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IPOWarriors IPO Preview for January 7, 2022

January 7th, 2022

Nothing too noteworthy, but tomorrow brings us the first IPOs of 2022, with a slate of low-float debuts that should give us an idea of whether this trade has turned around or still a setup better watched from the sidelines.

In 2021, some of the most profitable IPO debuts were low-float IPOs that got squeezed into massive, multi-halt runs, that delivered as high as 500% wins off their debut. Most of these were ‘Stealth IPOs’ of the Chinese variety (UTME CPOP SOPA), but we saw some other ultra-low float plays that ran on buzz and hype (EBET DATS MITQ AERC) … some of these appear to have been manipulated by insiders, others simply caught fire based on social buzz.

We’ve also seen many of the recent low-floaters simply drop off the debut, or in the worst-case scenario, debut at an incredibly high premium and enter into a “halt-of-death”: an initial upward halt that opens below the halt price: ex. SIDU. (yeah, I got killed on that one).

So we haven’t really seen a low-float IPO work all that well since AERC: a micro-float that debuted at such a high premium ($40 first trade off a $10 IPO) with constrained supply that triggered multiple halts. What has been working are longer term plays on low-float biotechs: NOT buying the debut, but accumulating on drops and waiting for announcements once the quiet period ends. Some have taken longer than others: but IINN, KTTA, MYNZ, among others. For these, I’m not looking at the IPO as a chance to buy in, but to put these on my radar and watch for dips. There are a couple recent low-float biotechs on my radar, in addition to adding more IINN.

Ok, so let’s go through the IPOs on deck for tomorrow:

CinCor Pharma (CINC) – January 7, 2022 | 11M Shares
A clinical stage biopharmaceutical focused on treatments for hypertension. Not really gonna try to get into the details of their medicine, suffice to say that this is a pharmaceutical with a float that doesn’t really qualify as super-low float, and the underwriter is Morgan Stanley, so don’t expect any real hijinx. To me, this is just a typical biotech IPO and I’m not touching these anymore, simply because I don’t know anything about them, and I doubt many retail traders do either, so… pass.

Amylyx Pharmaceuticals (AMLX) – January 7, 2022 | 8.75M Shares
This company develops treatments for ALS and Alzheimer’s and unlike many pharmaceutical IPOs, has already passed Phase 2 and gone directly to Regulatory Filing in the US and Canada for their lead drug: AMX0035. It seems they are now applying for marketing authorization in Europe and have received priority review for it’s lead candidate from the FDA (currently under Phase 3 clinical trials)… I mean, this all sounds interesting, and if they can deliver a treatment for ALS it would potentially be a huge winner, but again, I don’t know anything about this stuff: it’s all hard to get my brain around. I don’t see why a significant number of retail traders would drive up demand for any of these, but think I’ll keep a close watch on this one. Let it drop and find a bottom, and keep an eye on the quiet period expiration. By accumulating on lows ahead of QP expiration, you may just be in a position to ride the rocket ship on any major announcements. Given the PR they released going into the IPO, this one has me wondering if they’re setup to blow up once they resume issuing press releases. Backed by the big guns at Goldman and others.

Vigil Neuroscience (VIGL) – January 7, 2022 | 7M Shares
Another biotech focused on something called ‘microglia’, some kind of immune cells in the brain that play a key role in maintaining the central nervous system. This one is a bit out there for me, and I’m not gonna try to understand it… just not the kind of IPO that gives me any reason to think it will perform well off the debut, and just like, whatever… I’m gonna skip this one and probably won’t be tracking it.

Hour Loop (HOUR) – January 7, 2022 | 2M Shares
This company is basically a vendor on Amazon.com that has expanded to Walmart.com and sell a small fraction of orders on their own website: hourloop.com. They claim to offer 100,000+ products and use software to identify niche demand for items and optimize them on these popular ecommerce platforms, and they are raising money to ramp up their operations. This one is kind of interesting for a few reasons: one, they have grown revenue 93.4% in the 6 months ending June 30, 2021, with gross profit up 103% over the same time frame on gross margins of 57%: these would be impressive numbers for any business. They boast an operating profit, are net income positive, but swung to a slight cash flow negative position in the 6 months ending June 30, 2021 vs cash flow positive in 2020. This is a micro-float IPO, and the underwriter is EF Hutton, who has done a few IPOs that ran hard: notably AUVI back in August 2020, but more recently has been involved with an exclusive placement for DWAC, a private placement for KTTA, and exclusive placement for LGVN: all names that recently went on big runs.
I dunno, maybe I’m still a bit gun shy after getting wiped out by SIDU, but think this one might be worth at least a small play just for the fun of it. Will be watching the pre-debut indication to see if it gives any hint of being a runner.
It already priced at $4, not sure what would make this look interesting: maybe a debut price at like $7 that showed high demand, low allocations on WeBull, and small numbers in the pre-debut imbalance, but seems like this might be a tough market for a low float IPO to really blow up in.
Still, with no other notable IPOs on the immeidate horizon, this one may just be interesting enough to play if for no reason than to get the juices flowing again
( yeah, yeah, the good old “boredom trade’… c’mon it’ll be fun).

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Alright so, no clear winners out there, but will be watching and discussing them in real time in the r/IPOWarriors Reddit thread: so join us for all the action tomorrow.

Note: the information contained in this article is not financial advice, and I am not a financial advisor. This is just information to give you ideas so you can do your own research and make your own trading decisions. I will most likely be taking positions in some of the equities listed in this email. Previous success is not an indication of future performance. Trading stocks is risky, you can lose money. Good luck out there.


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