IPO Trading Review for the Week of
June 27, 2022 – July 1, 2022
Last week we again saw nearly the full slate of scheduled IPOs get rolled into the future, with only one IPO debuting according to plan: a developmental stage mining company that showed little appetite from institutional investment for new share offerings for relatively unproven companies. While it did fit the profile of being a “mainstream IPO” – with tier-1 underwriters involved, it was a poor litmus test of the market’s interest in IPOs, though its dismal performance, if anything, served as further warning for any prospective mainstream IPOs to continue holding off their offerings until financial climates substantially improve.
One potentially positive piece of news for the IPO market emerged in a Tweet from Dr. Michael Burry, in which he predicts a “bullwhip effect” may be in the works, which could result in deflation and force the Fed to back away from rate hikes:
”This supply glut at retail is the Bullwhip Effect. Google it. Worth understanding for your investing endeavors. Deflationary pulses from this- -> disinflation in CPI later this year –> Fed reverses itself on rates and QT –> Cycles.”
Should Dr. Burry be correct (again), this could manifest itself in a market where growth stocks rally, which would be a boon for the IPO market. Given the pent up backlog of companies waiting for conditions to improve so they can launch an IPO bid, we could see a deluge of IPOs going into the last half of the year… IF Dr. Burry’s forecast proves prescient. In the meantime, we still have a steady flow of low-float IPOs and LPX plays to focus on…
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Ok, Let’s take a look at what happened last week in IPO Land:
Ivanhoe Electric (IE) – June 29, 2022 | 14.4M Shares
IPO Price: $11.75
Debut Price: $11.79
Day 1 High: $12.00
Day 1 Low: $10.10
High Since Debut: $12.00
Low Since Debut: $8.32
Day 1 Action: Given that IE had already been delayed for a week, on top of which Jim Cramer directly slammed the IPO, it’s not all that surprising that this stock priced at the bottom of the range, and failed to attract much retail interest outside of short sellers rushing into to scalp the perceived weakness of this offering. While the stock did manage to debut with a slight premium to the IPO price at $11.79, and briefly appeared to want to rally as it touched $12.00, the stock managed to hold above the $11.50 level out the gate, and traders began looking for possible breakout triggers that never materialized, as ultimately the stock slid through a number of dips throughout the first day of trading to reach a bottom at $10.10 before rallying into the close as high as $11.15 – likely due to shorts covering their positions and other traders jumping into the short cover.
Day 2 Action: Day two brought additional pain to IE shareholders, as the sock continued to fall out of the gate, reaching a bottom at $8.25 before rebounding back up to nearly $10.00 before closing the day at $9.71.
Looking Ahead: This IPO continues to drop, as there appears to be little interest in owning a mining operation that is not directly tied to lithium mining, despite the intense need for copper – a primary metal mined by IE 0 – in the production of modern automobiles. I would expect that any legislation that gets signed with regards to bolstering America’s locally sourced materials could be a massive catalyst for this IPO. Otherwise, I’m not sure how we can make an argument that this company is worth more than whatever its market cap is when it has no revenue and it’s CEO is an infamous pump-and-dump specialist. This is one I just roll into my mental index of stocks, and we get some big news event that pumps all the mining companies, I’ll certainly take a shot on this down-beaten IPO.
One thing to bear in mind with mainstream IPOs, is that they do adhere to the customary 40 day quiet period, so I will have my eyes on August 3 or thereabout for the QPX (quiet period expiration) to possibly offer some redemption for this stock in the form of positive analyst coverage or an announcement on behalf of the company.
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LPX Recap:
Recent IPOs that moved shortly after or going into their lockup expiration periods: this is a play we actively track and discuss in the weekly preview newsletter.
by Aly Angel: https://twitter.com/tradingfitgirl
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NeuroSense Therapeutics Ltd. (NRSN)
Catalyst: Positive Alzheimer’s Drug Study
Type: IPO
IPO Date: 09-Dec-21
IPO Price: $6 sold as units
LPX Date: 07-Jun-22
LPX Period: 6 Month
Historical LPX Notes: ticker hit EP’s at day 102 – Reference 20F 14-Apr-22
90-day gen rule & 180-days + 6.5 m dir/ ofc and uw can be exercised
Exercise Price: $6 equal 100% of the IPO price per Unit
Outstanding Shares: 10,943,543 (per 20F)
Close day before vol: $1.70
High of the Day on vol: $3.30
Recap:
The EP’s remain at $6 per wx (ref 20F). This ticker ran at the 90 day and hit EP’s. The 180-day LPX has an additional 6.5m shares that can now be sold into the market.
Looking Ahead:
As with any multi-day runner, we are looking for trapping and an algo to continue volume. The volume died in the overall markets on July 1st, as expected. If the vol continues into next week, there is a high probability that we will see prices closer to the EP’s. As always, move stop losses up when you’re playing any multi-day, and remember that algos target both sides and create traps and SL raids, so you need to be looking left to not get stopped on a knife.
LPX tickers that hit new lows and have not had an LPX vol run
90-Day to 180-day example watch. This chart is typical.
Direct Digital Holdings (DRCT)
Catalyst: Ranked in Houston Business Journal
Type: IPO
IPO Date: 11-Feb-22
IPO Price: $5.50
LPX Date: 12-May-22 and 180-day 10-Aug-22
LPX Period: 90-day
Exercise Price: $6.60
Outstanding Shares: 2,800,000 (per 10Q)
Close day before vol: $1.05
High of the Day on vol: $1.74
Historical Notes: Ticker had a vol hod $5.49 on 30-Mar-22, did not hit list price, but there was enough vol to move shares. This is w/ in the over-allotment (o/a) period and is commonly seen in the current market.
Looking Ahead:
We are watching for a low channel for loading into the 180-day LPX. There needs to be consolidation that holds, and I will usually buy on the second reversal (w/in the vol profile) channel. As always, respect your risk and set your stops.
Tickers that are close to the 180-day LPX date and are consolidating in a lower channel:
Maris Tech Ltd (MTEK)
IPO Date: 02-Feb-22
IPO Price: $4.20 for 3.2m wx
LPX Date: 02-Jun-22 & 01-Aug-22
LPX Period: 120-day & 180-day
Exercise Price: $5.25
Notes: has 2 mo, 6 mo, and 18 mo LPX dates
– Reference 20F 28-Apr-22, 424B4 03-Feb-22
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Yoshitsu Co. (TKLF)
IPO Date: 18-Jan-22
IPO Price: $4.00
LPX Date: 17-Jul-22
LPX Period: 180-day
Exercise Price: $4.80
Notes: 180-day Underwriter LPX w/ EP $4.80
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Hillstream BioPharma Inc. (HILS)
IPO Date: 12-Jan-22
IPO Price: $4.00
LPX Date: 02-Jun-22 & 01-Aug-22
LPX Period: 120-day & 180-day
Exercise Price: $5.00
Notes: 180-day for UW w/ EP $5.00 & 365 day for dir & ofc
Looking Ahead:
Consolidated reversals, close to the LPX dates are the current watch for a starter position.
These have a channel that is getting tighter, indicating a channel break soon. Below is an obvservation cut and the next level to watch would be a bounce off ATL’s. A channel break up is an indicator they are going to move it up, soon. The tighter the channel, the safer the build.
As always, SL’s save and grow accounts
For a full list of IPOs and Uplist LPX dates and video reviews
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