The market somewhat surprisingly rallied off last week’s monumental rate hike, or at least, didn’t crash quite as badly as some likely feared. Have we reached the “bottom”? I don’t care to speculate on that, suffice to say that we still don’t have any mainstream IPOs on the calendar: so in the meantime, I’m finding quick plays to take profits on IPO debuts, and last week was no exception.
Perhaps the biggest target for the IPO debut trading strategy right now, is to be on the lookout for Stealth IPOs – a setup that has repeatedly delivered opportunities for over 200% gains in a single day, with a profile that has become more easily identified as they continue to emerge from the lineup of low-float IPOs. The challenge at this point has been more about finding the rare Stealth debut that doesn’t price us retail traders out on the initial print. All we can really do is keep watching for the culprits, be prepared to take advantage if the setup is primed, and execute when we see the opportunity.
The other setup that may be back in play is the Day 2 rebound on a Day 1 tanker: though this play appeared to dry up going into last week, we did see a rather odd IPO launch result in an epic tank where I decided to pull the trigger on an overnight hold and was surprised at how quickly confirmation of my hypothesis was delivered.
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Remember that Monday is a market holiday (Juneteenth) – and since I’ll be tied up on Tuesday, I likely won’t be able to make a Benzinga appearance this week. I’ll try to do a YouTube video instead, and will aim to get it out by Tuesday night in anticipation of Wednesday’s IPOs.. which I believe could be quite interesting.
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Ok, Let’s take a look at what happened last week in IPO Land:
Heart Test Laboratories (HSCS) – June 15, 2022 | 1.75M Shares
IPO Price: $4.25
Debut Price: $3.75
Day 1 High: $3.75
Day 1 Low: $1.69
High Since Debut: $3.89
Low Since Debut: $1.69
Day 1 Action: I can’t recall an IPO that debuted after 3:00 PM EST, and certainly not a super-low float of the lesser known underwriter offerings. So when this one hadn’t gone live by noon, I’d just assumed it was postponed or cancelled. When it showed up on a halt scanner near the end of the day – at 3:23 PM EST to be exact, it elicited a crooked eyebrow look from me as I went to check what was happening…
Sure enough, it had debuted late in the day, with apparently nobody prepared to buy it: on top of which the ticker was apparently not tradable on some platforms, which is a great way to stifle demand. At first I just shrugged it off, but when it dropped right through the $2.50 level without even a head-fake of a bounce, and only momentarily looked ready to curl up off the $2.00 level, I started to wonder if we might see an opportunity to get this under $1.80 – a level where I’d feel pretty confident in holding overnight for a possible Day 2 spike (or at the very least, bag hold until they came up with PR in 90 or 180 days).
Well, the wait on this one was not long, as it began its rally nearly as soon as the market closed, and had rallied over 100% within an hour: topping out at $3.67 in after hours and resting at $2.82 when the final shares of the day traded hands at 8:00 PM EST.
Day 2 Action: Those who held overnight were, for the most part, slightly rewarded for their risk, and while I can’t say it was a ‘smart’ risk, given that taking a 100% gain at any time is usually wise, the early pre-market spike was very predictable, and I was able to time the exit nearly to perfection with a limit order placed immediate at 4:00 AM EST to sell at $3.85 that filled 5 minutes later as the price peaked at $3.89. There was plenty of time to sell in the $3.20 to $3.45 level all the way through 8:00 AM EST, with another spike up to $3.83 at 7:35 AM EST – so it’s not like the Day 2 win opportunity was limited to trading platforms that offer 4:00 AM trading. The price started tapering off going into market open: beginning the day at $3.18 and steadily declining to a morning bottom at $2.34 but rallying again after the turn of Noon to reach $3.06 before capitulating into a Day 2 close at $2.42. So the strategy of buying the Day 1 dip provided a substantial win opportunity regardless of where you closed your position, and there is no reason to hold this kind of play beyond a significant run on Day 2.
Looking Ahead: HSCS closed the week on a low volume day that printed at $2.07 to close the week. I expect the IPO trading on this name is likely done for the time being, though if you’re somehow still bag holding this one, you may see a random spike up into a halt at any point: I wouldn’t like to be relying on it at this point. More likely that this one continues to find new lows until we get closer to LPX. Given the underwriters involved and the company’s products, I’ll be keeping an eye on this one as we get towards the 90-day and 180-day lockup expiration dates. Any kind of positive headline can cause an ultra-low-float stock to rip: and The Benchmark Company seems to have a knack for getting themselves wrapped up in these plays (see AERC over the past two weeks).
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Lytus Technologies (LYT) – June 15, 2022 | 2.1M Shares
IPO Price: $4.75
Debut Price: $20.00
Day 1 High: $24.98
Day 1 Low: $17.01
High Since Debut: $28.98
Low Since Debut: $17.01
Day 1 Action: We accurately called this one to be a Stealth IPO – and were excited to enter on the debut when the opening price indication first appeared to show a debut print around $11, and even as it kept creeping up to $15, then $16 – then looking like it was going to possibly let us hop on board at $17, I was prepared to play ball from the opening print. But when it edged past that, and started throwing opening indications in the low $20s, I had to back down: given where I know these end up, and the risk that the upside may be limited to the mid-$20s
The stock manged to halt up from its opening sale at $20.00 – paused at $22.00, though not the instant-halt that we expect from a heavily manipulated debut. The weakness showed itself in the resumption of trading, as the halt opened up at $19.05 – taking out panic sellers for a 5% loss, which may have looked like a smart move as the stock plummeted to halt again at $17.15 from there.
We’ve seen a few of these reverse off the $13 level, so I was contemplating opening a limit order at $13.05 to see if it may catch off the opening of the halt, but that was wishful, albeit potentially dangerous, thinking, as the stock managed to reverse out of the halt back to the upside: this time halting up from $17.46 to $20.52, and again from $20.00 back to $22.00 – peaking at the Day 1 high of $24.98 from there before pulling back down the other way: again through a halt, to touch $17.41 before reversing back up to the $22 level… This was a low-volume, high spread trade for the rest of the day, with fluctuations between $17.80 to $21.50 for the remainder of the afternoon: closing the day at $17.01 on 616k shares traded on the day.
Day 2 Action: Given the low volume on Day 1, Day 2’s run through multiple halts up to a high of $28.98 to start Day 2 may have been somewhat predictable, but again, it could just have easily gone the other way. It found relative stability in the $23 to $25.50 for most of the remainder of the day, and sold down on low volume to close Day 2 at $21.25.
Looking Ahead: Ok so, the rug pull hasn’t happened yet: and we’ve seen a few of these such TOP string together a week’s worth of green daily candles to reach highs approaching $40… so maybe this one hangs around and continues to creep up from here. But at some point, the music stops and those standing without a chair will get burned as the price plummets 90% or more. Looking into the not-so-distant future, it’s easy to see this one in the $2.00 bin: I don’t attempt to determine what the pumpers and insider manipulation schemes will do to this between now and then. Will look for more predictable volatility in fresh IPOs this week.
Have my eyes on a few.
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Recap week of June 13th LPX movers (Contributed by Aly Angel)
NOTE: “LPX” stands for “Lockup Expiration Date”
90-Day, 120-Day and 180-Day LPX
AeroClean Technologies, Inc. (AERC)
Type: OTC Uplist
LPX Date: 23-May-22
LPX Period: 6 Month
IPO Date: 24-Nov-21
IPO Price: $10.00
Exercise Price: $12.50
RECAP: started walk on 6-Jun-22, EP 7-Jun-22
muti-day walker has been trapping both sides with a very bullish chart and high borrow rates (1k%)
Notes: 11.4m shares now unrestricted at 6-month LPX
– Reference 10Q filed 12-May-22
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Tivic Health Systems Inc (TIVC)
LPX Date: May 10, 2022
LPX Period: 6 Month
IPO Date: November 11, 2021
IPO Price: $5
Exercise Price: $6.25, equal to 125% of the public offering price
RECAP: on watch for the walk, low of 1.46 a few days after LPX date and consolidated into a reversal. Started the walk on Friday w a dollar upside.
expecting another multiday walker as this is the current trend.
Notes: also has 12-month LPX for officers and directors
– Reference 424B4 filed Nov 12, 2021 and 10Q filed 16-May-22
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HeartCore Enterprises, Inc (HTCR)
Type: IPO
LPX Date: 11-May-22
LPX Period: 3 Month
IPO Date: 10-Feb-22
IPO Price: $5.00
Exercise Price: $4.25
RECAP: PR share repurchase, ran $3.20 8 Jun, potential multiday has given several daily spikes and tested $3 on June 13th. On watch for a 90-day LPX run, reminder to play the waves and take profits along the way.
Notes: one insider owns 69% shares under rule 506 – Reg D
– Reference 10Q filed 16-May-22
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Blackbox Stocks (BLBX)
Type: OTC Uplist
LPX Period: 6 Months
IPO Date: 10-Nov-21
IPO Price: $5.00
Exercise Price: $6.25
RECAP: hit low of $1.05 on June 15th and began 100% walk into AH June 16th. This could be considered a liquidity test. Watching for continued walk to $6.25 EP as they now have 4.2 mil shares they can dump into the market.
Notes: 4.2 mil shares are unrestricted at 180 days
– Reference 424B4 filed Nov 12, 2021 and 10Q filed 16-May-22
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IPOs that hit 180-day LPX dates in the last 30 days, but have not run to EPs
Check date if there’s a secondary offering, as these take longer to run.
BEAT – EP $6
BJDX – EP $7
MTEK – EP $5.25
STRN – EP $4.81 – $5.18 *has secondary
For a full list of IPOs and Uplist LPX dates and video reviews https://tradingfitgirl.net/always-learning for the direct Spreadsheet Link
