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IPO Trading Review for the Week of August 29, 2022 – September 2, 2022

September 4, 2022

After a historic run of low-float IPOs boosted by an unprecedented level of hype and hysteria in the market following HKD’s insane run from a $7.80 IPO price to over $2,000 within two weeks, the IPO market appeared to have cooled off a bit, after several recent high-fliers failed to deliver the level of spectacular gains that day traders had come to expect from buying these heavily over-inflated debuts.

HPCO seemed to confirm this trend, as it opened high and proceeded to deliver a remarkable, yet very predictable, collapse off the debut, and day traders became shuffling towards the exits on low-float IPOs…

… and THEN an uplisting underwritten by a usual-suspect in the Stealth IPO game caught the day-trading world, not including IPO Warriors members, completely off-guard, and the most insane Day 1 rally of all-time re-ignited the flames of the IPO debut trade.

It appears that we’re just in the early innings of this revived hype-cycle, and as a result, we’re looking at highly probably upsides in the next string of IPOs, provided the underwriters and companies going public don’t get greedy and decide to screw day traders… unfortunately, IPOs are not created for the purpose of making ‘investors’ money: their purpose is to make money for the companies performing the IPO and the underwriters and brokers who sponsor their deals (and yes, to some degree, to the clients of the brokers who buy IPO shares, but almost certainly not the general public who buy these IPOs off the debut and trade them in the open market after they are live).

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

Hempacco (HPCO) – August 30, 2022 | 1.5M Shares
IPO Price: $6.00
Debut Price: $38.00
Day 1 High: $41.80
Day 1 Low: $7.00 (in after hours)
High Since Debut: $41.80
Low Since Debut: $7.00

Day 1 Action: With an ostensibly ultra-low float, as a Boustead deal, day traders were a bit overzealous in attacking this one on the debut: likely unaware of the 1.79M reseller shares slated to debut trading alongside the IPO shares and how those could impact trading. We had this figured out long before the debut, and I sold off my small Webull allocation (44 shares) on the opening print, and watched as its attempt to move upwards off the debut was sold off prior to a halt after touching $41.80 (though likely just missing the actual mark where it would have triggered a halt), before reversing downwards into the dreaded “halt of death” at $34.20… from there it opened at $15.01, and panic selling ensued: dropping the price down into another halt at $13.64.
It managed to stabilize from there, bouncing first up to $19.24, halting as it went, then capitulating again down to $12.82, and then traded in a range from $14 to $16 until it managed to break out to a high of $21.96 in the early afternoon, but that was all the momentum it could regain, and it spent the remainder of the day sliding down to as low as $7.00 within 15 minutes after the closing bell.

Day 2 Action: Day 2 delivered an early pre-market push to a high of $9.35, though on small volume, so not much of an opportunity there to play an overnight hold… from there it tanked off the opening bell back down to the $6-7 range, giving traders (like me) who bought in at the end of Day 1 hoping for a Day 2 rally, an agonizing bag-holding position that only got worse as the day progressed. Shortly after 1:00 PM EST, the bottom fell out, and it fell as far as $4.80… had I not been in on ATXG for what had started as a small position, but was quickly multiplying with each halt, I may have been disgusted with myself for getting caught in HPCO, if even for a small position. No meaningful rally materialized on Day 2, and it closed at $5.11

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Addentax Group (ATXG) – August 31, 2022 | 5M Shares
IPO Price: $5.00
Debut Price: uplisting: had no debut
Day 1 High: $1,999.99 (no, that’s not a typo)
Day 1 Low: $12.95
High Since Debut: $1,999.99
Low Since Debut: $8.61

Day 1 Action: I mean, I’m not even sure how to write this one up: asides from the fact that it wasn’t a traditional IPO (it was an OTC uplisting), therefore it didn’t have a typical pre-debut balancing of shares before going live with an opening trade; it was also the most insane run I’ve ever seen on the actual IPO date (and it’s not even close). It basically did what HKD did over the course of several days, and nearly 2 weeks after it’s IPO, in a single day.
ATXG appeared to have started trading at 8:51 AM EST – at least that’s when the first trades occurred: a trade for 10 shares at $350 and then 20 shares were sold at $90… and a handful of shares traded between $20-30 before the market opened (about 300 shares total up to that point). The opening trade during regular market hours printed at $27.00 and the stock began to fall through halts on very low volume for about the first 30 minutes of trading. it reached a bottom at $12.95 before volume slightly increased as it reversed through several more halts to the upside.
I was out running errands for this one right as it bottomed out, but due to the halts, was back at my desk while it was establishing the clear reversal, and took a small lotto play at $24.01.
From there it halted its way up to $32.56, but fell back down to as low as $22.50, before going back up the other way: constantly halting as it steadily climbed up through $150 to $167.35 before posting it’s biggest red candle of the day on a reversal down to $135.00 before embarking on what would become the most epic Day 1 run that I’ve ever heard of or seen: hitting a series of 3 halts from 2:36 PM EST that opened at $258.50, $374.21, and $656.54 before the stock finally traded freely in the after-hours market: where it blew through the $1,000 level and for a brief moment, touched $1,999.99 before dipping to $671.75 and then coming back up to the $1000.00 level before dropping steadily down to a low of $460. It came back a bit to finish late-hours trading at $550.20

Day 2 Action: Early pre-market traders swapped single digit trades up to the tune of $722.00 with slightly higher volume pushing it up to $894.00 nearly 2 hours later, but it lost steam heading into the opening bell: trading at $650.00 at the open, and what followed can only be described as the perfect book-end cliff-dive to the greatest Day 1 Rally in history: from a $650 open to a bottom at $22.65 and a close at $30: I mean, if you were crazy enough to try and catch the falling knife on this one, you may still be recovering from that one… and if you managed to short it at any point: you’ve done well with that trade. My take on these Stealth IPOs is that you wanna take profits earlier rather than later, and be sure to be ready to hit the eject button once you see multiple halts to the downside. Stop losses won’t save you when you get a halt from $509.14 that opens at $314.00.

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Shuttle Pharmaceuticals (SHPH) – August 31, 2022 | 1.225M Units plus 1.31M reseller shares
IPO Price: $8.125 per Unit
Debut Price: $24.05
Day 1 High: $84.70
Day 1 Low: $13.60
High Since Debut: $126.26
Low Since Debut: $11.77

Day 1 Action: This one certainly appeared to be an odd setup, when they issues paper warrants that executed immediately upon the commencement of trading: basically meaning that the IPO price of $8.125 was effectively $4.065 for each of the shares received once they began trading with a float of just 2.62M shares. The opening trade at $24.05 on just 12k shares failed to attract any day-trader hysteria, and given that at that point in the day, ATXG had only dropped from the open… the hypothesis that we were witnessing the tail end of this IPO hype-cycle was, at that point, intact. But as ATXG began climbing, SHPH seemed to catch the momentum, by 12:30 PM EST, ATXG was showing clear signs of a breakout run, and SHPH was in the right place, at the right time: running up from a baseline in the $16.00 zone up to $20 before receding slightly back down to $17.00, before reaching complete combustion at around 2:00 PM embarking on a series of upwards halts in tandem with ATXG’s upward moves, topping out Day 1 at $84.70 before halting down into the close to finish the day at $38.48. After hours initially brought a further sell-off, touching as low as $25.00, but shares quickly snapped back up to $74.00 by the 5:00 turn, and swung in a volatile range from sub-$40 to $70+ for the remaining hours.

Day 2 Action: While ATXG couldn’t muster a follow-on rally on Day 2, SHPH managed to climb throughout the pre-market session, breaking out to its ATH at $126.26 out of an upwards halt that froze trading after the first minute and opened 10 minutes later to establish the high-water mark for this ticker. it would then plummet down to a bottom at $44.30, swing back up to $75.24 and then proceed to top out at $94.09 before relenting back down to $41.00: climbing into a close at $52.40

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bioAffinity Tech (BIAF) – September 1, 2022 | 1.29M Units
IPO Price: $6.13
Debut Price: $8.40
Day 1 High: $15.55
Day 1 Low: $7.52
High Since Debut: $15.55
Low Since Debut: $6.96

Day 1 Action: This one had the fortune to be the “next IPO” after both ATXG and SHPH went on insane rallies the day before – ensuring that it was going to catch fire on the debut. It fulfilled this prophesy with three upwards halts from the opening trade at $8.40 to a high of $15.55. I was on holiday, and unplugged for the day: but had I been in this trade, the “3 halt rule” would have mandated that I sell out of the third halt upwards (and I would have been selling out of each halt on the way up).
The stock spent the rest of the day fading out through some dips and rebounds, and managed to close Day 1 at $8.30 – just $0.10 below its debut, making this an easy trade if you put in an allocation request (which likely got a full-fill), and a relatively easy trade to avoid a loss on if you bought the debut.

Day 2 Action: A steady rally in the early pre-market brought this one up from the $8 level to a pre-market high at $11.48, with momentum carrying over into regular hours with an early run to $12.82 after a quick dip on the opening bell reversed into a rally. But that would be the end of the fun, as it fell throughout the day, closing at $7.05

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