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IPO Warriors IPO Preview for March 28 – April 1, 2022

March 28, 2022

With still no mainstream IPO debuts in sight, low-float IPOs have taken center stage as LPX plays from the September-December deluge of low-float IPOS from 2021 enter the terminus of their lockup periods, and fresh low-float IPOs brave a market that is finally thawing out from the winter chill that brought on the biggest decline since the onslaught of COVID two years ago.

Given last week’s decent performance by LCFY, and strong Day 2 run by AKAN the week before, traders are beginning to pile into the Day 1 dip in hopes of a Day 2 rip; a behavior that eventually could culminate in a debut rally and spark a string of copy-cat plays. Perhaps this is just my fantasy: that we could get back to the kind of ripping IPOs, but we’re certainly due for something that gets hot out of the gate without being pumped to absurd prices before the debut: and I think we have a few candidates that may deliver such an offering.

(And if you want to watch a great video on what the near-term setup looks like on AKAN, check this out from @tradingfitgirl)

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Before we jump into the recaps: most of a you are probably aware of the fact that I’ve recently had to evacuate my family (pregnant wife, 2 year old daugher, and 2 dogs) from Kyiv, Ukraine – where we had been living for the past 3 years. A few members of the IPOW community have asked me if they could make a donation or contribution to help out. While I’m doing alright and have savings in my trading account, I try not to touch that money, and this whole episode has been a pretty significant financial hit.

For anyone who would like offer some personal support, I’ve gone ahead and setup a GoFundMe account –

https://gofund.me/400de027

I would also like to encourage those who want to help those in greater need than my own to donate directly to a refugee fund.

Dyakuyu.

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Live Streams this Week:

I’ll be live-streaming the debuts of the following IPOs on the
IPO Warriors YouTube Channel

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This Week’s IPOs:

  • Rail Vision (RVSN) – March 31, 2022 | 1.97M Shares

  • Genius Group (GNS) – March 31, 2022 | 3.27M Shares

  • Expion360 (XPON) – April 1, 2022 | 2.145M Shares

  • Wearable Devices (WLDS) – TBD | 3.6M Shares

  • Qsam Biosciences (QSAM) – April 1, 2022 | 1.7M Shares

  • Iveda Solutions (IVDA) – April 1, 2022 | 827K Shares

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Ok, Let’s Jump In:

Rail Vision (RVSN) – March 31, 2022 | 1.97M Shares
Price Range:
$4.13 – $5.87
Offering Size:
$18M
Shares Outstanding:
13.95M

Industry: Imaging Technology / Automation

Overview:
This Israeli company is developing imaging technology software for railway safety and operational systems. They are pre-revenue, with products still in pilot testing stage, so there are no financials available, though it does have some backing from entrenched industry players, such as German train braking producer Knorr Bremse. It has been rescheduled from last week, and is still available for allocation request on WeBull.

Considerations: Given that it’s been available on WeBull for nearly 10 days and still has not been filled, I’m gonna guess that the underwriters will either pull this offering again, sweeten the deal, or foist it on account holders who wish to participate in their next ‘hot’ deal.

Growth Numbers:
– Revenue Growth:
0% for 6 months ending 31, 2021
– Gross Profits:
0% for 6 months ending 31, 2021
– Gross Margin:
0% for 6 months ending 31, 2021

Baseline Financials:
– Cash Flow:
negative
– Net Income:
negative
– Operating Profit:
negative

Notes from the S-1:
– “
Certain of our existing shareholders, including entities affiliated with certain of our directors and beneficial owners of greater than 5% of our share capital, have indicated an interest in purchasing up to an aggregate of $2.5 million of units in this offering at the initial public offering price per unit.”
This is the kind of language that makes me take pause and wonder if they might suppress volume and force a spike in the price off the debut, and why I’ll be looking for possible manipulation of the volume.

Underwriters:
Aegis Capital

IPO Classification:
Low Float IPO

Recent Similar IPOs: MTEK LCFY

Trading Strategy:
This one may be interesting to watch on the debut, although with warrants involved, I can’t imagine that it would demand a premium on the opening trade, and is more likely to drop a bit before it rebounds. If shares are more or less forced onto account holders, I would expect any debut premium will be sold off immediately. If we see a fallout from the debut, then I may try to buy the initial dip-to-bounce play, keeping a tight trailing stop loss, and then look to build a position slowly through Day 1 with some buying power left in reserve to double down for a deeper bottom towards the end of Day 1. Then the play is to sell a Day 2 pop, as we’ve mentioned several times in this newsletter: this is the setup we’re looking for right now.

The only possible curveball is that the float is so low, that if insiders do end up buying a substantial piece of the IPO, they could pinch the debut volume to such a low number that the price gets squeezed. If we see a pre-debut indication balance in double digits, then it might be tempting to jump in for a small play off the debut.
Given that they are having trouble selling even such a small allocation, I’m expecting this to drop to about $2.40 or below before any kind of rally materializes (see LCFY from last week)

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Moderate.

Watch me live-stream this debut on YouTube:
https://www.youtube.com/watch?v=czXNdR9Jgtc

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Genius Group (GNS) – March 31, 2022 | 3.27M Shares
Price Range:
$5.00 – $6.00
Offering Size:
$18M
Shares Outstanding:
25.5M

Industry: Ed-tech

Overview:
This Singaporean company specializes in online and offline educational services, including corporate training for major corporate clients including Deloitte, J&J, Vodafone, Google, IBM, Heineken, Lenovo, DHL, HP, and many other recognized international brands. With over 1.9M students and 9,00 partners on its GeniusU platform, this is a substantial player in the ed-tech space. Unfortunately, COVID has hurt their bottom line, and there are many competitors in the space who have moved into the virtual learning sector.
Their growth numbers are not nearly as impressive as other ‘growth’ companies posted in the 6 months ending June 30, 2021… which is essentially comparing metrics against the worst 6 months of the initial wave of COVID lockdowns. So with revenue up 40% in that period for 2021, I’m just not all that impressed with this company as a growth story: coupled with negative gross profit over the same period, and I just don’t see this as a company that many investors will get excited about buying in on the IPO.

Considerations: Ok, so pay attention… here’s what I wrote last week:
There’s nothing particularly sexy to me about this IPO, as the float is a bit large for a ‘low-float’ play and the underwriter has delivered a mixed bag of hits and misses. I don’t see this as a likely “Stealth IPO” setup, but will keep an eye out for any indication in the pre-debut price matching that would indicate otherwise. It has been rescheduled once already, which generally means they were unable to attract sufficient interest in the IPO, and it is still available on WeBull for retail buyers to request allocations. Not sure what kind of catalyst they could deliver to save this down the road either: perhaps an announcement of a big contract with a major company. Just doesn’t really fit the blueprint for trading low-float IPOs in any regard: UNLESS it turns out to be a stealth IPO (more on that later)”

… alright, so now my opinion on this debut has COMPLETELY changed, you know why? Because Boustead Securities has taken over as the lead underwriter: replacing Think Equity, and reduced the float from 7.27M shares to just 3.27M shares. I guess Think Equity couldn’t fill their order book, but Boustead is taking a different approach, and is distributing shares only to corporate clients. If the float gets choked, or Boustead turns this into a Stealth IPO setup, there is a chance this flies.

Growth Numbers:
– Revenue Growth:
40% for 6 months ending December 31, 2021
– Gross Profits:
-26% in 6 mos ending December 31, 2021
– Gross Margin:
62% (pro forma)

Baseline Financials:
– Cash Flow:
negative
– Net Income:
negative
– Operating Profit:
negative

Notes from the F-1:


– Boustead has anoption to pick up an additional 490k shares within 45 days of the offering.

– 12 month lock-up period for directors, 6 month lock-up period for shareholders

– 5M underlying share options at a weighted average exercise price of $6.41

– “Boustead Securities, LLC may, at its discretion, permit our shareholders to sell shares prior to the expiration of the restrictive provisions contained in those lock-up agreements.” … so yeah, don’t hold onto this if it spikes.


Underwriters:
Boustead Securities

IPO Classification:
Low-float IPO

Recent Similar IPOs: EEIQ AKAN SOPA TKLF HTCR

Trading Strategy:
Gotta watch this one closely in the pre-market debut, if they price it at $5 and it debuts with a premium in the $8-13 range, it could be a stealth setup that rips into a series of upwards halts. If it debuts at a ridiculous price, say, above $20, then I won’t touch it on the debut, and likely will just stay away from it unless it comes down to the $9-10 range from there, and even then, I’ll probably just watch and gasp if it rebounds and runs back up again. Have to assume that whatever insane price it reaches on Day 1 or Day 2, it comes back to earth within a week. If it somehow debuts below the IPO price, then I’ll watch for Day 1 dips to play Day 2 rips, just like any other low-float IPO we’ve seen this year with a few exceptions.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Intrigued

Watch me live-stream this debut on YouTube:
https://www.youtube.com/watch?v=czXNdR9Jgtc

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Expion360 (XPON) – April 1, 2022 | 2.145M Shares
Price Range:
$7.00 – $9.00
Offering Size:
$15.3M
Shares Outstanding:
6.445M

Industry: Energy Storage (Batteries)

Overview:
Based in Oregon, USA, Expion360 manufacturers and markets lithium ion phosphate batteries for RVs and boats, with plans to expand into industrial and home energy applications. It’s products are marketed as a greener alternative to lead acid batteries with vastly superior energy storage capacity. Sales have been skyrocketing, while losses have been expanding to fuel growth.

Considerations: In some ways, this IPO represents a battle between oppositional trends at a pivotal time in the market: on one hand, it is a green energy play with impressive growth numbers, on the other hand it is a growth company with substantial operating losses, negative cash flow, and negative net income. A year ago, this one would have been primed to run hard off the debut simply due to the ultra low float and rampant demand for anything related to electrical and vehicles was soaring. But over the past few months, anything that is being pitched simply on growth and hype has been severely punished if not entirely ignored. So here we have a company whose low float alone is likely to draw interest from day traders, and the green/alternative energy angle is returning to the spotlight as fuel prices skyrocket. I looked up some reviews on their products, and customers seem to be very happy with the company’s service and product quality.

Growth Numbers:
– Revenue Growth:
+187% in 2021 vs 2020
– Gross Profits:
+443% in 2021 vs 2020
– Gross Margin:
36% for 2021

Baseline Financials:
– Cash Flow:
negative
– Net Income:
negative
– Operating Profit:
negative

Notes from the S-1:


– ck-up agreements.” … so yeah, don’t hold onto this if it spikes.

Underwriters:
Paulson Investment Company (I have never heard of them and couldn’t find any recent IPOs listed on the ‘Transactions’ page of their website.

IPO Classification:
Low-float IPO

Recent Similar IPOs: VLCN

Trading Strategy:
I have a feeling that this one might be the one to break us out of our weak debut slump. If the market remains strong through the week, and day traders are looking for something fresh to play, a green-energy-batter-for-vehicles company could be a prime target. It feels like day traders will want to jump into this one if it starts running, but may be a bit hesitant to actually bid on the debut trade. This could result in an ideal setup to take a position off an opening drop, if not buy the debut outright.
Trading setups are generally cyclical, and when a strategy gets abandoned for long enough, it tends to pop up with a vengeance under the right conditions. This might be one of those setups.


Brand Name Recognition:
Moderate.

Debut Trade Conviction Level:
I’m pretty excited about this one, but maybe just because it’s been so long since we had an IPO run off the debut. Can’t take a huge risk off the open, and I’ll be watching the pre-debut balance to gauge my initial reaction.
I should also point out that I’ve submitted an allocation request on WeBull for this offering, and will determine some of the strategy based on how much of my requested share allocation gets filled.

Watch me live-stream this debut on YouTube:
https://www.youtube.com/watch?v=6p3P-84DatA

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Wearable Devices (WLDS) – TBD | 3.6M Shares
Price Range:
$4.00 – $6.00
Offering Size:
$18M
Shares Outstanding: 11.1M Shares

Industry: Electronics

Overview:
This Israeli tech company produces electronic bracelets that use sensors to interpret the movement of your hand, and can be used as an interface between electronic devices. They’ve included a spin on this being used in the context of virtual reality, and expanded that to include applications within the ‘metaverse’. Ok, sounds pretty cool, and it looks like they’ve been selling a lot of them.

Considerations: This one sounds kind a cool, and Aegis capital has some hits on it books among the expected list of losers. It’s low float and low price make it an attractive day trader target, so if social media buzz starts humming around this name it could be worth playing. However, it’s also not listed on most of the IPO calendar sites (yet anyway), so if they haven’t promoted the IPO, and I couldn’t figure out a firm date, we might see this one get pushed back to next week. There is also the risk that the ticker doesn’t get registered with all the trading platforms – something that happens much more often than it should – and if that happens, I won’t touch it off the debut, as this obviously impacts demand in negative ways. At that point, the setup would be to accumulate on Day 1 and cash in when it’s trading on all platforms for the Day 2 run.

Growth Numbers:
– Revenue Growth:
215% for 6 months ending June 30, 2021
– Gross Profits:
-233% in 6 mos ending June 30, 2021
– Gross Margin:
93% (pro forma)

Baseline Financials:
– Cash Flow:
negative – moving towards positive
– Net Income:
negative – moving towards positive
– Operating Profit:
negative – moving towards positive

Notes from the F-1:

– 180 day lockup period

Underwriters:
Aegis Capital

IPO Classification:
Low-float IPO

Recent Similar IPOs: MTEK

Trading Strategy:
I’ll be expecting this one to drop on Day 1 and rally on Day 2, unless I see strong buy-side demand in the pre-debut indication without pushing the price up too high on the debut. If there’s social media buzz around this IPO, and we get a modest debut premium, I’ll likely take a shot at a starter position on the debut, but will be making a game time decision one way or the other.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Moderate.

Watch me live-stream this debut on YouTube:
https://www.youtube.com/watch?v=6p3P-84DatA

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UPLISTINGS:
I’m not going to go too in-depth on these, as these stocks already trade on OTC markets and are simply uplisting to major exchanges, but will include summaries just to give you some ideas.

QSam Biosciences (QSAM) – March 30, 2022 | 1.75M Shares
Price:
$11.50

This company is the license holder for a drug called Samaium-153 DOTMP – a clinical stage novel radiopharmaceutical used to treat cancer and really, I’m not gonna try to pretend I understand where this stands in relation to other treatments. It’s low float, it’s biotech, but I don’t see this getting a ton of attention from traders given the relatively high price point, after performing a reverse-split at a ratio of 1-for-40 shares on March 10, 2022.


Iveda (IVDA) – April 1, 2022 | 827K Shares
Price:
$9.68

This company is provides AI-based video technology, and has recently announced the a UV Germicidal Irradiation product that helps cities disinfect COVID by .affixing their product to HVAC vents. They are slated to perform a reverse split of 1-7 or 1-9 shares depending on the closing of the share price prior to the IPO.
Ok, so this one sounds a LOT like AERC, which improbably debuted at $40 after pricing at $10, and ran to over $100 on very thin volume on Day 1. While I don’t expect a repeat performance, the float is so tiny that really anything could happen.

Watch me live-stream this debut on YouTube:
https://www.youtube.com/watch?v=6p3P-84DatA

Quiet Period Expiration (QPX) Watch:

The SEC mandates that companies and underwriters refrain from making public statements for 40 days after an IPO begins trading. The QPX date marks a time when press releases may be issued that have the potential to move the stock price; especially companies whose price has dropped from the IPO.
These can present great trading opportunities ( I recommend this video here)

Upcoming QPX:

– Smart for Life (SMFL): March 28, 2022

– Meihua International (MHUA): March 28, 2022

Lockup Period Expiration (LPX) Watch:

Most IPOs are subject to a 180 day lockup period before insiders and shareholders who owned shares of a company prior to the IPO can sell their positions. Typically, the dilutionary effect of this event will cause a stock price to drop, as supply increases without any fundamental changes in the value of the underlying company. Many investors will wait for LPX before starting a long term position in a company.

Upcoming LPX:

– Amplitude (AMPL): March 28, 2022

– MELI Kaszek Pioneer (MEKA): March 28, 2022

– Warby Parker (WRBY): March 28, 2022

– Olaplex (OLPX): March 29, 2022

– Exscientia (EXAI): March 30, 2022

– First Watch Restaurant Group (FWRG): March 30, 2022

– Nutriband (NTRB): March 30, 2022

– TDCX (TDCX): March 30, 2022

– Volcon (VLCN): April 4, 2022

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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.

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