IPO Trading Review for the Week of July 12-16, 2021

July 12th, 2021

Sorry for the brevity of this week’s review (of last week’s IPO trades), but I’m vacation and taking some time to relax with my wife… so I’m gonna focus on a few key plays that stood out and offered important lessons for future IPO trading.

Also, I WILL be appearing on Benzina Pre-Market Prep tomorrow morning at the usual time to review this week’s upcoming IPOs, You can watch me live here:

So let’s take a look at a few of the key IPO plays from last week:

Unicycive Therapeutics (UNCY) was on a lot of day-trader’s radars due to the success of many low-float IPOs. However, experience IPO traders (myself and others on Twitter), warned of a sell-off due to the fact that this one was a Roth Capital underwritten IPO. Our premonitions were validated when UNCY debuted at $8.55 and dropped immediately into a downward halt at $7.70 before opening out of the halt at $5.50 and continuing downward from there to a bottom of $4.00. This opened the door for a swing trade from $4.00 to a high of $6.56, but otherwise was a pretty rough IPO for anyone who expected halts off the open. The keys to recognizing that UNCY was a dud were: the increased float, the lack of any real story behind the company, an unpopular underwriter, and a debut price that did not offer a compelling entry.

Membership Collective Group (MCG) gave no indication that it would provide much of an upside, and while it debuted at $13.21, and recovered off an initial dip to reach as high as $13.59, that would be the all-time-high for this stock to date, as it tailed off for the remainder of the week to close at $12.50 by Friday.

F45 Training (FXLV) opened at $17.04, and looked strong out of the gate: making a short run up to $17.75, but immediately ran out of stamina and spent the rest of the day fading out to a low of $15.51 before rallying back up to $16.74 and closing at $16.20 – roughly where it finished the week.

Sight Sciences (SGHT) provided one of the few winners of last week’s IPOs, with a debut at $30.00 and a peak at $37.13 later in the day. This one did show a great example of why I don’t set stop losses off the debut, as it dipped in the second minute a low of $27.13 before immediately recovering back to break-even two minutes later, before embarking on a steady climb throughout the remainder of the day. This seems to be a typical pattern for relatively low-float plays that take a little while to get going, so I’ll be watching for that on any IPO with 6-10M shares (and even more so for anything with a lower float than that).

Stevanato Group (STVN) showed the importance of watching the indication price for a opportunity that I might have otherwise passed on: as we knew it was a strong company, but were somewhat concerned about the size of the float and market conditions. When we saw the company price its IPO at the low end of the range at $21.00 and then debut way below that at $16.65, there was solid reason to believe it had little room to fall further from there. True to form, the stock rose throughout the day to a peak on the close at $19.67. When we see solid, profitable companies with growth debut well below IPO price due largely to poor market conditions on the date of the IPO, it’s often a solid play.

Inspira Technologies (IINN) this one had some Twitter hype and super-low float, so we expected some action off the debut. But similar to other IPOs where there was a high retail allocation and warrants were involved, we didn’t see quite as much of an initial run as others. However, this one still did offer quite a few opportunities to bank profits: as it debuted at $5.00 and after a brief initial dip, climbed up into a halt at $5.66 which opened at $6.01 for an ideal partial exit. The post-halt run couldn’t maintain momentum past $6.18, however, and the resulting downward reaction put the stock at the debut price for the next hour of trading, with fluctuations in the $4.50 to $5.20 range for the remainder of the day: offering many opportunities for bag-holders to cut bait, and for long term buyers to load up on dips. Day 2 brought some additional action, with a high $5.80. There seems to be mixed sentiment amongst the social sphere as to whether this is just a short-term day trade or a long term hold. I expect that this stock will be pumped intermittently over the upcoming weeks until we get a headline that pops this into the double-digits, much like ALF did… though long term holders should beware of holding beyond such a spike, as the CEO is notorious for having taken such opportunities to issue new share offerings in his former digs as CEO of NNDM.

Regencell Bioscience (RGC) looked a bit like a potential Stealth IPO, but the clue that this one was not poised to multiple upward halts was in the IPO price – Stealth IPOs typically price at $4-5, whereas this one priced at $9.50. Further indication that this would not run was provided in the debut price of just $12.00 – and though hopeful debut buyers were given reason to cheer as it opened straight into a halt at $13.20, their celebrations were immediately dashed when it then opened at $11.50 and continued to fall from there to a bottom of $9.52. Holders were offered brief reprieve on the resulting rebound, which reached a high of $12.45, but anyone greedy beyond that was left holding shares that closed at the end of the day at $10.00.
The lessons here are that if you’re going to play low float, random Chinese stocks; if the stock doesn’t enter a series of upwards halts out of the gate, then get out with a non-loss when given the chance.

Watch me Live on Benzinga Pre-Market Prep Monday at 9:00 AM EST for a look forward to next week’s IPOs:

Note: This isn’t financial advice, and I’m not a financial advisor… this is just information. I trade these stocks – I may have positions or may take positions in these stocks within the next 72 hours.

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