Eric Krull, IPOs and more. PreMarket Prep is the #1 go-to source for everything you need to know before the market opens! Join our expert hosts as they break down the latest market trends, analyze key indicators, and provide actionable insights to help you navigate the trading day ahead.
Category
🗞
NewsTranscript
00:00Let's talk about the IPO market.
00:04Kind of a quiet year so far.
00:07It has been.
00:08And in fact, the IPO market has been really
00:12soft since 2022, the beginning of 2022.
00:16The IPO market had a lot of IPOs in 2021.
00:20And as it's shown there in the slide on the left, you can see it had almost
00:24like a climax top in terms of both the dollars
00:27raised in the IPO market and the number of IPOs.
00:31There's 397 IPOs in 2021,
00:34and that doesn't include the 400 some odd SPACs
00:37that also ended up mostly being just terrible investments.
00:40And then you can see after 2021, when we had the bear market,
00:44how the IPO market got crushed, both in terms of the numbers of IPOs.
00:48It went down to 71, the lowest in like 10 to 12 years
00:52and the money raised through IPOs.
00:54It came up a little bit in 2023 last year,
00:57and it's rising slightly ahead of last year.
01:00You can see the slide on the right where I'm showing quarterly numbers.
01:04You can see the numbers of IPOs is flattened to slightly rising
01:09both in the number of IPOs and the dollars raised.
01:11So it's the frozen market is thawing a little bit, but it's still not great.
01:16We're not we're not in like everybody's excited yet mode.
01:20Yeah, you mentioned you mentioned the SPACs there.
01:23So that that that's something that worth mentioning.
01:27You think I mean, it hasn't hurt the banks, though, right?
01:29I mean, I don't know what percentages of, you know, the IPO market,
01:33you know, over the banks, if I some banks that dabble in there a little bit more.
01:37I guess things more more interested for the banks on the interest rate
01:42and the economic activity.
01:45OK, well, you have less.
01:48You think you might get some more liquidity, right?
01:52Because people want to get in on the new stuff.
01:54But that that doesn't seem to be the case.
01:56Exactly. You would think what there's less IPOs come out,
01:59but the better ones will be coming out.
02:01But we always look at the measure of how much the stocks trades
02:05in dollar volume per day.
02:07And normally and our past research showed that over a long period of time,
02:1228 percent of IPOs traded over 20 million dollars a day.
02:15And we call that the liquidity tell,
02:17because that also correlates well with the ones who do the best.
02:20And lately, since 2022 in January,
02:23only 13 percent of them trade over 20 million dollars a day.
02:26So we're getting a lot of the lower quality stocks coming out
02:30to the public market that the institutional investors
02:33just don't have the appetite to trade the ones that have come out.
02:37OK, all right.
02:38I mean, you want to you know, you want to see the volume.
02:41And that's another thing that you talked about with your life cycle.
02:43Maybe we can go with that at the end.
02:45You know, the volume spirits are the big boys making a commitment.
02:49You know, are the institutions after the initial surge?
02:53So, all right. Well, your top IPO is here.
02:56There's an interesting day.
02:58We got some good ones on there.
02:59Let's let's talk about them. Let's talk about them moving forward.
03:03Well, first, these are the only 18 that trade more than 20 million dollars
03:08a day and are up more than 20 percent since they debuted.
03:11So there's not a lot of them, obviously.
03:14So they're just the ones that have come out.
03:16There's very few acting well.
03:18It's always hard to do biotech.
03:19I don't really invest in biotech stocks.
03:21They're usually a story stock.
03:22They usually have no earnings.
03:24They have some sales.
03:26So I kind of ignore those.
03:29There's an interesting one, a number two.
03:30But please, no one go out there and buy this one.
03:32They have no sales and no earnings, but it's interesting to watch.
03:35It's nano nuclear.
03:36They have portable nuclear power plants
03:38that can be moved around on a semi trailer truck.
03:42It's a very interesting concept.
03:44It's one of those things where this could grow down the road.
03:47You can bring power someplace where they have major outages or start power
03:51in places that don't have any, like, say, Africa or you name it.
03:54It's an interesting company.
03:55Don't invest in it because I'm talking about it.
03:58But the ones I'm really watching are arm holdings.
04:00They're at number four, Kava at number seven.
04:03And I'm also watching.
04:06Let me get my thing straight.
04:08Reddit, which is down there, number 18.
04:12Wow. If you throw out the biotech one, right,
04:16and you throw maybe, did you ever talk to me about this nano energy
04:21or was there another another energy stock?
04:24There is a different one.
04:25The one the one I was talking about, I might have gone public
04:30be a spackle a while ago, but it's OK.
04:33That's not a dirty word.
04:34No, that's what the one I was about was EOSC.
04:36OK, OK, so I'm looking at this list of 18
04:41and then you take out the biotech, then how many?
04:45Like out of what?
04:47Well, out of how many do you have this?
04:50We were looking at in the last two and a half years, you're looking at.
04:55I think it was like 300 IPO.
04:57So there's just not that many doing well.
04:59But yeah, I mean, I was the ones on this list here.
05:02I'm watching Birkenstock, although it's come back a little bit
05:06and Birkenstock and also arm holdings.
05:08They're not new companies.
05:10You know, arm holdings was public before.
05:12Then it went private and it came back.
05:14Birkenstock has been around a long time, but I do find it interesting.
05:17This Viking Holdings, you know, they're the Viking River Cruise Company
05:21and also Gigacloud.
05:24They've had some pretty good moves.
05:26So those are the ones I'm really paying attention to.
05:29And if you flip this chart upside down, I'm going to go to your next chart.
05:32No, you don't have it.
05:33If you flip this upside down
05:36and you said the percentage loss from day one closing price
05:40going back the same time and the same volume parameters.
05:45How many stocks would you have in it?
05:47That's a great question.
05:48I'll have that for you the next time.
05:49I'll bet there's probably 50 to 75.
05:52It's a lot more.
05:55OK. All right.
05:55And then the final slide and then a B, I'm going to have a B
05:58and Dennis ask some questions here.
06:01This is what you got your eye on here.
06:03Cabagro restaurant.
06:05Talk to me about this charts.
06:06Caba, you can see it had that initial run up.
06:09We call it the IPO advanced phase and then it corrected and undercut
06:12the day one low, like 91 percent of all IPO stocks do.
06:16And then it formed this cup base and then it broke out.
06:19We call that breakout above that old IPO advanced phase high.
06:24The institutional advanced phase.
06:25Perfect marking there.
06:27And it's going on as an institutional advanced phase rise.
06:31That's the place you want to buy.
06:33It's been rising up until like the last two weeks.
06:36It's corrected pretty hard below the 50 day moving average in red,
06:40but it's holding in there pretty well.
06:41We'll see how it does today.
06:43Arm holdings.
06:45It really is still in the IPO advanced phase.
06:47And they had that little small cup base in the beginning.
06:50A few weeks ago, had the monster breakout, the monster correction
06:54that should have shaken out everybody, including me.
06:56And it did. But I got back in.
06:59And then it's had a great run from the 200 day moving average
07:02shown there in black.
07:03And it's it's corrected also like other chip stocks in the last two weeks.
07:06But it's helped.
07:07It seems to be right there at the 50 day moving average on yesterday's close.
07:10So that's a good sign.
07:12I say 50 day, but that's really the 10 week line on the weekly and then read it.
07:17It's still in its IPO advanced phase.
07:19It, too, is above its 10 week line.
07:21These all have the right kind of chart patterns I'm looking at.
07:25So are you are you waiting, you know, a pause to build the brace,
07:30build a base technically?
07:31What are you looking at here?
07:33Or you just kind of, you know, said, are you willing to nibble here at the 50
07:38and then, you know, nibble at the 200 if it gets there?
07:41How do you look at these technically?
07:43I read it. I'm especially waiting for a little bit of a pause,
07:45a little bit of a base.
07:46I like to see it firm up in terms of price stability.
07:49It's pretty volatile right now with its moves.
07:53Arm holdings, I'm actually in it.
07:55That one. And also in Cava, I'm also in that one.
07:58I bought those earlier and I have enough cushion that I can hold.
08:01Eric, I'm curious about, I mean, how do the expected rate cuts
08:04impact the IPO market?
08:06Do you think that will encourage more companies to go public?
08:10We recently, you know, heard about the Israeli cybersecurity company
08:14Wiz Bomb, you know, they they turned down Google's deal
08:18in in favor of going IPO.
08:20I feel like a couple of years ago, you get a twenty nine billion dollar
08:23bid for a company that's five years old.
08:25You take that now they're looking at IPO.
08:28I'm trying to think of some other one.
08:29I mean, the Skims, which is Kim Kardashian backed apparel company,
08:33is eyeing an IPO.
08:34I mean, do you think they're waiting for these rate cuts to come?
08:37I do think that's part of it.
08:38I think they're waiting for the market to get
08:41a little bit past this frothy stage on A.I.
08:44and then move more into like what's nice to see the idea of moving up.
08:48That means more companies, especially the smaller mid caps.
08:51And most IPOs are not big caps like Arm.
08:54Most of them are smaller.
08:55So I think when that starts to free up, I think that'll happen.
08:59But the other thing is there aren't many big names out there.
09:02Like how many companies can we think of?
09:04I mean, you mentioned Kim Kardashian's company.
09:06You mentioned Wiz.
09:07There aren't too many out there that people are just waiting for.
09:09You know, it's not like it's not like in the past where, gee,
09:12we're really waiting for Facebook.
09:14We're really waiting.
09:15We're waiting. Yeah, that's right.
09:17If you think about how many big name
09:20private companies of large capitalization are out there,
09:23they're just there's not that many.