Thanks again to everyone (all 10 of you) who contributed to the IPOWarriors Streaming gear campaign: we reached the $2,000 goal in just 1 week!
It’s not too late to add contributions, as I have identified some additional needs that would help me in video production (like, some video editing software):
To be honest, last week was a bit exhausting… so many IPOs; ranging from blockbusters to random low-float plays. Many win opportunities, and some doozieys as well. While this week doesn’t present any obvious blockbuster IPOs, there are some interesting debuts on the calendar that present potential plays. Let’s take a look:
Sono Group (SEV) – 11/17/2021 | 10M Shares
If I were to pick three buzzwords for the current market, I would pick “solar”, “EVs” and “Crypto”… well, this company produces a proprietary solar coating for electric vehicles: now if the car could mine crypto with the excess energy, we’d have a trifecta, but we’ll have to settle for 2 out of 3. Given the performance of the Rivian IPO, along with the rising tide that seems to be lifting all EV stocks not named “TSLA” (which is reversing for reasons that can best be explained as its CEO having to pay taxes), SEV seems like it should get adequate market attention. While they are pre-revenue, they claim to have $50M in customer deposits for their in-house developed ‘Sion’ vehicle, and plan to license their technology to other EV manufacturers. The float is relatively small, and there’s already chatter on the social networks. I don’t recommend buying a long term position off the debut, but worth taking a short term play on the debut given the potent buzzwords.
Iris Energy (IREN) – 11/17/2021 | 8.2M Shares
Here we have another bitcoin miner, with ridiculously impressive grown numbers: revenue is up 736% in the 3 months ending September 30, 2021, and gross profit is up 1,208% in the same time frame. Then again, the price of BTCUSD is up roughly 500% in that same period, so we’re not really able to compare those metrics on the underlying strength of their mining capabilities. They have achieved positive cash flow and operating profit, and they intend on using a portion of the IPO money to buy more hardware. So if you think bitcoin will continue to increase in value, or if you just recognize the demand for bitcoin mining companies, then this is a pretty attractive IPO. Especially if Bitcoin continues its current upward trajectory throughout the week, this is an IPO that is likely going to get attention and worth playing off the debut.
User Testing (USER) – 11/17/2021 | 14M Shares
This company provides a platform for companies to test user engagement processes, and boasts revenue growth +44% in the 9 months ending September 30, 2021 and gross profits up +51.5% over the same period, with gross margins at a health 74%. However, they have negative cash flow, operating losses, and negative net income. Beyond that, there is a somewhat unusual clause hidden in the S-1 that allows them to sell an additional 27M shares in roughly February if the share price holds at 10% above the IPO price for at least 10 days – some other stipulations in there too, but the bottom line is there is a reasonable chance that the float will more than double prior to a normal 180 lockup period, and these types of features spook me when it comes to IPO debuts. Anyone who traded CPNG off the debut will recall the free fall that ensued, only to later realize that hidden in the S-1 filings were provisions that allowed for a massive early lockup expiration with in 5 days if the stock traded above a certain threshold that was met upon debut. Be forewarned.
Braze (BRZE) – 11/17/2021 | 8M Shares
Interestingly, this is another customer engagement platform with slightly better growth numbers but also carries negative stats across its baseline financials. Revenue is up 52.6% in the 6 months ending July 31, 2021 and gross profit is up 60% in the same period.Gross margin is slightly lower than USER, at 67%. This one is getting comparisons to WEAV, which stumbled in it’s IPO last week, though has since made a recovery, but the valuation here is higher, and its client list boasts larger corporate clients including Etsy, HBO, Dominoes Pizza, and Intuit. If I had to chose between USER and BRZE, I’d probably lean towards BRZE. I’m not quite sure about this one, but given how some of last week’s tech IPOs performed (EXFY and BLZE), I’ll give it some consideration and see where it debuts.
Sweetgreen (SG) – 11/18/2021 | 12.5M Shares
This is ‘plant-forward’ restaurant chain that has just purchased a Spyce: a company that produces a robotic-kitchen platform. So… having missed the runs on BROS and PTLO, and given the relatively decent performance of FWRG: all regional food and beverage chains, I’m leaning towards buying SG on the debut in hopes that it can follow suit. I’m not yet convinced that it has the same avid following as the others, but if FWRG can at least provide an upward move from its debut, then I like SG.
As for the financials, it has been rebounding out of COVID with momentum, and revenue is up +50% in the 39 weeks ending September 26, 2021 while gross profits are up +89% over the same period with gross margins at 40%. But unlike some of the other chains we’ve seen go on massive runs, this one posts negative cash flow, net income, and operating losses. So while it’s not quite coming to the plate with as much buzz as BROS or PTLO, I feel it has more going for it than FWRG, so I’ll likely be taking an order of SG on the debut.
KinderCare Learning (KLC) – 11/18/2021 | 25.7M Shares
This company operates nearly 1,500 children’s education centers in America, with just shy of 200k kids in its programs ranging from as young as 6 weeks old up to 12 year olds. They are gaining momentum as the country opens up from COVID, and parents need a place to keep their young children while they return to work. Revenue is up +35% in the 9 months ending October 2, 2021, and gross profits are up +134% in that time period. Note: these numbers are compared to peak lockdown eras, so should be taken with a grain of salt. But they do post positive cash flow, net income, and operating profit: so the company is pretty solid. The float is on the higher side, and I’m not sure there will be much retail excitement over this name, so I’ll probably pass.
Austin Gold (AUST) – 11/19/2021 | 3M Shares
Friday brings us the expected odd lot of low-float debuts that have at times delivered nice small win opportunities: but were, for the most part, complete failures that never caught any momentum. This one is a gold prospecting company based out of Vancouver with claims in Nevada. Their website is laughably bad, with no updated information, and some pages showing error messages. Interestingly, the CEO just sold his previous gold mining company, Pretium Resources, for $2.8B at a significant premium for shareholders, so this does look somewhat legitimate. On the downside, the market has not been too friendly to Roth Capital IPOs, so I’m not sure this will get much immediate retail demand. 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.
Snow Lake Resources (LITM) – 11/19/2021 | 2.85M Shares
Another mining company with a low float, this Lithium Miner is also pre-revenue at this point, but may be more interesting than AUST for the simple reasons that ThinkEquity is the underwriter, along with there being generally more interest in anything EV-related (Lithium is used for producing EV batteries), and the float is slightly lower. If I had to pick one, I guess I’d go with the one that has an EV angle, and if I’m not too tied up on Friday, may give this one a try with a token play just… well, to avoid the boredom of not having any other IPOs to play (generally a terrible reason to buy an IPO debut, but there are some reasons to see potential in this trade).
We’ll see if any other IPOs sneak onto the calendar mid-week, and if there are enough to warrant attention, I’ll send out a mid-week update.
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.