Wanted to first thank everyone who contributed to the campaign to raise money for some streaming gear: we reached the $2,000 goal in just 1 week!
It’s not too late to add contributions, as I have identified some additional needs that would help me in video production (like, some video editing software):
So this past week, we saw a deluge of low-float IPOs, most of which failed to garner any day trading attention, one stealth-IPO that we sniffed out – but didn’t quite nail with enough conviction in order to take a trade on it given WeBull blanking the debut indicator right before it went live, and some blockbuster IPOs that initially performed according to expectation but went on to prove the strength of the overnight media cycle for multiple day runs.
Before we get started, please join me on Benzinga Pro at 12:00 PM Noon EST on Monday, November 15, 2021 to review next week’s IPO calendar:
Ok… let’s dig in:
Third Coast Bancshares (TCBX) was a little more volatile than we expect out of local bank IPOs, with a debut at $26 that zig-zagged down to $25.50, up to $27, and then back do the $26.40 level… from there it resumed trading like a small bank IPO and steadliy declined into a close at $25.01. Pretty much not worth playing, like most small bank IPOs.
Hertz (HRTZ) was a bit of a non-event, as this was a re-uplisting of the famous car rental brand that rose from the dead and has already posted huge gains on it’s recovery from the brink of bankruptcy. In fact, it dropped pretty hard from the previous day’s trading, as we suspected, given that it was a liquidity event for shareholders rather than a fundraising event for the company. The stock dropped to a low of $25.40 on the day, and has since recovered back up to as high as $27.38
CI&T (CINT) Pulled a head-fake off the debut at $17.56 that put a scare into any debut buyers as it dropped to a low of $15.62 before rallying back to a baseline of $17.00. Those who doubled down would have been wise to bank any wins at that point, but bottom scalpers who had the conviction of further gains would have been amply rewarded with a torrid run up to a high of $22.50. That would be the zenith of this play however, and a tough one to have called. Shows the reasoning behind not using stop losses on Day 1 debuts, but a bit less comfortable than some of the other wins we saw this week
Bluejay Diagnostics (BJDX) behaved how we sort of expected random low-float IPOs to perform, with an initial drop that offered an undercut entry from the $5.47 debut price, to a shortly lived run up to a high of $6.25 that proved to the be the best exit, and a trail off to close around $5.00. It seems that being a low-float on its own is not enough to sustain a rally anymore, and the trend has gotten played out to a degree. This doesn’t include ‘Stealth IPOs’ that clearly have some other manipulative forces operating behind the scenes, but for most of the other rando-low-floaters (gonna call these “RLFs” … we saw a pattern of low demand and low volume combining to deliver downward escalators with no possibility of salvaging a win out of a debut entry.
Society Pass (SOPA) we had our eyes on this one this week as a possible stealth IPO, and though our instincts were correct, WeBull stopped showing us the indication price prior to the debut, so most everyone underbid the open. Too bad, as this one went on to rip through multiple halts off the $15.50 debut, to an initial opening run that topped out at $43+ before returning to baseline at around $30, until an end of day run brought the high of the day to $54. But that wasn’t the end of SOPA’s run: on Day 2 it pulled a typical stealth IPO move and topped out at $77.34.
This followed a nearly identical pattern as some of the other stealth IPOs we’ve seen, but unless you catch the opening debut, they are pretty dangerous plays: as many IPOs that halt out of the gate will get you into trouble if you chase (MYNZ and VAXX are prime examples). It’s nice to know these Stealth IPOs haven’t vanished though, so we’ll keep an eye out for the next one.
Expensify (EXFY) looked prime for a strong run, and delivered a short rip out of the debut at $39.75 to a peak at $42.00, but eased off and looked like it had already priced in all of the gains on its steep IPO debut premium, as it backed off to a low of $37.49 before rallying back above $40 to close the day. Turns out, a night of sleep gave this one the strength it needed to get to the highs we had hoped for, as it steadily climbed throughout Day 2 to a high of $47.62. I didn’t have the patience or risk tolerance to hold beyond taking some profits on the opening run, but a more calibrated and relaxed approach would have yielded optimal gains.
Backblaze (BLZE) debuted at $19 and after an initial pop to $22, dropped down to a low of $18.25 and then slowly climbed back above $19 before running back up and beyond $22 at the end of the day. An easy play if you took profits on the initial jump or held until the end of day run… and ig you held overnight into Day 2, you were rewarded with an opportunity to exit as high as $23. Not a huge runner in either direction, but worth a safe play for easy profits.
Rivian (RIVN) this was the main event of the week, and Day 1 played out pretty much as anticipated: an opening run from the debut price of $106.75 to a high of $119.45, then the huge float outpaced the initial surge in demand, and it fell off to a low of $95.65. This would have been an ideal time to load up on shares, although you may have second guessed yourself as it failed a short recovery and dipped slightly lower to $95.20… after that, it was all uphill from there. The Day 2 media cycle was predictably strong, and retail traders piled into this one to drive a Day 2 rally up as high as $125.00. Further media coverage propelled this into a Day 3 run that peaked at $135 shortly after the opening bell. The buzz is deafening on this one, and valuation is totally disconnected from financials, but the market already loves it, and if you read that on the Day 1 dip, you stood to take a handsome profit from this trade.
Vaxxinity (VAXX) showed us that even biotechs can produce a social media fueled spike, as it debuted at $16.90 and ripped into a halt at $18.59. From there it opened up at $20.70 and reached as high as $22.77 before falling off. I will always take a partial exit out of the first halt, unless I think we’re in a Stealth IPO play, and then am prepared to sell the rest immediately if we don’t get a second halt right away. It proved wise in this case, as VAXX fell off for the rest of the day to a baseline of $15.50… and this is where I made a critical error and ended up throwing away much of my wins.
I tried to get fancy with a re-entry off the baseline play, as this looked like an obvious retracement back up to VWAP, which was up above $18. When I missed the sub-$16 entry, I chased it up at $17… not realizing that there was a hidden sell-wall at $17 that would not be broken. I held into Day 2, and was forced to take losses when it failed to deliver any kind of Day 2 push. In retrospect, the lesson here is of course, Don’t Chase (Rule #2), but also, don’t expect a Day 2 push to bail you out on a biotech play, or any non-brand-name IPO play for that matter.
Journey Medical (DERM) showed that a sub-IPO price debut price on a solid company generally provides a safe setup for an easy win, and started trading at $8.70 after pricing their IPO at $10.00. It wasn’t a rocketship ride up, more of a slow and steady climb, but if you had the conviction to see this one for what it was, you let it open and gave it room to ride up to either a wall at $9.45 or a longer leash all the way up to $9.95, though it did ultimately peak at $10.20
Myneric (MYNA) got off to a rough start, with a debut price of $19.90 that quickly dropped down as low as $18.55 before recovering to form a base at $19.50… from there bag holders would have been holding their breaths waiting for the next move: we often see further drop-offs from such consolidations. But patient traders rejoiced when it suddenly ripped up to a high of $22.00 before settling into the $20.50-$21.50 rang, before trailing off at the end of the day to close at $19.25.
On thing to notice on just about all early IPO moves to the upside, is that we typically see the initial spike up hit the high of the run, and then a flag pattern form. From there, the breakout is usually an extreme move to the upside or downside: so if you’re aiming for a quick and steady win for at least a portion of your position, the best way to optimize your chances of catching a top is to pick a whole number: usually $2-3 above the debut price, and undercut that by $0.05-$0.15. We saw this in a number of opening runs this week, and even the rebound from MYNA held this pattern, with a spike up to $22.00, which was the whole number between $2-3 above the debut price of $19.90. I like to undercut the whole number but at least $0.05 to ensure that I get out before other sellers who have eyeballed that whole number, as you’ll often see rallies fall just short, and the extra few cents really isn’t worth missing the exit.
… and a bunch of RLFs (random low floaters) that I can pretty much summarize with one description: LVLU, WEAV, BEAT, PIK, TIVC, WBEV, BTBD:
Debuted, fell, fell some more, made a weak attempt at a recovery, you wish you hadn’t played it: the sooner you got out the better.
So yeah, just being low-float doesn’t cut it anymore. Perhaps a couple of these don’t quite belong on this list, but generally these were all disappointing IPOs from a debut buyer’s perspective, so better off just leaving these alone for now unless there is a solid company behind the IPO: ideally something with some buzzworthiness to it.
The lesson of the week for me was to focus on fewer IPOs that have brand name recognition and give a portion of your position a shot for a Day 2 run. The other lesson was to trust my instincts on Stealth IPOs and don’t rely on WeBull to show you the imbalance pricing: overshoot the bid to ensure debut entry with a limit order at your acceptable risk tolerance. That way if you do miss it, you can accept that it wasn’t right for your appetite.
Remember to please join me on Benzinga Pro at 12:00 PM Noon EST on Monday, November 15, 2021 to review next week’s IPO calendar:
NOTE: this is not financial advice, and I am not a financial advisor: this information is just my opinion and is for informational purposes only. I may have or take positions in the equities mentioned in this article in the next 72 hours. Trading equities is risky. Do your own research,and trade your own trade.