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IPO Warriors IPO Preview for May 2 – May 6, 2022

May 3, 2022

Honestly, I can’t remember the last time we had an IPO for a company that your average consumer, let alone retail trader, had ever heard of going into the debut. The market has been in a brutal pull-back from the COVID hysteria that brought out a record number of IPOs in 2021, with ‘growth’ names being hit hardest and many recent IPOs trading significantly below their initial pricing. Simply put, the institutional money that provides the anchor investments in mainstream IPOs has had its money parked on the sidelines, and so we’ve been left to trade low-float IPOs of the more dubious variety.

Suffice to say, there have still been some incredible win opportunities in the offerings backed by the less prominent underwriters, with OST and HLVX continuing the trend last week. But this week we may see the beginning of a turnaround in the market, depending on how the first brand-recognized IPO we’ve seen in a long time performs.

With a full slate of IPOs lined up for Friday, May 6, 2022: I’m planning to live-stream the action with co-host Aly Angel starting around 9:40 AM EST here:

https://www.youtube.com/watch?v=kY6V6_Hclgo

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This Week’s IPOs:

  • Edible Garden (EDBL) – May 4, 2022 | 2.14M Units

  • Austin Gold (AUST) – May 4, 2022 | 3M Shares

  • Novusterra (NOVS) – May 4, 2022 | 2.14M Units

  • PepGen (PEPG) – May 6, 2022 | 7.2M Shares

  • Bausch + Lomb (BLCO) – May 6, 2022 | 35M Shares

  • WYTEC (WYTC) – May 6, 2022 | 2.9M Shares

  • SOS Hydration (SOSH) – May 6, 2022 | 1.6M Units

  • SaveOne (SVRE) – May 6, 2022 | 1.38M Units

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Ok, Let’s jump in:

Edible Garden (EDBL) – May 6, 2022 | 2.14M Units
Price Range:
$6.00 – $8.00
Offering Size:
$14M
Shares Outstanding:
4.046M

Industry: Indoor Gardening

Overview:
Rescheduled from last week: 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.
There have been rumors that a large portion of the shares are under lock-up provisions, but I have not verified this. But if we do see a very low volume of shares being offered in the pre-debut imbalance, it could indicate an opportunity to get in for a small position on a potential runner.

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:
We have granted the representative of underwriters an option exercisable within 45 days of the date of this prospectus to purchase from us up to 321,429 additional shares of common stock at an assumed purchase price of $6.99 per share and/or up to 321, 429 additional warrants at a purchase price of $0.01 per warrant, less, in each case, the underwriting discounts and commissions to cover over-allotments, if any.
I mean, underwriters almost always have the option to buy more shares, but considering the size of the IPO to start with, adding about 640k in potential shares (half warrants) to the float by the underwriter could provide enough motivation for the underwriter to try to get this to jump on Day 1… and would also likely setup an abrupt drop whenever the underwriter decides to exercise and dump that position.

Underwriters:
Maxim Group

IPO Classification:
Ultra Low Float

Trading Strategy:
I am not sure about this one, really. If they debut on Wednesday, I’ll be busy celebrating my daughter’s birthday anyway, but were I trading this one, I’d be watching to see if the pre-debut indication balancing shows low volume with a significant debut premium. I’d tread carefully either way, but if we see low volume with healthy premium it could be poised to halt up off the open.

Brand Name Recognition:
None.

Debut Trade Conviction Level:
Low

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Austin Gold (AUST) – May 4, 2022 | 3M Shares
Price Range:
$4.00
Offering Size:
$12M
Shares Outstanding:
12.5M

Industry: Gold Mining

Overview:
This company owns the gold prospecting rights to several plots of land in Nevada near existing mines. The CEO has a history of delivering value to clients, with his most recent company being sold for $2.8B (Pretium Resources) at a considerable premium for shareholders.

Considerations: This one was repeatedly rescheduled again and again from November into December 2021 before ultimately throwing in the pick and shovel and delaying the deal until this week. Their website is laughably bad, with no updated information, and some pages showing error messages. Perhaps they feel that with the market in the dumpster, there will be an interest in gold. There was a time when the prototypical pump-and-dump scheme revolved around gold mining companies, so there will be an abundance of skeptics on this one, and the market has not been too friendly to Roth Capital IPOs, so I’m not sure this will get much immediate retail demand. Then again, gold is considered an inflation hedge, and perhaps that brings this one some attention. Maybe one to watch, but unless the temperature of the social buzz around this one gets hot, I’ll be watching it from the sidelines.

Growth Numbers: None: they haven’t even built any mines yet.

Baseline Financials:
Also none

Notes from the S-1:
Didn’t really bother

Underwriters:
Roth Capital (an unloved underwriter who has yet to deliver a debut winner since I’ve been watching their IPOs)

IPO Classification:
Low Float

Recent Similar IPOs: LITM (I guess, I mean, it’s also a pre-operational mining company, but Lithium is hotter than Gold these days).

Trading Strategy:
Can’t imagine much interest in this one off the debut. Perhaps it’s a low-floater that gets accumulated on Day 1 and runs on Day 2? Who knows, that’s been a winning setup for the past 3 weeks, and we saw it again on NVCT from Friday last week to Monday this week. Almost makes sense to buy any low-float IPO that bombs on Day 1 just to see if it rebounds in the following days.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Low..

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Novusterra (NOVS – May 4, 2022 | 3.75M Units
Price Range:
$4.25 – $5.25
Offering Size:
$18M
Shares Outstanding:
12.5M

Industry: Graphene production

Overview:
This company manufactures products made of graphene produced from coal and carbon. They are pre-development, so no financial are available.

Considerations: This one will need some serious social buzz in order to make any kind of upward move off the debut. The float is not tiny and there are warrants involved, so unless the Twittersphere and Reddit Throngs can concoct a narrative around EV applications, this one is likely to drop off for a bit before it gets some random pumps by trading groups. If the debut shows a premium above the IPO pricing, it might actually be on day trader’s radar.

Growth Numbers: None: they are pre-development.

Baseline Financials:
Also none

Notes from the S-1:
Didn’t really bother

Underwriters:
EF Hutton

IPO Classification:
Low Float

Recent Similar IPOs: LITM ( IF this catches an EV angle, it could be an interesting setup – like LITM… if not, it’s unlikely to give much immediate upside).

Trading Strategy:
Just gotta watch the debut and gauge interest on social media. If we see really low volume on the debut with an unreasonable debut premium, it could be set to run off the debut. But it’s a super risky play, so I will most likely be watching it from the sidelines

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Low..

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PepGen (PEPG) – May 6, 2022 | 7.2M Shares
Price Range:
$13.00 – $15.00
Offering Size:
$124M
Shares Outstanding:
20.5M

Industry: Biotech

Overview:
This is a clinical stage biotech with a lead candidate in Phase I safety trials that focuses on Duchenne Muscular Dystrophy.

Considerations: I generally don’t trade biotech IPO debuts, and this one doesn’t provide anything enticing enough to make me want to break that trend.

Growth Numbers: None.

Baseline Financials:
Also none.

Notes from the S-1:
Didn’t really bother

Underwriters:
BofA Securities

IPO Classification: Friday Biotech Bust

Recent Similar IPOs: ANTX

Trading Strategy:
Biotechs like this one are a very difficult debut to trade: 90% of the time they drop on Day 1 and are far less prone than their ultra-low-float counterparts to random pumps. I just don’t trade this kind of stock unless it drops to absurdly low price points going into the lockup period, but certainly not a Day 1 debut trade for me.

Brand Name Recognition:
Low.

Debut Trade Conviction Level:
Low..

Live Debut Streaming: https://www.youtube.com/watch?v=kY6V6_Hclgo

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Bausch + Lomb (BLCO) – May 6, 2022 | 35M Shares
Price Range:
$21.00 – $24.00
Offering Size:
$966M
Shares Outstanding:
350M

Industry: Contact Lenses

Overview:
This is the first bona fide mainstream IPO of the year from a brand-name company known in average households as a company that specializes in corrective lenses and disposable contact lenses. This is a well-established company with solid baseline financials and steady growth, but nothing like what we saw in software startups in the last couple of years. This IPO is a little different than usual IPOs, as the company is not actually raising any funding for the company – it is a spin-off from Bausch Health Companies who will be pocketing all of the proceeds from his debut. Another way to look at this is that Baush Health is selling this company to the public. It’s also a dual listing on the TSX and NYSE.

Considerations: The float on this one is a full 35M shares, and my guess is that retail traders aren’t too enthusiastic to buy into a long-term position on any IPOs right now, so the typical debut premium we have seen in brand name openings seems unlikely. The financial community will be watching this on closely to see how it performs: a strong debut will open the door for more IPOs, so I believe the underwriters will be aiming to keep the IPO price reasonable, and open it at a price that avoids an immediate sell-off.

Growth Numbers:
– Revenue Growth:
+10% in 2021 vs 2020
– Gross Profits:
+7.7% in 2021 vs 2020
– Gross Margin:
61%

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

Notes from the S-1:
pretty standard stuff.
We are not selling any of the common shares in this offering and will not receive any proceeds from the sale of the common shares.


Underwriters:
Morgan Stanley, Goldman Sachs, Citibank, JP Morgan… and many others

IPO Classification:
Mainstream IPO

Recent Similar IPOs: We haven’t had a brand name mainstream IPO this year, so I’m not going to make any comparisons.

Trading Strategy:
I don’t believe this will be particularly exciting one way or another. I believe they will price it reasonably for institutional buyers to ensure they don’t take a bath on the debut, and they open it at a price that they can easily protect if it drops. So it could be a relatively safe entry – particularly on any opening drop, but I also feel that IPO buyers will sell into any strength.

Brand Name Recognition:
High.

Debut Trade Conviction Level:
Moderate

Live Debut Streaming: https://www.youtube.com/watch?v=kY6V6_Hclgo

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WYTEC (WYTC) – May 6, 2022 | 3.89M Units
Price Range:
$4.15 – $6.15
Offering Size:
$20M
Shares Outstanding:
18M

Industry: 5G Networking

Overview:
This company provides 5G network deployment technology for small cell systems that offer coverage within 1000 feet of a tower. They target their solutions to mobile virtual network operators in the cable industry to bolster their cellular and mobile offerings with WiFi/data/VOIP services.

Considerations: This company is not profitable, not producing positive revenue, and has negative baseline financials across the board. The float isn’t that low, relative to others we have on the docket for Friday, and I’m not sure there will be much day-trading interest on this one. However, we have seen quite a bit of interest in recent low-float IPOs in the past week, and Tuesday saw quite a few recent low-float IPOs make rebound runs (OST, HLVX, JCSE, RVSN…) so maybe the trend can bleed into some interest in a debut play, but that’s a long shot.

Growth Numbers:
– Revenue Growth:
-11.7% in 9 months ending September 30, 2021
– Gross Profits:
+26% in 9 months ending September 30, 2021
– Gross Margin:
15%

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

Notes from the S-1:

Underwriters:
EF Hutton

IPO Classification:
Low Float IPO

Recent Similar IPOs: MTEK

Trading Strategy:
This one has units and the float isn’t that low: so it would need social buzz to send it on a debut run. Given that Boustead has an IPO offering on Friday, I think low-float IPO scalpers will be focused on that one instead of WYTC. I’m not particularly interested in this one until it bottoms out as a possible LPX move when the lock-up expires.

Brand Name Recognition:
None.

Debut Trade Conviction Level:
Low

Live Debut Streaming: https://www.youtube.com/watch?v=kY6V6_Hclgo

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SOS Hydration (SOSH) – May 6, 2022 | 1.36M Units
Price Range:
$4.50 – $6.50
Offering Size:
$8M
Shares Outstanding:
7.03M

Industry: Health Supplement / Sports Drink

Overview:
This is company has developed a hydration product based on the WHO’s rehydration formula with enhancements that they claim improves absorption and performance of the product. They do have a retail presence in large retail chains such as CVS, Walmart, and Whole Foods, along with online sales on sites like Amazon.com and Target.com. So this is like, actually a real company with revenue and a product that generally has very high customer ratings for its performance. Whether the market is ready to be enthusiastic about buying into the debut is another question.

Considerations: Rescheduled from last week (and the week before then): not much has changed, and it is still offered for allocation request on WeBull, so it seems they must be struggling to fill their order book.

Last week I wrote,
“I’ll have to defer to social media throughout the week to get a sense as to whether retail traders are likely to get behind this one at all. With just 1.36M shares (plus an equal number of warrants), and a limited number of total shares outstanding, this one could get pumped simply as an ultra-low float IPO. But I’m not sure it’s sexy enough to warrant a debut buy: so I’ll be watching the pre-debut indication and most likely, just waiting to see if it drops into an attractive price range for a subsequent rebound.”

Given the attention STSS no doubt stirred up with its Day 3 run, this one may get played out. The float is tiny, and food stocks are in vogue right now, so maybe I should pay attention to the debut on this a little more. If we see strong buy-side demand perhaps it can run.


Growth Numbers:
– Revenue Growth:
+54% in the 9 months ending September 30, 2021
– Gross Profits:
+42% in the 9 months ending September 30, 2021
– Gross Margin:
37% in the 9 months ending September 30, 2021

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

Notes from the S-1:

Underwriters:
Maxim Group

IPO Classification:
Ultra-Low Float

Recent Similar IPOs: OTLY

Trading Strategy:
I’ll be paying attention to social media this week, as sometimes a cult-brand IPO gets enough support from its target consumer base and loyal customers to run it: think DNUT, BIRD, BROS, etc.
The float is so low that it may not drop as hard as others, especially given that it appears to have at least moderate brand name recognition. If it doesn’t perform well at all on Day 1, it could be a very interesting Day 2 setup, as this one actually could benefit from an overnight media cycle. I believe many of its loyal customers won’t be aware of the IPO until it the day after it debuts and headlines announce its IPO performance: so a Day 2 run is very possible.


Brand Name Recognition:
Moderate

Debut Trade Conviction Level:
Not high, but not completely disinterested. Seems like it could get enough support from a loyal customer/fan base to give it some legs.

Live Debut Streaming: https://www.youtube.com/watch?v=kY6V6_Hclgo

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SaverOne (SVRE) – May 6, 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 has been rescheduled from last week. 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 profits
– 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

Live Debut Streaming: https://www.youtube.com/watch?v=kY6V6_Hclgo

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Actelis Networks (ASNS) – May 6, 2022 | 3M Shares
Price Range:
$4.00
Offering Size:
$16M
Shares Outstanding:
15.6M

Industry: IoT (Internet of Things)

Overview:
This is a network solutions company with a proprietary hybrid fiber-copper technology that provides a flexible solution for areas regardless of whether they can easily be reached with fiber-optic solutions. But that’s not really why anyone is paying attention to this one: it’s a Boustead deal, and they tend to figure out ways to run their offerings, so people will watch, some will buy off the debut, and if we get anything other than volatility off the debut we will be surprised.

Considerations: Well, it’s a low-float Boustead deal. That’s generally enough to bring attention to this one..

Growth Numbers:
– Revenue Growth:
+0.2% for 2021 vs 2020
– Gross Profits:
-20.3% in 2021 vs 2020
– Gross Margins: 46%


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

Notes from the F-1:


Underwriters:
Boustead Securities

IPO Classification:
Boustead

Trading Strategy:
I’ve put in an allocation request for this one on WeBull – if we get a debut premium, I’ll probably sell on the debut. I’m not so sure this one has much upside as a debut trade. Boustead has delivered a couple duds recently, and the runners have had clear ties to Asia or other foreign entities (AKAN was tied to Lesotho)… so I’ll be investigating a little further during the week to see if I can find anything interesting.Otherwise, this one might be one where I just sell any allocation I get if given a chance to take profits, and otherwise put this one on watch for a longer term LPX play.

Brand Name Recognition:
None.

Debut Trade Conviction Level:
Low

Live Debut Streaming: https://www.youtube.com/watch?v=kY6V6_Hclgo

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