The market rallied throughout the week, and we saw a handful of recent IPOs rally hard off recent lows: both in mainstream IPOs like HCP and GTLB and the low-float variety such as PIK and HOUR. If the rally continues, I expect to see other recent low-float IPOs run, especially those that have yet to post a meaningful spike should they drop a press release coming of QPX or to boost share price on LPX.
If you’re not familiar with the terms QPX (Quiet Period Expiration) or LPX (Lockup Period Expiration), I highly recommend following and watching the content produced by Aly Angel – https://twitter.com/tradingfitgirl
She’s got her finger squarely on the pulse of these setups and one of the few voices I’d highly recommend listening to in the Twittersphere… and often graces the IPOW chat with her insights and ideas.
Ok, Let’s take a look at what happened last week in IPO Land:
Akanda (AKAN) – Match 15, 2022 | 4M Shares
IPO Price: $4.00
Debut Price: $30.00
Day 1 High: $31.00
Day 1 Low: $8.18
High Since Debut: $31.00
Low Since Debut: $8.18
Potential Win Opportunity: 140%
Day 1 Action: This was one of those ‘MC Hammer’ debuts (“Can’t Touch This”), where the company priced the IPO at $4.00 and due to a squeezed debut float, opened for trading at $30.00. Though it briefly bumped up to $31.00, it went straight into free-fall from there, evoking nightmares for any traders who made a similar buy-in disaster on SIDU (or TKLF, or JZXN, or any other $5 IPO that debuted above $30)… basic rule on these is don’t touch them on the debut. There has been 1 random low-float IPO that debuted at 300% the IPO price and ran up significantly from there: AERC, and we haven’t seen that kind of run get repeated.
What we HAVE seen is the Day 1 ridiculous open followed by a hard dip right before the closing bell, and a run on Day 2… this one provided the ideal setup to accumulate a position at the end of the day in hopes of a Day 2 rally.
Day 2 Action: In this case, the Day 2 rally came on stronger than anticipated, with a run right before the opening bell in pre-market up to $14.85, followed by a run from the opening bell at $13.00 to a high of $19.89. This followed the playbook perfectly, mimicking what we’d seen in MGLD the week before. I’ll be looking for this setup again if any of the low-float IPOs scheduled for this upcoming week proceed with their debuts.
Looking Ahead: This one is probably done: the float ballooned from 4M shares to 28.9M shares, and closest comp I could come up with for the business model is CLVR: which has sunk down to $1.15 from ATHs up near $20 back in February 2021… no reason to really pay attention to this one except for the fact that Boustead stocks are unpredictable. But with the low float angle removed, unless the shares are disporportionately held by insiders who orchestrate some kind of pump, it’s not one I expect to show any mercy to bag-holders who got caught in the spikes.