy shorting just about everything or nursing margin calls.
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Ok, Let’s take a look at what happened last week in IPO Land:
Tenon Medical (TNON) – April 27, 2022 | 4M Shares
IPO Price: $5.00
Debut Price: $22.05
Day 1 High: $28.00
Day 1 Low: $13.50
High Since Debut: $29.81
Low Since Debut: $13.50
Day 1 Action: As expected, this one opened up at a significant premium to the IPO price, on a very small volume of just 18k shares, and jumped up into a halt at $24.26 – looking like it might be on it’s way to triple digits along the lines of $AERC.
But the excitement was short lived for any debut buyers, as the dreaded “Halt of Death” reversal ensued, and the share price opened up down at $17.40 and closed almost immediately again into a downward halt at $15.66. The pain wasn’t over yet, as the next halt opened at $14.00 and touched $13.50 before instantly reversing back up into a halt at $15.40… diamond handed believers and scalpers who ventured to pick up shares on the way down were rewarded from there, however, as a choppy spread and a series of halts culminated in a top at $28.00. From there it traded between $23 and $27 for the remainder of the day, on volume of 880k shares
Day 2 Action: TNON was all over the place on Day 2, dropping down into a halt in the opening minutes that touched as low as $20.11 before reversing back up through halts to hit the ATH at $29.81, bouncing around a bit more until it dropped out to the low of the day at $17.69 and immediately rebounding to $25.59… it then sporadically traded for the rest of the day between $20.50 and $24 and closed the day at $24.04
Rough trading waters for anyone who ventured into this one mid-stream, with Bidders and Sellers jockeying under and over one another to catch each successive trade.
Looking Ahead: This on is too chaotic for me to predict beyond the fact that it is nearly certain to head back down to the sub-$5 level in the not-so-distant-future. I wouldn’t touch this with my worst enemy’s account, and the trading pattern on TNON already makes me a bit sea-sick.
Ostin Technology (OST) – April 27, 2022 | 3.4M Shares
IPO Price: $4.00
Debut Price: $10.10
Day 1 High: $43.97
Day 1 Low: $10.10
High Since Debut: $56.11
Low Since Debut: $3.90
Day 1 Action: We absolutely nailed this one, calling out the Stealth IPO setup well in advance, and adding to the WeBull allocations we received on the debut. A fortuitous string of upward halts brought us from the opening halt at $11.11 which opened at $16.10 and immediately halted up at $17.71, to the second halt at that opened at $20.22 (a 100% win on a debut trade right there), to a series of slightly choppy halts that presented no real fear of a reversal reaching a high of $28.73 – the opening move on OST was the stuff we dream about as IPO traders. It then setup a classic baseline pattern that ascended from a post-peak-low at $21.60 to an end of day run that closed at $40.00 and briefly touched $43.97 in the first minute of after-hour trading. This was a tremendous day for a debut: reaching 1000% over the IPO price and offering almost no downside for those who held out for a chance to take profits at any point after they entered their trade.
Day 2 Action: The opening move in early pre-market jumped to the all-time-high on OST, with shares traded for as much as $56.11, but the volume on that candle was only 534 shares, so it’s not a very realistic measuring stick of ‘what-could-have-been’ had you attempted to cash out at that price. Following the initial early pre-market spike, the share price came back to ‘just’ $35.00 and floated around in the $35.00 to $40.00 range until markets opened for regular trading hours. An halt down in the 3rd minute of trading was probably enough to scare off any holdovers from the day before, but it quickly reversed and climbed to the all-time-high of regular trading hours at $47.76. It managed to cling to the $40.00 level for about 20 more minutes…
… and then, things got really ugly, very fast.
What ensued was the fastest reversal off a 1000% gainer that I can recall in IPO debuts: with a BASE jump from $40.00 that landed all the way down at about the $6.00 through a series of halts featuring brutal gaps between halt price and opening. There would be no meaningful bounce from there, as shares sold off down to a low of $3.90. A meaningless rally into the close as shorts closed their positions offered little remorse to bag-holders who failed to cash out on the drop, and even an after-market rally that touched just over $5.00 was of no real consequence to anyone who attempted to time the bottom on the way down.
This was by far the worst Day 2 I can recall, reaching over -90% down from the previous close.
Looking Ahead: Yeah, no thanks. This one could rally, or randomly spike up from whatever depths it sinks to in the future. Set your calendars for 180 days from the debut, as this one could potentially get run again once the lockup period expires. But until then, I’ll wait for it to fall below $1 before even thinking about taking a position. Maybe it gets a pump now and then… but I’m happy to just shake my head from the sidelines and chuckle regardless of which way it goes.
I trusted this one to run up off the debut, and eventually crash out. Not gonna go playing in traffic while this one continues to make a mockery of the notion of market regulation.
Belite Bio (BLTE) – April 29, 2022 | 6M Shares
IPO Price: $6.00
Debut Price: $12.50
Day 1 High: $17.46
Day 1 Low: $9.64
High Since Debut: $17.46
Low Since Debut: $8.70
Day 1 Action: The pre-debut indication gave away the setup on this one as it showed pricing at $10.00 and inched up to an opening trade at $12.50 on a robust volume of 250k shares with an ensuing insta-halt up to $13.75. Dreams of a series multiple upward halts were dashed after it opened at $15.50 and reversed after touching as high as $17.04 ( $0.01 away from halting), and then reversed downward into a halt at $13.95. The less-greedy trader who got out after the first halt was rewarded with a solid $3/share win: I tried to get a sell order out before the halt but couldn’t fight my way through the confirmation screens in time, and ended up taking an exit right at my entry price of $12.50 out of the second halt. From there it continued to sell off down to a bottom of $9.64, which would have made a $10.00 entry a nice place to get onboard before the IPO allocation sellers finished offloading their positions and retail day traders brought on a rally that peaked at $17.46. That was the end of the ride, however, as it then trailed off for the remainder of the day, to close down at $10.59 and further petered out into after hours.
Day 2 Action: This was a Friday IPO, so we’ll have to see what Monday brings for Day 2. Despite all the volatility, we only saw volume of 3.4M shares on a float of 6M shares, so a Day 2 rally is not out of the question.
Looking Ahead: Like the others, this eventually joins the rest of the dollar-bin rubbish that makes up 99% of low-float IPOs and those with the patience to read through the F-1 to understand the lock-up period restrictions and follow the FDA announcements could put themselves in a position to load up for an eventual spike on potential approval. Bear in mind that their lead candidate is in Phase III already.
Hillevax (HLVX) – April 29, 2022 | 10.3M Shares
IPO Price: $17.00
Debut Price: $18.76
Day 1 High: $20.57
Day 1 Low: $17.00
High Since Debut: $20.57
Low Since Debut: $17.00
Day 1 Action: The pre-debut indication on this started just above $18.00 and was steadily increased to the opening debut price of $18.76. The book runner clearly maxed out what they could grab on the debut, and despite early allocation sellers taking advantage of the opportunity to get out with a small profit, the opening sell-off sustained the $18.30 support level before the low float kicked in and sent the share price on a run up to a high of $20.57. It would than retract to a baseline at the $18.50 level – with a random 1-minute spike down to $17.00 that looked more like a dark-pool print than active trading, and the stock managed a rally at the turn of power hour to a peak at $20.35 before trailing off into the close at $19.09
Day 2 Action: This was a Friday IPO, so Monday will bring us the Day 2 action.
Looking Ahead: Most biotechs simply fade away as their debut trails off into the past, and are mostly forgotten about until they have some news to report. There were only 2.34M shares traded on a float counted as 11.77M shares according to WeBull. Their lead candidate is a norovirus vaccine, which could be pretty big news if they received approval, but it’s far more likely that this one drops significantly over the next several weeks or months before news is dropped that would pump this stock again. I don’t generally play biotech IPOs to begin with, and once volume falls off, they are best left to settle out and accumulate sparingly into any lock-up period on hopes that they run the share price on headlines to pop it to give insiders a chance to profit on the bump.
Catch me on Benzinga LIVE at Noon on Monday, May 2, 2022 to review the winning trades from last week and to preview the IPOs for the week ahead: