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IPO Trading Review for the Week of September 6-10, 2021

September 5th, 2021

Things continue to provide little action in the IPO world, with just one IPO last week in addition to a rather hyperbolic follow-on offering that I went over on last Monday’s Benzinga Pre-Market prep show… nothing of note on the Calendar for this week, so again, I won’t be sending out a newsletter for the week ahead (also, the Benzinga show for Monday has been cancelled for this week, we’ll resume on Monday, September 13, 2021).

Some have been asking me what I trade other than IPOs, and the answer is rather simple: I swing trade recent IPOs that appear to be at a low end of their peak, though I have missed some pretty significant moves – there have been enough to keep me engaged and profitable. ARRY, DNMR, and S both gave me good returns, while I had several others on watch that have done 50% or better in the past few weeks: DOCS, RSKD, ADGI, TASK, and ICVX to name a few. On watch at the moment are CURV, CPNG, VZIO, and TKNO… but be wary of upcoming lockup expiration dates and tread lightly on low-volume stocks.

Ok, a few notes from last week:

DoubleDown Interactive (DDI) – debuted at the IPO price of $18.00 and basically moved sideways throughout the day at around $17.90-17.95 before falling as far as $17.50 right before the close. Clearly not much excitement around this IPO, so bag holders would have been wise to take the gift of a green exit on Day 2 when it briefly spiked as high as $18.50 before trending back down to the $18.00 level. Greed was punished on Day 3, when the bottom fell out, and it has sunk down to close the week at $16.15. Volume has been very low on this one, so I’m not gonna try to play a swing trade on this one unless we see much further price decay: but at some point this may get low enough for the low float alone to attract a pump from day traders… if volume all of a sudden spikes, this could fly. I just won’t be putting any cash into this one unless it drops quite a bit more.

Focus Universal (FCUV) – I had this one on my watch list and discussed it last Monday on the Benzinga Pre-Market Prep show… simply because Boustead Securities was the underwriter. In retrospect, I wish I’d taken an active position instead of just watching it, as it clearly was manipulated similarly to the way we’ve seen “Stealth IPOs” move… though it was a secondary offering that triggered this event.
FCUV opened the day at $6.00 with the secondary offering having been closed at $5.00 … the opening hour of trading saw the price drop hard to as low as $4.65, followed by a brief run up to $5.83 which likely tempted most short term traders to exit their positions for what would later be revealed as small gains compared to what was coming.
Day 2 showed a quirky spike in early pre-market to $12.98, but the gains were almost entirely relinquished by the time the market opened, and the first half hour of trading showed only a relatively tame dip and rise… then things started getting wild. A series of halts both upwards and downwards yielded a peak of $24.38 by around noon, and after market movement pushed the share price just over $30 to $30.20 — early pre-market trading on Day 3 peaked at $31.04, but from there on out, the stock trailed off into the close, and Friday brought further losses as it closed at $13.96
There was no particular rhyme or reason for FCUV to have run – no news, no headlines, just a manipulated stock where my guess is that the underwriters and insiders bought up the free float going into the offering, and the limited size of the offering (just 2M shares) provided optimal conditions for driving the price up … my best guess is a money laundering scheme, but who really knows. Rest assured, give what we’ve seen with RGC and FCUV, and the lack of new Chinese listings, I’ll have my eyes wide open for anything underwritten by Bousted, Network 1, or Sutter: that includes recent low-float IPOs.

So what’s up for next week? Well, no IPOs, and a trading holiday on Monday (Happy Labor Day everyone)… but the good news is that we’ve got some pretty interesting IPOs just around the corner: AllBirds, On Holding, Toast, Rivian, and others should provide a healthy dose of action on the IPO front. If we continue to see lower debut premiums on these, I may be adjusting my strategy to hold on for larger profits over several weeks instead of cashing in for short term gains.

Stay tuned, and good luck out there!

Note: I am not a licensed financial advisor, this is not financial advice: just information… I currently hold or may take a position in the equities mentioned in this newsletter. Please trade responsibly and understand that investing in the stock market is risky. Good luck!

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