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Suspicious IPO Setup on Watch – May 27, 2021

May 27th, 2021

I’ve just uncovered an IPO that has been filed but not yet priced, and no date has been announced for the debut. So we don’t know for sure if this is going to attempt to go live in ‘Stealth Mode’, but it has me excited, and I’ll be tracking this one for a possibly explosive debut.

Let’s first check out why this stock has raised my suspicion:

  • It’s a Chinese Company. What do they do? Education, but that’s not really the point. We’ve seen recent Chinese IPOs for Janitorial and Appliance services jump 900% (EJH), and others that are OEMs for cell phone manufacturing jump nearly 1000% (UTEM)… as well as an insurance company that went from $17 to $50 in a single halt (TIRX)…

  • Low float. The float on this one is 5M shares, which is consistent with many of these low-float stealth IPOs.

  • Priced at $4-5 per share. Also consistent with the stealth IPO profile.

  • Now, this one’s really important: The underwriter is Network 1 Financial Securities… the same company that provided underwriting for TIRX.

  • The filing for this Company was initially registered on May 7th, 2021. The same date as Singular Genomics (which debuted today)… for reference, other IPOs that debuted this week filed between May 3 – 7, including FLYW (May 3), DAWN (May 4), FIGS (May 5), OMIC (May 7).
    So given the timeline, we could expect to see this stock debut this week.
    NOTE: Fridays have been especially ripe for Stealth IPOs.

Ok, so I think I’ve strung this out long enough… the company I am looking at is

Golden Sun Education Group Ltd (GSUN)

There’s really no reason to go into what they do: they are a private education provider offering Spanish tutorial services in China. With one premium private school, three tutorial centers, one educational company that supports language studies for other schools, and a logistics company for schools. They are seeking to raise $28M through the IPO.
Their website is typical of these Chinese IPO companies: http://www.jtyjyjt.com/

Anyway, that’s not the point. The point is that it looks a lot like the other IPOs we’ve seen from random Chinese companies that have gone parabolic on the debut.

WARNING: SOME HAVE ALSO CRASHED.

Last week we saw JZXN crash from a debut of $45 with no reprieve for bag holders. And Network 1 has debuted other IPOs for education companies that have also flopped (HYW, CNEY, among others).

Then again, many of their IPOs have randomly spiked weeks or months after their IPOs… but that doesn’t mean I want to be stuck bag holding one of these.

Still, I’ll be keeping a sharp eye out for GSUN, and will provide updates to you all through this newsletter and on Twitter as I see further developments.

Stay tuned…

Note: none of this is financial advice… it’s for informational purposes only. Trading IPOs can be very risky. I am not a financial advisor, and as always, trade your own trade. Good luck!

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