It's been a busy couple of weeks for IPO stocks, with Reddit and Astera Labs launching, and a number of IPO-like new issues, including Trump Media & Technology Group and GE Vernova all beginning to trade since late March.
Most of these IPO stocks racked up big gains as they hit the market. Astera stock and Reddit stock both surged as much as 70% on their first trading days while Trump Media jumped more than 16% on March 26, its first day trading under the DJT ticker. The special purpose acquisition company stock had rallied 35% on the day before that change.
Meanwhile, GEV traded up more than 16% between March 28 and April 2 after its spinoff from General Electric.
However, all these stocks have booked retreats as the initial excitement has receded. Since Trump Media stock began trading as DJT on March 26, the stock is down 53% from its high of 79.38.
Reddit stock surged as much as 70% beyond its 34 offering price when it began trading on the New York Stock Exchange on March 21. It ended trading on March 21 at 50.44. Since then, it is down 8.5% and has also dropped 38% from its March 26 high of 74.90.
Meanwhile, Astera Labs stock surged 72% from its offering price of 36 on its first trading day on March 20. In its fifth trading session, it notched a record high of 95.21 but has now retreated 26%.
GE Vernova stock started trading a few days ahead of the April 2 spinoff from General Electric. The stock hit a high of 152.48 on April 2 but has dropped nearly 15% since then.
Astera Labs leads these four IPO stocks with a Composite Rating of 74 out of a best-possible 99. ALAB stock also tops the field with a Relative Strength Rating of 79. Reddit stock has the top EPS Rating with a 74 score.
In terms of gain from IPO price, Reddit ended Monday with a 36% advance. Astera had booked a 92% gain. The non-IPO new entrants are a little more difficult to gauge. Trump Media is up just a fraction from 36.94, its close on March 22 — just after shareholders approved the Trump Media/Digital World Acquisition merger. Year to date the stock has a 112% gain.
GE Vernova swung between 115 and 135 in its first day of trade, then rocketed as high as 152 over the next few sessions. On Monday it closed just above 129 — 12% above its lowest opening day price, and 28% above where GE stock had started the year.
Wall Street Weighs In On These IPO Stocks
Former President Donald Trump holds a 58% stake in DJT. The options market shows that puts outweigh calls, meaning investors are betting DJT will go down, according to a recent note from NewEdge Wealth.
The wealth management firm believes there is "likely more downside for DJT ahead."
Last week, analysts with Bernstein initiated research coverage of Reddit stock with a bearish underperform rating, and a price target of 40. With revenue growing last year by more than 20% and "conservative" 2024 targets, Bernstein analysts say the IPO stock has a good setup in the short-term. But it could struggle longer-term competing against tech giants that have held back social media platforms such as Snapchat and Pinterest.
Meanwhile, Baird analyst Colin Sebastian initiated coverage of Reddit with a neutral rating and 50 price target.
On March 25, Northland analyst Gus Richard initiated coverage of Astera Labs stock with an outperform rating and an 85 price target. The Santa Clara, Calif.-based company makes connectivity chips for cloud and artificial intelligence data centers.
JPMorgan analyst Mark Strouse on Monday also gave GE Vernova its first upgrade, handing GEV an overweight rating from its previous neutral. Strouse kept his price target at 141 and told investors the stock has pulled back since the April 2 spinoff largely owing to technical and flowback selling.
The analyst added that now with GEV trading at a discount there could be an entry point for a "long-term core holding" for investors in the global electrification theme.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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