IPO Could Change Sentiment
In the late fall, online video company Hulu will undergo an initial public offering. While the underwriters are currently unknown, the company is looking to raise roughly $2billion. This offering could potentially be the hottest of the year. In 2009 the company did more than $100million in revenue and most industry people are expecting Hulu to easily generate more in 2010.
Hulu offers a subscription service for $9.99 a month. The service allows subscribers to watch old and new TV shows via internet devices. No matter what, this IPO should create a buzz, not only with the trading community, but with novice investors as well. This type of aftermarket interest propelled Tesla Motors (NASDAQ:TSLA) to lofty highs when it went public.
On the less positive side, industry experts like Rupert Murdoch have often been negative on free internet content. Still this deal should remain hot and potentially be the catalyst for some mediocre IPO’s to suddenly become hot. Penny stock newsletters will probably also join in on the story.
This should bode well for the penny stock market as well. Many OTCBB companies have tried to associate themselves with either Apple Computer (NASDAQ:AAPL) or Google (NASDAQ:GOOG). Surely some potentially hot penny stock will try to capitalize on this new market.
The key is finding the right microcap stock that will trade up in anticipation of the Hulu IPO. This is the hard part. We will be researching this subject and if it makes sense, a company will be highlighted. So stay tuned. Also, due your own research as well. Keep in mind there are many penny stocks that slip under the radar and some of those can provide massive gains if you buy them right. So do your homework and be prepared.
IPO Preview
Will the FOMC Meeting Weigh on MDMD and RP?
Last Week $885 million was raised in the IPO market. Although most of the deals reduced their offering price, the capital raised still remains substantial. Today, the market started up due to market strength in Europe. The problems at Hewlett-Packard (NYSE:HPQ) didn’t even send the market red for long this morning. However, this week’s FOMC meeting may loom large for upcoming IPO’s.
This week, Web Media Solutions company Media Mind Technologies (NASDAQ:MDMD) and RealPage (NASDAQ:RP) are slated to trade, and seem to be shaping up to look like flagship deals. Unless of course, the market doesn’t like what comes out of the FOMC meeting. As usual the market should see penny stocks volatile coming out of the meeting.
Barring a disaster though, MediaMind Technologies should trade at decent premium according to some IPO services. RealPage should do even a little better, despite the fact that 7.5 million shares from shareholders are being sold into the offering.
Other deals that look decent are DLC Realty Trust (NYSE:DLC) and the secondary offering of Molina Health (NYSE:MOH), despite the fact that their earnings were shaky. Generally the end of August is light for the IPO calendar, due to the labor day holiday. This will make the calendar look very heay for the next two weeks.
Many of you know that there are too many penny stock newsletters to count. There are also several IPO services that offer early reads on deals. They base their ratings on many factors, but none of these predictions will hold their mud if we see bad news out of the FOMC. On the other hand, good FOMC news could take the hotter IPO’s far beyond previous upside expectations. The beauty of investing is that we never know.
While IPO’s are volatile they are somewhat less risky than investing in hot penny stocks. A main difference is that IPO’s are more subject to market news and volatility in the large cap space. This is why you need to be prepared to perhaps buy quality IPO’s in the aftermarket that have only gone down in price due to the broader markets falling.
While a winning trade in an IPO often offers a smaller return than one in an explosive penny stock, you have to consider the risk factor. This week could provide investors a chance for 20-30% in some offerings and potentially more over the long term, if some of these names trade lower due to fear. Once again, compile your symbols and be ready. We will have more blogs and penny stock alerts this week.
Green Dot IPO News
Last week we saw two Smart Technologies (NASDAQ:SMT) and Qlik Technologies (NASDAQ:QLIK) trade at first day premiums. While QLIK held it’s gain and traded even higher during the next trading session, SMT plummeted and hasn’t traded back to it’s issue price of $17. These recent results are just another example of how unpredictable the IPO listings have been lately. Some IPO investors will sell a new issue once it breaks it’s issue price, figuring the stock is broken on a short term basis. These sell orders often have a ripple effect and trigger stop loss orders which often bring a stock down to the point where it becomes oversold. Other IPO investors will step in and buy shares when this happens. They are looking for a quick retracement to the issue price. In some ways the tape action is similar to trading hot penny stocks. Many penny stocks that have been beaten up are often flipped by traders who forsake the potential of huge gains for frequent, fast, small profits. It’s a game that’s generally played by experienced investors and may be played again this week with Green Dot (NASDAQ:GDOT).
Green Dot is based in Monrovia, California and was founded in 1999. The company is a provider of prepaid MasterCard and Visa debit cards. As of the entry there is a lot of interest in this IPO. The offering size has been increased and most IPO services are anticipating a premium of 1-2 points. Green Dot also has corporate partnerships with companies like Walmart and Kmart. Walmart also happens to own 2 million shares of GDOT. Another big investor in Green Dot is Sequioa Capital which owns a 31.9% stake.
The fundamentals of Green Dot are better than most IPO’s. As of 3/31/2010, they earned $4.4 million on $92.8 in revenues. Now here’s the unpredictable part. The Green Dot IPO is a private equity deal and the shares offered are all from selling shareholders. Recently the street has not been too kind to these offerings. However, sentiment can change. This is just another example of why investors need to do research. The selling shareholders might be a non-event, but it doesn’t hurt to have this knowledge as an arrow in your quiver. Like penny stocks, finding information on IPO’s is sometimes difficult. So try to find out what you can before you invest or trade. It could be the difference between a massive gain or a loss.
IPO News
Once again, IPO listings failed to follow through. The Canadian based company Smart Technologies (NASDAQ: SMT) was priced at $17 per share, which was at the midpoint of it’s range. The interactive whiteboard maker also happened to be the largest NASDAQ IPO of the year, and was anticipated by some to possibly to trade at a 2 dollar premium. Well, buyers were disappointed again. Smart Technologies was the latest IPO to trade at a smaller premium, and as of the entry, is trading below issue price. What does this tell you when a company that expecting 680 million in revenue and was seeded by Intel trades lower ? It tells us that this summer hasn’t been great for speculation. Imagine how a company with Smart Technologies‘ story would have traded back in the late 1990′s.
As we have said in prior blogs, the speculative money has been on the sidelines. These summer doldrums have led to very few hot penny stock success stories. While most expect OTCBB and NYSE volume to lighten up in the summer, the concern is when that volume comes back. So be selective with your speculative microcap selections. Watch for quality IPO‘s that are trading at discounts to their issue prices. Look at large cap stocks that are trading at low P/E multiples and form you penny stocks lists. The is value in every market and eventually sentiment will turn. Just don’t run out of bullets before it does.
Dog Days of Summer for IPO Market ?
Many of you know, from previous entries that the Tesla IPO (NASDAQ:TSLA) was a wild ride and offered huge gains to many who bought in the aftermarket. However, this week is no different from years past. Using the word slow is an understatement. Consequently, Fortune Bank IPO (NASDAQ:FBBC) is the only new issue scheduled to trade this week. The outlook for the deal is a mild premium and in no way can be confused with Tesla Motors Inc which provided many with the volatility and excitement that you can find in penny stocks. Next week will be a little more active with three deals scheduled to price. Business software company, Qlik Technologies IPO (NASDAQ:QLIK) is thought by some to trade at a decent premium. Real ID (NYSE:RLD) is also expected to trade at a nice premium.
The remaining IPO on the syndicate calendar is the Canadian company Smart Technologies IPO (NASDAQ:SMT) which IPO services say may trade at a small premium. Keep in mind that Tesla traded higher on a big down day in the market. While you never know how new issues will trade, quality offering can still trade at premiums in bad markets. The best thing to do is form a list and be prepared. It doesn’t matter whether your investing in an IPO list or a penny. Being prepared to act is the key. Remember there is an Tesla aftermarket buyer who was filled @ 17.54. That buyer had the opportunity to sell the stock over $30 the next day. Now that is a massive gain! I think it’s safe to say that some of those Tesla aftermarket buyers did their homework. IPO’s and penny stocks can offer huge gains and we are always looking for the next huge winner.
Tesla IPO and Its Wild Ride
Going into the long weekend, it seems that shares of Tesla (NASDAQ:TSLA) have come back to earth. IPO shares of TSLA were priced at $17 and surged to 30.42 on it’s second day of trading. A massive gain considering that traders had time to buy aftermarket shares under $18. Was a lesson learned here for investors who paid more than $25 ? Yes, I think so.
TSLA is a company that has a great CEO, a cutting edge product and has never had problems raising money despite being unprofitable. However, the saying “What goes up must come down” came into play on TSLA. It’s probably safe to say that some of the aftermarket buying came from buyers who have a legitimate long term perspective. These are investors who are investing with a horizon so long that makes paying a point or two higher almost irrelevant. But what was the short term trader thinking at $30 a share ? Buying TLSA for a short term after it’s huge run is a classic example of why it’s sometimes better to sit on your hands. While the company has tremendous potential, the market mechanics remain the same.
It doesn’t matter if it’s a blue chip on the NYSE, a mid-cap or an OTCBB issue. Smart traders will always take profits. The lesson learned here is not to chase stocks that have made huge moves in short time frames. Looking at charts and decreasing volume at the highs is key. This applies not only to TSLA, but to hot penny stocks too that are on the move.
Tesla Motors and the Electric Car Company
The much anticipated Tesla Motors IPO will begin trading on Tuesday. Goldman Sachs, Morgan Stanley, JP Morgan and Deutsche Bank are the lead underwriters. The offering has also increased in size due to demand for the shares. However, Tesla is the classic concept stock and has never turned a profit. Does that matter ? Probably not.
Generally concept stocks due exceptionally well in good markets, but tend to get destroyed in bear markets. For instance the solar stocks went down faster than the broader markets in the 2009 crash due to a constant lack of earning visibility and their concept status. In Tesla’s case, the shares are oversubscribed according to some IPO services and may trade at a 1 or 2 point premium on day one. Tesla’s electric cars sell for more than 100k before tax credits which differ from state to state. They have also sold only a little more than 1000 cars. Due to the hype surrounding the deal, fundamental analysis will probably fall on deaf ears in the first week of trading.
As always we try to link some of the hotter ideas in the broader markets to penny stocks on the OTCBB. In this instance look for possible increased activity in Electric Car Company (OTCBB: ELCR) or Li-ion Motors Corp (OTCBB:LMCO). These companies specialize in electric car conversions and may see some sympathetic buying due to the interest in Tesla motors. Time and time again we have seen micro-cap stocks turn into hot penny stocks due interest coming into a larger company within the same space. You don’t need to act yet. As a matter of fact you may not need to act at all. Just be ready. Massive gains in penny stocks are a lot easier to obtain if you have the right information and are prepared.
Tesla Motors IPO
IPO Calendar and Penny Stocks……Is there a Trend ?
Playing an IPO offering is just as confusing and challenging as investing in blue chips or penny stocks. Yesterday we saw Hudson Pacific Properties (NYSE:HPP) priced @ $17 and as of right now it is trading to 17.40. Now this was a deal that many people thought would be dead in the water. Prior to this offering, five REITS have done IPO’s this year. All five traded lower on the first day. Does this change the trend of IPO’s trading at a discount on the first day? Probably not. The new issue/secondary calendar tends to get a little thinner in the summer months. So developing any type of trend might be a little difficult. A lot of IPO investors are high risk high reward investors, the same type of investors as people who buy penny stocks. They both have something in common; neither likes to lose money.
So if IPO’s are not priced more favorably for retail investors and institutions, we may see even more deals cancelled or delayed in July and August. Nothing in the market is easy to predict. Nobody has a crystal ball. We are always looking at hot penny stocks and trying to predict the next winner.
Check back for more updates and free penny stock picks.
Think an IPO Offering is Safe? Think Again
As many of you may know, the IPO market has been very shaky recently. Some deals have seen penny stock like volatility. We have seen a flood of private equity deals come to the market, and this has turned institutions and retail investors sour on some of the last few offerings. Express Inc. (NYSE:EXP) is a prime example. Express was once a division of The Limited Brand (NYSE:LTD) until a majority stake was taken by Golden Gate Private Equity. As all private equity firms do, Golden Gate cashed in on the IPO.
The once solid Express deal, lost street interest and was priced at $17. This was below the original price talk of $18- $20 that was expected. Today, the stock is trading in the $13 range. As mentioned above, this has cast doubt into future private equity IPO’s and may continue into the near future. Even with companies as established as Express.
The Toys “R” Us IPO could be the next test of this trend. KKR and Bain Capital have large stakes in the $800 million IPO. IPO’s in some regard are like hot penny stocks. They offer the chance of high percentage gains to speculative investors.
Next week’s flagship IPO is CBOE Holdings. Goldman Sachs is the lead manager of the deal. Some IPO services are calling for a $4 premium on the first day of trading. The deal is being priced between $27-$29. As most people know, CBOE like most highly anticipated IPO’s will be as volatile as a high beta gold stock on the first day of trading. Since IPO allocations of CBOE for retail investors will be virtually non-existent, most retail investors will be forced to participate in the aftermarket.
Keep in mind that while the reward is there, the risk is too.
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