Pretty thin week in IPO land, mostly due to the ongoing disaster that is the current market, with growth stocks taking the heaviest punishment, but general panic hitting stocks. Even with this hysteria, there are still a couple IPOs that will debut: primarily ultra-solid companies with little exposure to growth/interest rate fears, and questionable Stealth IPOs that will debut with total disregard for market conditions.
Before I jump in, I wanted to give you all a heads up that I’ll be premiering the new Premium Newsletter format next week: much deeper research and added content, with the hitch that in the near future I’m planning to charge a subscription fee (don’t worry, it will be heavily discounted for existing subscribers and attractively priced to begin with).
Ok, let’s recap:
Yoshitsu Co (TKLF) – Was accurately identified as a Stealth IPO on Monday before the IPO on Tuesday, and unfortunately, this $4.00 IPO debuted up at $40.99 and promptly traded down into a halt at $36.89 and opened from the halt at $22.25… it dipped slightly to $20.16, but impressively rebounded up through a halt to a high of $34.79 before flagging and baselining in the $30.00 zone. After failing to hold VWAP, a sharp drop off through multiple downward halts brought the stock down as low as $13.00, followed by an intense rally back up to as high as $37.74.
For those keeping score at home, that was basically, $41, to $20, to $35, to $13, and then back to $37… all on relatively low volume.
Consider that HOUR, with a float of just 1.5M shares, traded a volume of 50M shares on Day 1 as it climbed from a debut of $4.50 to a high over $10,
Yet TKLF traded just 2.85M shares on Day 1 while swinging wildly between $40+ to under $15 and back.
I don’t know how you trade this, but certainly don’t buy the debut at $40+, and any entry above the IPO price carries significant downside risk.
If you caught the bottom below $15, nice work, that would have made for a high conviction entry for me had it been the debut price, but at that stage in the game, I’m just spectating.
The good news is that we see Stealth IPOs are still alive, we just need to be patient and be in position to play one that doesn’t price us out from the opening whistle.
NSTS Bancorp (NSTS) – We don’t usually see bancorps debut at a premium, so it was a little surprising to see this one open trading at $12.75 after pricing at $10.00. From there, it did what most bancorp IPOs do… which is essentially nothing. Up to a high of $12.90 off the debut, and then a drop down to $12.50 where it currently is trading. I don’t see much of a reason to try and play these as an IPO trade. Those who specialize in this corner of the market know infinitely more than I do about how they work, and I don’t see enough volatility in short term activity to make these interesting for short term trades.