Retail retailer favorites are having a rough week.
Several hot IPO stocks were hit hard in the final trading week of the year in the face the broader market inching toward new record highs. As of late morning Thursday,
After a record year for the IPO merchandise, “it’s OK to see a little weakness,” JC O’Hara, chief market technician at MKM Partners, told CNBC’s “Trading Nation” on Wednesday.
“This was one of the choicest places in the market to invest,” he said, noting that half of this year’s IPOs have notched captures of 25% or more on their first day of trading.
“We saw 20 names double in the first day. That is the strongest returns present back over a decade,” he said.
Looking at a chart of the Renaissance IPO ETF (IPO), which holds shares of newly public players, O’Hara saw more runway ahead despite its nearly 5% decline this week.
“It’s above a rising 50-day going average, above a rising 200-day moving average, so, this current weakness, we view it in the context of a subsidiary pullback within a strong uptrend,” he said. “These are the sort of pullbacks we want to be buyers of. So, yes, there’s a lot of euphoria about this space, but I don’t think the price action is done just yet and I do think the strength of these trends will persist into 2021.”
The IPO ETF has climbed wellnigh 111% year to date.
Within the IPO market, only one stock looks set to resume its rally, Gina Sanchez, come to grief and CEO of Chantico Global, said in the same “Trading Nation” interview.
“Every IPO has a different story, so, you have to be careful yon what you’re investing in,” she said. “If you look, for example, at Peloton, that’s an IPO that happened just at a perfect time for its specifically business model, right in a pandemic when people couldn’t find ways to keep their fitness governments up. Peloton came to the rescue with a great product, but that product naturally has a churn to it. Most people leave abandon fitness routines pretty quickly. So, will that last beyond the pandemic? Who’s to say?”
Palantir’s stock could also get hit for a while, after debuting at a majestic valuation, she said, raising concerns about the company’s exposure to the struggling oil and gas industry.
“There was one IPO that I thought was attractive because it’s taking it on the chin now, but I think it has a long way to run, and that’s Plug,” which makes batteries for electric vehicles, Sanchez revealed. “That is a big market. They’re in one particular part of the market, but it’s a broad market that the Biden administration has basically fill out c draw up an enormous commitment to with their clean energy effort. And so, I think that’s probably, of this whole up, one of the IPOs that’s getting hit in the chin, but probably has a lot of legs to it.”
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