Recap of IPO Trading for June 28 – July 2, 2021

July 4th, 2021

Wow, that was an insane week, with over 20 IPOs, we’ve got a lot to review in terms of win opportunities and what we learned from IPOs that were best avoided… Let’s jump in!

Dingdong Maicai (DDL)
Just like MF the week before, DDL performed dismally on it’s Day 1 debut, opening at $28.20 and after an initial dive and recovery, trailed off to a bottom at $22.70. However, bag holders were rewarded with a stunning Day 2 rally up to a high of $45.98 !!! Starting to see a bit of a trend here where low-float debuts that tank have some pent up firepower to deploy on Day 2, and if that spark catches fire, the results can be explosive. Bottom feeding hard dips on Day 1 plays is something to watch.

Xometry (XMTR)
Debuted at $66.55 and the low float plus social media buzz around this stock sent it on a rocket ride up to a Day 1 peak at $97.57, making it one of the strongest plays of the non-Stealth variety this week. Day 2 however, gave back all of the gains of the day before, to close at $65.23. If you held past a 100% debut + a 50% runup off the debut, you were greedy: always bear in mind the IPO Price / Debut Price / Current price relative values when considering your exit from a short-term play, and make sure you lock in profits when you’re up.

SentinelOne (S)
Debuted at what seemed like a reasonable premium at $46, but the market’s concerns about the total valuation, combined with a large float of 35M shares caused S to trade downward for the first two days, closing Day 2 at $40.04, before a Day 3 rebound back to $44.00 – $45.00. Given the overall strength of cybersecurity firms in today’s market, I would encourage bag holders (like myself) to stay in this one for a bit. But as for a day-trade, I’m going to be exceedingly cautious on any IPOs with floats that exceed 30M shares going forward, unless there is significant brand-name recognition to propel sufficient demand.

Intapp (INTA)
What appeared to be just a common SaaS play on the surface, provided a substantial win on the debut, as it initiated public trading at $25.25 and raced up to a top at $30.00 before settling into the $27 range for the rest of the day. A brief upwards move to $28.50 in the power hour gave any holdouts a chance to sell out at a nice little profit, but any hopes for a Day 2 run went unfulfilled, though the stock is still priced above debut for anyone who help out for further upside and is ready to get out for a win.

LegalZoom (LZ)
Got off to a bit of sleepy yet profitable start, with a debut at $36.75 and a peak at $38.68 followed by bounces between $37 and a high of $38.79 for Day 1. This was one that I expected the market to take a few days to appreciate, and it has finally made a run above $40 on Day 3. I decided to sell out on Day 2 at breakeven in order to jump into one of the two Stealth-IPO plays this week (VRAR) and am happy for the win I took there, but feel that my hypothesis on LZ was solid, and that this one could continue to offer higher exit points in the immediate future. Something to keep in mind for crowded weeks IPO weeks however, is that tying to play as many as possible kind of over-extended my energy and spending power, which may have been better concentrated on a few focused sure-fire winners. Oh well, still a banner week, which just goes to show that even in the best weeks, there will always be money left on the table.

Debuted at $26.25 and offered an initial run up to $27.98 before reversing as far as $25, then countering through an extended bullish flag to a high of $28.97 for the day. Sort of a tricky one to play, and given all the other action of the day, probably better to avoid any biotechs. Volume and demand dried up as usual on Day 2 and even more so on Day 3, so if you do play biotechs, don’t expect sustained retail interest, and take profits on Day 1 (VERV aside).

Clear Secure (YOU)
I ended up staying out of this one, despite having a suspicion that brand recognition and the idea that it’s a ‘reopening trade’ would drive demand. YOU exceeded my expectations by a long shot, debuting at $38.66 and climbing to a high of $44.73 on Day 1. Given my lack of conviction in the play, there’s no way I would have held through the run up to $53.97 on Day 2, but for those who saw the hype on this one and held in the trade, congratulations, you made a decent killing.

Integral Ad Science (IAS)
Gonna have to come back to the drawing board and stick to brand-recognition, as well as confirm the float numbers on the toss-up names like IAS: this one did not live up to my expectations. It debuted at $22, and dropped hard to $18.11 before rebounding to $21.80 at the close without offering any opportunity for a win. Since then, it’s continued to trail off to around $19, and the free float ballooned from an IPO offering of just 15M shares to a current float of 53.22M shares. This appears to be a solid company with growth and profits, so I’m willing to stick with this one and give it a chance to turn around. But unrecognized brands with somewhat confusing monikers might be worth passing on in the future (took this lesson into my decision to pass on EVCM).

Krispy Kreme (DNUT)
DNUT delivered as expected, with as much hype and brand recognition as you could ask for, along with a reduced IPO price that was gift-wrapped for retail investors. This one debuted below the IPO price at $16.30 and ran upwards to a peak of $21.75 in the initial minutes of after-hours trading. Seems the day traders who piled into this took profits on the morning of Day 2, as it has since slid to the $18.50 range and continues to head downwards into the weekend close. Still, this was as easy a play as you could ask for (to be honest though, I got an IPO allocation from Etrade, so I sat this out. DIDI and DNUT were my first IPO allocations I have ever been granted from ETrade, and I’m still coming to terms with how I will trade these opportunities in the future ( I’m supposed to hold them for 30 days). I have also been considering the ethos of other IPO traders who censor themselves from commenting on IPOs where they receive allocations: as it could be construed as ‘pumping’ the stock… might stick to this rule myself, or given the relatively low number of shares I get allocated anyway, just stop requesting any allocations at all.)

DiDi Chuxing (DIDI)
Note: I also got an allocation on DIDI from Etrade, and otherwise was not going to trade this one anyway due to the high float that was upped to 317M shares prior to the debut. As expected, this one tanked off the $18 opening to reach as low as the IPO price of $14.01. Biggest lesson over the past couple weeks has been that a high float makes it almost impossible for a stock to run off the debut.

Aerovate Therapeutics (AVTE)
There was basically no reason to think this biotech would run, and showed why I generally stay out of biotechs altogether. It debuted at $28, dropped to $23, and after a brief recovery attempt, faded out to a close around $23… it has traded downward from there (bottomed at $17.60 on Friday). Bullet dodged.

Acument Pharmaceuticals (ABOS)
Another biotech to avoid: debuted at $25.07 and dropped from there.. bottomed at $16.93 on Day 2. Unless you have a very strong, compelling reason to believe otherwise, stay away from standard biotech debuts, they rarely make it worth the risk.

D-Market Electronic Services & Trading (HEPS)
Did better than expected, given the high float and ‘Amazon of {country}’ designation, HEPS opened at $13.05 and traded relatively sideways for most of Day 1, before running up to $14.76 on Day 2. Nothing too exciting, but if you did play this and held into Day 2, you were rewarded with some small profits.

EverCommerce (EVCM) – July 1, 2021 | 19M Shares
After the IAS dud, EVCM didn’t look like it was catching much interest from the retail crowd on social media, despite strong financials and a reasonably priced IPO. This one debuted at $20 and has steadily dropped from there, bottoming on Day 1 at $16.24 and barcoded at $17.00 through most of Day 2 before offering a brief spike to $18.50 before reverting to the $17 level at the close
This could eventually recover, but I’m glad I avoided this one. Definitely will focus my attention on fewer, more prominent names going forward. The market doesn’t seem that interested in solid business fundamentals right now: retail traders want sexy buzz words and brand name recognition. Might miss some like INTA, but that’s ok.

Torrid Holdings (CURV)
The media ended up picking up on this one throughout the week, and with a low float of just 8M shares (upped to 11M), I had a suspicion similar to what I had with YOU that this one could be a solid play, but was too busy playing the Stealth IPOs and otherwise had funds tied up in S and IAS. Unfortunate, as CURV debuted at $23.50 and after a brief dip down to $22.25, ran up to $25.82 before selling into the $24-25 for the rest of Day 1. Day 2 caught an overnight media cycle, which propelled CURV up as high as $27.66 with room to run from it’s current range in the $26 – $27 zone. Not the most exciting play of the week, but better than some of the other positions I’m holding.

Pop Culture (CPOP)
This one went out as a Stealth IPO Alert to the newsletter group mid-week, and I sincerely hope you opened that email and read it carefully. As long as you bought in at the debut price of $12.26, you had to have made a killing. This is one of those rare Stealth IPOs that I have talked about again and again: that just ran and ran, however, you’d be wise to take profits on the initial run up, as many of these do not make the kind of sustained liftoff that we saw on CPOP.

To recap, CPOP debuted at $12.26 and immediately halted up through a series of halts to an initial top at $33.92, before settling into a range of $22-26 throughout the remainder of the day. Those who took the risk and held through to Day 2 were gifted with an insane run up to $78 — and wait, that’s not all folks, Day 3 saw a further run up to $94.86 in the early pre-market (only good for WeBull traders)… it has since traded down to $51.73.

I want to review the strategy for this kind of trade a little further, as some may be tempted to the let the next low-float ‘Stealth IPO’ run in hopes of Day 2 and 3 ultimate profits. My observation is that is it generally not optimal to take your full position for a multi-day ride. The majority of these plays do not sustain their runs pas Day 1, and all of them eventually return to prices close to or below their debut price. So if you do want to let a portion of your position ride for the multi-day run, fine. But be sure to lock in the majority of your profits on the initial spike. In this case, you could rather easily have covered your initial investment on the initial upwards halts, and then let the rest ride if you’re so inclined.

The Glimpse Group (VRAR)
Another stealthy, ultra-low-float IPO that delivered explosive gains with a debut price of $11.75 and immediate consecutive upward halts: the wise trader exited the majority of their position after the second halt at $15 for a substantial win on a high-conviction play that netted a 28% gain in the course of 21 minutes of trading. The high conviction I had in this setup allowed me to put in a large order, of which I exited 80% out of the second halt, and let the rest ride to the end of the day, taking full profits at $17 for a bit of a bonus. Those expecting a Day 2 run were, for the most part, disappointed: though the charts show that it did spike briefly to $19.25 in early pre-market, that was on a volume of just 2,107 shares, so it’s not a realistic measure of a ‘woulda/coulda/shoulda’ trade.
It seems to me that the multi-day, low-float, stealth runners have a few things in common: they are Chinese companies, and their underwriters are Network 1 Financial or Boustead.
Keep an eye out for MITQ next week, it’s a low-float Boustead IPO that on the surface seems pretty uninteresting (home cinemas). Perfect setup for a Stealth runner.. or a stealth bomber. Will have more on Monday or Tuesday next week.

And before I forget: Please consider a donation to my whiskey fund:

I actually don’t get paid for this, other than the profits I take on the trades I’m sharing with you, and while it does feel good to help you all make some money on these trades, it also feels good to be appreciated for the hours of work I put into collecting this information and sharing it with all of you.

My wife doesn’t approve of me spending my normal salary on whiskey, but allows me to indulge with whatever proceeds are donated from the IPO Warriors trading community…

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NOTE: This is not financial advice. I am not a financial advisor. I do like to share this information and if you enjoy reading it, make of it what you will and I sincerely hope you are able to use what I’ve shared with you to profit from trades that you yourself make and for which you are 100% responsible. And I definitely have some positions in some of the equities mentioned here, and might buy more or sell out of them within the next 72 hours or anytime thereafter.


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