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IPOWarriors IPO Preview for November 1 – November 5, 2021

November 2nd, 2021

We’ve got another full plate of IPOs this week, featuring a pair of Russian companies with strong numbers, a few names you’re probably more familiar with, and some low float debuts that are gonna get a lot of attention.

Ok, let’s take a look at this week’s IPOs:

LianBio (LIAN) – November 2, 2021 | 20.3M Shares
This one actually already debuted, and if you missed it, well, you’re a happy camper, as this one debuted at $15.50 and pretty much just went down and then down further, to a close at $13.75. It then resumed its downward trend on Day 2, and is currently at $13.39. If you’re looking for a really long term hold that doesn’t have much more room to fall, I’m not sure it’s there yet, but it’s certainly at quite a discount to its IPO price.

Allbirds (BIRD) – November 3, 2021 | 19M Shares
This company is well-known for its comfort shoes made of eco-friendly materials, and has decent revenue growth of 26% over the 6 mos ending June 30, 2021, and gross profit up 32% in the same time period, but has negative cash flow, operating losses, and negative net income. The real question is whether this will spark interest in the retail segment: does it get compared to CROX? That would be great. Or does it fall into the bag with other Direct-to-Consumer models that have not done well out of their IPOs (HNST, DTC, even WRBY took a while to recover from a post-IPO dip). If you do play this off the debut and get stuck on Day 1, a Day 2 recovery is feasible, and the partnership with Adidas could be a longer term catalyst on the horizon that might buoy the price back up in case you really get stuck bag holding. So perhaps not too much downside if the debut premium is limited, but I am not too excited about this one, and am looking for more high conviction debut plays in which to put my money this week (though I may change my mind come IPO time on this one).

Claros Mortgage Trust (CMTG) – November 3, 2021 | 7M Shares
Not gonna spend too much time on this one: this company focuses on financing transitional commercial real estate assets, which may be a good business, but this one falls in the category of regional banks and investment vehicles that generally trade in a pretty sideways range off the IPO debut, so for me it’s a pass.

Delimobil (DMOB) – November 3, 2021 | 20M Shares
This is a Russian ride-sharing and car rental platform that offers impressive growth numbers in the 6 mos ending June 30, 2021, but we’ve seen this time frame has been a bit misleading as it is comparing financials against the first 6 months of COVID lockdowns, which seems a bit too selective for any objective analysis. They are cash flow positive, and while net income and operating profits are negative, those metrics are also moving in the right direction. I simply haven’t had great luck on most foreign IPOs, as American retail traders seem to be unfamiliar with the brand names, and until they prove themselves with some positive earnings reports, often get ignored in the market. I’ll watch this one, and if it does perform well off the debut, may get into another Russian IPO we have on slate later in the week.

NerdWallet (NRDS) – November 4, 2021 | 7.25M Shares
A name many are familiar with due to their aggressive approach to dominating search results for keywords generally associated with financial services, this company does offer a bit of brand name recognition, but is ultimately heavily dependent on competing in Google’s search results for revenue. Essentially, they are content company, and they’ve done an impressive job in turning an essentially non-technical web advertising platform into a highly valued, and soon-to-be public company. They posted some impressive growth numbers in the 9 mos ending September 30, 2021: with revenue up 48% and gross profits up 50% on gross margins of 92%: however, they swung from positive to negative in cash flow, net income, and operating profit in 2021. I’m a little concerned that their debut will mimic that of OB, which has performed pretty poorly since the IPO.

Evotec (EVO) – November 4, 2021 | 22M Shares
This is a 25 year old German drug discovery platform with modest growth numbers that I’m not too excited about: in the 6 mos ending June 30, 2021 revenue is up 17.5% and gross profits are up 6%. Beyond that, other drug discovery platforms have not done all that well off their IPOs, such as ABCL, so I’m not gonna try to catch this one.

Arhaus (ARHS) – November 4, 2021 | 22.9M Shares
An omni-channel luxury/premium furniture retailer with impressive growth numbers and solid financials: this one could get comps to W, which was one of the darlings of the lockdown trading frenzy, so this one could be interesting. With growth numbers in the 6 mos ending June 30, 2021 of +58% on revenue, and +75% on gross profits, we see numbers that might actually be a good sign that growth has continued out of lock down. With positive cash flow, net income, and operating profit, this one is a company that would potentially even make a decent long term hold should the IPO debut fail to deliver an immediate pop.

Mainz Biomed (MYNZ) – November 4, 2021 | 2M Shares
This is perhaps the pick of the week – given the ultra-low float and the fact that the underwriter is Boustead Securities: a firm that has regularly delivered high-flying debut trades… and this company actually appears to have a solid business model. MYNZ is a German cancer diagnostics company that uses molecular genetics to test for a range of conditions including colon cancer and in-vitro diagnostics. With a device already approved in the EU for colon screening, which they are ready to bring to America for the FDA approval process, this company is in a strong position to deliver near-term catalysts that should push the stock higher in case it fails to perform on the debut. Given the early buzz on social networks around this IPO, my only concern is that the debut price gets inflated beyond a sustainable level above the $4-6 expected IPO price range, so I will likely approach it as follows:
IF the debut price is above $8, THEN buy a half position on the debut, and double down if we get a downward move from the debut
IF the debut price is below $8, THEN buy a full position on the debut
My guess is that we see multiple halts out of the gate, in which case, I’ll be selling out of my position in lots starting with the second halt: three halts and I’ll likely be totally out, but might save a little for the possibility of a continued run.
If we don’t see halts, I’ll be expecting at least one halt up later in the day, and will take profits out of that halt if it comes to that scenario.
If you’re trading this in an account that has early pre-market trading hours, consider holding a partial position to sell in the opening pre-market trading hours of Day 2.

Cadre (CDRE) – November 4, 2021 | 5.7M Shares
This 55-year-old company is a major provider of emergency equipment for first responders, and the IPO was rescheduled from August 2021 and downsized from 7.15M shares to a relatively low float of just 5.7M shares. Provided we get a reasonable debut price, I like this one for a quick debut scalp, which may take a little more time for day traders to pick up on, but more likely to give an opportunity for a modest profit than to tank.

MDxHealth (MDXH) – November 4, 2021 | 3.77M Shares
On the surface, this is a low-float IPO, and likely to attract some day-traders. But upon further investigation, it’s an uplisting from the Belgian exchange for a prostate cancer diagnostics system. Sounds really similar to MYNZ, but the lead underwriter is Piper Sandler, and they just don’t have the same track record of skyrocketing IPOs as Boustead does. So given that these are scheduled for the same day, and this one is an uplisting, I prefer to focus on MYNZ. Oh yeah, and in the 6 mos ending June 30, 2021 revenue is only up 8% and gross profits are up 11%… in case anyone cares.

Desert Peak Minerals (DPM) – November 5, 2021 | 10M Shares
This company holds royalty interests on oil and natural gas leases in the Permian Basin, and has generated revenue growth +85% in the 6 mos ending June 30, 2021, with net income up to $9.5M from a loss of $12.2M … so the numbers aren’t bad, but I’m not sure this one gets much retail interest. AND, it’s a Friday play, so I’m gonna pass on the prospect of having to try to carefully manage a slow moving IPO for a dollar win and take a look at some of the other IPOs on Friday’s lineup.

Cian (CIAN) – November 5, 2021 |18.2M Shares
Here we have the next Russian debut of the week: a real estate platform with comps to Z, and despite strong growth numbers including revenue +65% in the 6 mos ending June 30, 2021, has negative cash flow and operating losses. For somewhat unrelated reasons, Z tanked hard today on poor earnings compounded with punishment for an ill-directed attempt to automate the buying and selling of houses, so I’m not sure the market wants to buy a Russian version of this, even if the business models are not exact matches. For the same reasons I’m gonna pass on DMOB, I don’t see myself wanting to jump into this one.

Nuvectis Pharma (NVCT) – November 5, 2021 | 2.3M Shares
Ovarian cancer treatments: I usually have a no-touch policy on pre-clinical biotech, but in this market when the underwriter has delivered some interesting low-float debuts (this time we’re talking about ThinkEquity), and the float is just 2.3M shares, it deserves consideration. My decision on whether or not to play this off the debut will come down to how much social media buzz we hear on the days leading up to the IPO. If there’s not much buzz, maybe I’ll wait and see if I can catch a dip before the trading groups start pumping this one. And I would caution against trying to catch a Day 2 early pre-market spike simply because it’s a Friday IPO that might get forgotten by the time Monday morning rolls around.

IO Biotech (IOBT) – Unscheduled 6.5M Shares
This Danish biotech company IPO just showed up on my radar, and I haven’t done much research yet, but they claim to be developing disruptive immuno-oncology therapies based on their proprietary platform. They’re in clinical stage, and the float is not quite low enough to be a target for low-float IPOs, so I’m gonna follow my ‘no-biotech’ rule on this one, and if I miss a winner, oh well: gonna stick to what I know.

The Real Good Food Company (RGF) – Unscheduled |5.3M Shares
This company makes healthy food alternatives to comfort foods, but it’s an uplisting from OTCQB (VRYYF), so I’m not sure if the hype around the move to the NASDAQ has already been priced in: we often see these drop once trading starts, and I just don’t know if the hype will drive retail interest on this one. Will be interesting to watch, but come Friday, I’ve got to be pretty excited about a debut to maintain focus, and more likely to err on the side of caution, so this one is likely a pass.

FlexEnergy Green Solutions (FLXE) – Unscheduled | 3.88M Shares
Low float, and green-energy? Kind of sounds interesting, but this producer of gas turbines and heat exchangers for alternative energy is posting financials that are about as bad as I’ve ever seen in an S-1, so I’m not sure even a low float makes it worth trying to game this one. Revenue is down 20% in the 6 mos ending June 30, 2021 with gross profits down 55% during the same period. Oh, and the underwriter is Roth Capital, and for some reason, the market has been giving their IPOs the cold shoulder ever since I’ve been covering IPOs, so I’m not too eager to take the chance on this one being an exception to the rule. No thanks.

KidPick (PIK) – Unscheduled | 1.6M Shares
This one kind of snuck onto the IPO schedule, and appears to be a family run ecommerce business that sells children’s clothing on a subscription basis. Their growth numbers aren’t bad, with revenue up 70% over the 26 weeks ending July 2, 2021 and gross profits up 76% over the same period (but it is a bit odd that they’ve calculated growth on a period of 26 weeks and not the standard 6 mos). Baseline financials are negative across cash flow, net income, and operating profits, and the numbers are more indicative of a small business than a public company: as a footnote, the CEO’s son is the VP, COO, CTO, and Secretary. So, I don’t know, maybe a low float play: the underwriter is EF Hutton, and they’ve had a few low floaters that ran up enough to make this potentially interesting, but don’t get yourself stuck in this one. Volume is likely to disappear if it shows up at all, so tread lightly on any play in this relatively unknown ticker.

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Ok, so that wraps up the review for this week. Good luck out there.

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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