The market has been getting hammered, and until the Fed gives us a more definitive stance on interest rate hikes, we’re unlikely to see enough stability to give mainstream IPOs an environment where they are able to execute IPOs. So in the meantime, we’re left with low-float debuts that have been bringing us a mixed bag of assorted garbage to pick through in hopes of finding the rare opportunity to scalp a winning trade.
Fortunately, the “Day 2 Runner” and “Stealth IPO” setups have been working – as we saw last week with JCSE running on the Stealth setup, and ACON giving us a nice Day 2 pop in early trading. With nothing but low-floaters on the IPO calendar for this week, and the market off to a rough start through today (Tuesday, April 26, 2022), I wouldn’t be surprised if a few of these IPOs get pulled or rescheduled for next week. Those that do proceed with their listings, should be worthy of consideration.
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I’ll be live streaming the IPOs on Wednesday (April 27, 2022) with Aly Angel (https://twitter.com/tradingfitgirl) starting around 9:40 AM EST here:
https://www.youtube.com/watch?v=Ci6enlB8Oro
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This Week’s IPOs:
Innovative Eyewear (LUCY) – April 27, 2022 | 1.53M
Tenon Medical (TNON) – April 27, 2022 | 4M
Ostin Technology (OST) – April 27, 2022 | 3.4M Shares
SaverOne (SVRE) – April 27. 2022 | 1.385M
Belite Bio (BLTE) – April 29, 2022 | 6M Shares
Edible Garden (EDBL) – April 29, 2022 | 1.36M Units
HilleVax (HLVX) – April 29, 2022 | 10.3M Shares
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Ok, Let’s jump in:
Innovative Eyewear (LUCY) – April 27, 2022 | 1.54M Units
Price Range: $5.50 – $7.50
Offering Size: $10M
Shares Outstanding: 7.7M
Industry: Wearable Technology
Overview: This company produces glasses that feature microphones and open-ear audio technology that connect to devices via bluetooth. Dubbed as ‘smart audio glasses’ – they sell under the brand name “Lucyd” (https://www.lucyd.co) and are endorsed by a number of lesser known professional athletes such as WNBA player, Monique Billings. The IPO is selling Units that consist of one share of common stock and 2 warrants (a Series A and Series B warrant).
Considerations: As far as the product goes, I dunno, kinda bulky and gimmicky in my opinion. Are these the next GoPro or Beats-by-Dre? I doubt it. Perhaps they can upgrade to further advancements in the future: augmented reality would be a logical progression, but in the current format, I don’t think they are interesting enough to generate enough buzz to warrant a debut play. The ultra-low float plus warrants makes this an interesting setup for a possible Day 2 run, but that’s about the only angle I can see on this one other than a longer term LPX play: this one does have a low float even when taking the total shares outstanding into account.
Growth Numbers:
– Revenue Growth: 1136% for 9 months ending September 30, 2021
– Gross Profits: up to $86k in 2021 from -$17k in 2020
– Gross Margin: 20%
Baseline Financials:
– Cash Flow: negative
– Net Income: negative
– Operating Profit: negative
Notes from the S-1:
– Series B warrants expire within 1 year, and the company does not intend to list them on any exchange.
– Lucyd Ltd. will control roughly 65% of the stock upon completion of the offering
Underwriters: Maxim Group
IPO Classification: Ultra Low Float
Recent Similar IPOs: LCFY
Trading Strategy: This one doesn’t really look like a debut trade to me: don’t see any reason to believe it’s a Stealth IPO, and don’t expect it to get much retail interest. On top of that, market conditions are bordering on panic mode at the moment, so I’m expecting very low volume on this one and generally downward movement. This might setup a Day 2 pop, but even that depends somewhat on there being solvent day traders in the market to give it a boost.
I’ll be watching this one for a possible LPX run down the line. With Series B warrants on a 1 year expiration, it seems they’ll be wanting to run this back to the IPO price at some point before then.
Brand Name Recognition: Low.
Debut Trade Conviction Level: Low.
Live Streaming the IPO Debut: https://www.youtube.com/watch?v=Ci6enlB8Oro
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Tenon Medical (TNON) – April 27, 2022 | 4M Shares
Price Range: $4.50 – $5.50
Offering Size: $17.2M
Shares Outstanding: ~12M
Industry: Medical Devices
Overview: This company has developed an FDA cleared (501[k]) proprietary medical device that is designed to fuse one or both scroiliac joints to treat lower back pain. Revenue and gross profit are up year over year, and the company intends to use the proceeds of the IPO to fund marketing and expansion of it’s product.
Considerations: I’m hearing that this IPO is over-subscribed and the underwriter has run some IPOs pretty hard in the past (see AERC), so this one could be poised to debut at a relatively high premium. Where it goes from there is hard to tell. Given the weak market conditions, it’s hard to imagine anything other than manipulated floats run, but this is one to keep an eye on. If we see a huge debut premium on a tiny number of shares accounting for the pre-debut imbalance on the opening trade, then it might be a repeat of AERC. Given that we have another IPO on this day that looks more like an expected Stealth setup, I may pass on this one and focus on the other.
Growth Numbers:
– Revenue Growth: +264% for 2021
– Gross Profits: +310% for 2021
– Gross Margin: 65% in 2021
Baseline Financials:
– Cash Flow: negative
– Net Income: negative
– Operating Profit: negative
Notes from the S-1:
– “In addition, the representative of the underwriters may, in its discretion, release all or some portion of the shares subject to lock-up agreements prior to the expiration of the lock-up period. See “Shares Eligible for Future Sale” for more information. Sales of a substantial number of such shares upon expiration, or the perception that such sales may occur, or early release of the lock-up, could cause our share price to fall, or make it more difficult for you to sell your common stock at a time and price that you deem appropriate.” so… There’s a 180 lock-up period, but the representative of the underwriters may allow shares be sold off before then. Beware of this if this is trading at an absurd premium in the opening days. As we saw with AERC, the sell-off is dramatic and brutal.
Underwriters: The Benchmark Company
IPO Classification: Low Float
Recent Similar IPOs: AERC BEAT
Trading Strategy: Watch for highly constrained volume on the debut. If we see a tiny number of shares being offered for sale at a high premium in the pre-debut imbalance, we might be in a setup for multiple halts up – bear in mind that this is a very risky setup, as shares can get dumped at any time, and the reality is that this is going to price at around $5.00 per share, so it’s likely to come back down to that price within a week or so.
Brand Name Recognition: Low.
Debut Trade Conviction Level: Moderate.
Live Streaming the IPO Debut: https://www.youtube.com/watch?v=Ci6enlB8Oro
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Ostin Technology (OST) – April 27, 2022 | 3.4M Shares
Price Range: $4.00
Offering Size: $14M
Shares Outstanding: ~13.50M
Industry: Electronics
Overview: This is a Chinese company involved in the manufacturing of display modules and polarizers used in consumer electronics, outdoor LCD displays, and automotive displays. The do appear to have a legitimate business, with a wide range of products listed on their website, and unlike some of the other low-float IPOs we’ll be watching this week, they do have substantial revenue with net profit listed as $3.3M on $167M of revenue in 2021.
Considerations: This is purely a Stealth IPO setup along the lines of what we’ve recently seen in GNS and JCSE. The Chinese co-underwriter (Shengang Securities) was involved in both the MHUA and HUDI IPOs: the former halted in both directions on the open with a nice upside opportunity, the latter fizzled out for about 6 months before embarking on a massive upside move stretched out over several weeks. Prime Number Capital was also involved in the MHUA IPO, as well as EH, which, like MHUA, took an extended amount of time before it was run, eventually rising from around $8 to a high of $129 in early 2021.
This one is currently offered on WeBull for allocation request, and I’ve put in an order – I’m not sure how much I’ll be able to judge based on the fulfillment amount, since I am not sure many other US based traders will be clamoring for shares, but do expect to see this one open into multiple upward halts provided the debut price is below $20.
If the debut price is up in the $30s or higher, the only move at that point is to sell off any allocation I’ve received, and watch it from the sidelines.
If this one doesn’t jump on the debut, I’ll be circling back to this one in 6 months when the lock-up period expires to watch for an EH / HUDI type of run from there.
Growth Numbers:
– Revenue Growth: +20% for 2021
– Net Profits: +15% for 2021
Baseline Financials:
– Cash Flow: negative
– Net Income: negative
– Operating Profit: negative
Notes from the F-1:
–
Underwriters: Primer Number Capital, Shengang Securities
IPO Classification: Stealth IPO (potential)
Recent Similar IPOs: GNS PCSE
Trading Strategy: I have put in for an allocation request on WeBull for about 300 shares. It’s hard to determine on this kind of setup whether a large fulfillment indicates lack of demand, simply because I expect a large portion of shares to be allocated to Chinese accounts that will determine the price movement on the debut. However, I do believe that we’re going to see either a ridiculously high debut premium: in which case the move will be to sell whatever allocation I get (if any), or if we see a moderate debut price, to expect a move to the upside through multiple halts.
Having said that, we could see an initial halt down before any upside action, if US based retail traders bank profits on a modest debut premium, before the constrained volume on the Chinese side forces a reversal.
Brand Name Recognition: None.
Debut Trade Conviction Level: High.
Live Streaming the IPO Debut: https://www.youtube.com/watch?v=Ci6enlB8Oro
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SaverOne (SVRE) – April 27, 2022 | 1.38M Shares
Price Range: $7.22
Offering Size: $14M
Shares Outstanding: 4.046M
Industry: Mobile App / Automotive Software
Overview: This is an Isreali company that has developed a technology that restricts the use of mobile devices by drivers in vehicles. It’s an uplisting from the the Tel Aviv Stock Exchange, so I’m not gonna spend too much time discussing this one, since uplistings tend to be a different type of setup than most pure play IPOs.
Considerations: This is an uplisting, and the software seems like something consumers would only use if forced to: either by an employer or federal regulations. I may watch this one in case it sells off hard on Day 1, and look for a Day 2 spike: it is an ultral-low float offering that could get ignored. This would provide the right conditions for accumulation on Day 1 and a pump on Day 2.
Growth Numbers:
– Revenue Growth: +53% for 2021 on $145k in total revenue
– Net Profits: +198% for 2021 on $52k total gross profi
– Gross Margins: 35%
Baseline Financials:
– Cash Flow: negative
– Net Income: negative
– Operating Profit: negative
Notes from the F-1:
–
Underwriters: ThinkEquity
IPO Classification: Ultra Low Float, Uplisting
Trading Strategy: I’ll be focused elsewhere on Wednesday, but will keep an eye on this for a potential entry if we see a massive drop that persists throughout the end of Day 1 and look for a possible Day 2 setup.
Brand Name Recognition: None.
Debut Trade Conviction Level: Low
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Belite Bio (BLTE) – April 29, 2022 | 6M Shares
Price Range: $5.50 – $6.50
Offering Size: $36M
Shares Outstanding: 24.16M
Industry: Biotech
Overview: This is a clinical stage biotech focused on eye diseases with a lead candidate in Phase III. The underwriter, The Benchmark Company, is also handling TNON earlier in the week. The float isn’t ultra-low float, and biotechs are generally not great IPOs to buy on the debut, so I’ll be watching this one from the sidelines.
Considerations: The Benchmark Company will be pretty busy this week, with both TNON and BLTE on the calendar, and one would think that if they came out with two IPOs in close proximity to each other, then one would run and the other would stink: then they’d go to their retail customers and say, “Well, if you want in on one, you gotta take both.”
If you ask me which one is the winner, I’d say TNON – lower float, and product is already FDA approved. Having said that, I’ve heard rumors that retail was all but locked out of the TNON deal, and may scoff at being offered BLTE. So either way, and on top of being a classic “Biotech Bust” setup, I won’t be getting into BLTE. The float is also just too high to interest me in a possible Day 2 run.
Growth Numbers: It’s still in clinical trials
Baseline Financials: see above
Notes from the S-1: Given that I don’t like the setup to begin with, I skipped the S-1
Underwriters: The Benchmark Company
IPO Classification: Biotech Bust
Trading Strategy: I don’t really find anything appealing about this setup: except perhaps as an LPX play when the lock-up period expires. I expect they’ll time it around the FDA decision, and would be looking to scoop up shares well below the $2 level..
Brand Name Recognition: None.
Debut Trade Conviction Level: Low
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Edible Garden (EDBL) – April 29, 2022 | 2.14M Units
Price Range: $6.00 – $8.00
Offering Size: $14M
Shares Outstanding: 4.046M
Industry: Indoor Gardening
Overview: This company operates indoor agriculture technologies to grow lettuce and herbs indoors. Apparently, they emerged out of a failed cannabis growing operation and have rather sparse financials. Furthermore, 58% of their revenue comes from just 2 clients.
Considerations: Food prices are skyrocketing, but I’m not sure that’s going to be enough to get much buzz built around this company. Their financials are pretty weak, and the main thing going for it is that the float is relatively tiny, and this could attract the accumulation crowd. I’m not sure how much longer this trend will hold: as we’ve seen it get played out before, and this IPO is scheduled to debut at the end of a string of low float IPOs that have managed to pull together Day 2 or Day 3 rallies solely based on microscopic floats.
The comparatively high price gives this one a lot of room to fall, so perhaps if it capitulates all the way down below $3, it sets up a nice run back up to the $4 or $5 level. But I won’t be rushing into build a position.
Growth Numbers:
– Revenue Growth: +12% for the 9 months ending September 30, 2021
– Gross Profits: -40% for the 9 months ending September 30, 2021
– Gross Margins: 8%
Baseline Financials:
– Cash Flow: negative
– Net Income: negative
– Operating Profit: negative
Notes from the S-1:
–
Underwriters: Maxim Group
IPO Classification: Ultra Low Float
Trading Strategy: I can’t see this one being particularly exciting – then again, when a low float IPO has such horrible numbers, I start to wonder if there may be more going on here behind the scenes than I’m picking up on. I’ll be watching this one on the debut. If I see something unexpected in the pre-debut imbalance, or a ton of social media buzz leading up to this one, I might change my mind, but I doubt it. If I miss an unexpected runner on this one, then I’ll let it go.
Brand Name Recognition: None.
Debut Trade Conviction Level: Low
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Hillevax (HLVX) – April 29, 2022 | 10.3M Shares
Price Range: $16.00 – $18.00
Offering Size: $213M
Shares Outstanding: 4.046M
Industry: Biotech
Overview: This is a biotech company in clinical stages of testing a vaccine for norovirus that has already been extensively tested by Takeda Vaccines.
Considerations: Generally speaking, I don’t touch biotech IPOs, particularly on the debut. I’m not gonna change my approach for this one, although vaccine candidates have been one exception to the rule that most biotechs fall hard off their debuts, and this company has a leg up in term of where their lead candidate is in the testing process.
Growth Numbers: n/a
Baseline Financials: n/a
Notes from the S-1:
Underwriters: JP Morgan
IPO Classification: Biotech
Trading Strategy: I’ve long since given up on trying to guess which way biotech IPO debuts will trade, although this one is kind of interesting. But since that’s the line of thought that’s repeatedly gotten me in trouble trying to pick biotech debuts, I think I’ll just let it go.
Brand Name Recognition: None
Debut Trade Conviction Level: Low
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