4 Recent IPOs Have Potential for Some Huge Gains

Last year and so far in 2021 seem to be much more like 1999, as technology initial public offerings that made little or no money came out and rocketed higher. However, some of the glow has worn off, and some of the deals retreated to much lower price levels or traded lower right out of the chute. It was reported that some of the top hedge funds were shorting these stocks as soon as they could, and now it appears that many of the same hedge funds could be piling into the shares.
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We screened our 24/7 Wall St. research database looking for backdraft trade ideas on some of the stocks that have had some wild price swings in 2021. We found four that are rated Buy across Wall Street, and that also offer stellar technologies and applications. While not suited for conservative investors, they make sense for those who are more aggressive and looking for solid ideas. It is important to remember that Facebook was cut in half after its IPO and traded down to $17. Yet, it closed recently at $332.

While all four of these stocks are rated Buy at major Wall Street firms, keep in mind that no single analyst report should be used as a sole basis for any buying or selling decision.
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AppLovin

This stock was a disaster out of the IPO gate, as many thought it was priced too high, and it was reported that many orders were canceled the day the stock went public. AppLovin Corp. (NASDAQ: APP | APP Price Prediction) is a leading provider of software to meet the demand of app developers for app discovery and app monetization.

The company’s network includes ad engagement data from over 8000 developers and reaches more than 400 million daily active users. AppLovin generates revenue from fees charged to advertisers for using its software, as well as from in-app purchases of content within its first-party apps.

BofA Securities is very positive on the shares and noted this after the company reported revenue:

Strong results in the first public quarter with revenues 8% above Street and EBITDA 5% higher; Business and Consumer revenues both accelerate. AXON having a positive impact on business; Clients up 73% year over year. Total Ad spend up 155% year over year. Platform on $600 million net ad revenue run-rate. The new Sum-of-the-Parts gives a premium to Ad Software business and peer multiple for Apps business.

The BofA Securities price target for the shares is $75, and no Wall Street consensus target was available. AppLovin stock closed on Thursday at $69.68 per share.
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This stock has stayed some range-bound since the IPO, but it is certainly in the right space for 2021 and beyond. Aveanna Healthcare Holdings Inc. (NASDAQ: AVAH) is the largest pediatric home care company in the United States, providing care to medically fragile children and adults in the comfort of their homes.
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In addition, the company has an 11% market share in private duty nursing, with its next area of growth being adult home health and hospice (10% of pro forma revenues).

BofA Securities noted this after the company reported results:

The first quarter was at the midpoint of the preliminary range, and above our estimate on better revs and much better margins. Revenue and adjusted EBITDA guidance is essentially in line with our estimates/ consensus. Organic growth above market growth plus $150-200 million deals to drive revenue growth in the mid to high teens. Ample capacity to execute on mergers and acquisitions: cash post IPO, revolver, access to equity, credit markets – targets leverage of 4-4.5x. Home health deal pipeline is full. Reiterate Buy on the attractive growth profile and deal potential upside.

BofA Securities has a $14 price target, and here too no consensus was yet available. The shares ended Thursday trading at $11.65 apiece.
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Coinbase

This cryptocurrency trading company has been on a wild ride since going public with a direct listing recently. Coinbase Global Inc. (NASDAQ: COIN) provides financial infrastructure and technology for the cryptocurrency economy.

The company provides a primary financial account for the cryptocurrency economy, a platform to invest, store, spend, earn and use crypto assets. It provides an online marketplace for hedge funds, money managers and corporations, as well as a platform with technology and services to developers, merchants and asset issuers that enables them to build applications that leverage cryptocurrency protocols. It serves retail users, institutions and ecosystem partners.

Goldman Sachs loves the company and noted this when the firm started coverage recently:

While we believe the core business today offers an attractive growth profile with the potential to drive high levels of profitability, we see significant white space for new initiatives to drive more stable and recurring revenue streams to complement the core trading business over the longer term. If meaningful parts of the economy can transition to blockchain and crypto-native technology over time we see significant opportunity for Coinbase to benefit from its status as a critical element of the financial infrastructure for the ecosystem.

The $306 Goldman Sachs price target is much lower than the $402.07 consensus target, but Coinbase stock closed at $247.09 a share on Thursday.

This stock also recently went public, and the analysts at Goldman Sachs are very positive on it. DoubleVerify Holdings Inc. (NYSE: DV) offers a software platform for digital media measurement, data and analytics.
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The company offers DV Authentic Ad, a metric of digital media quality that evaluates the existence of fraud, brand safety, viewability and geography for each digital ad. Its DV Authentic Attention solution provides exposure and engagement predictive analytics to drive campaign performance, and its Custom Contextual solution allows advertisers to match their ads to relevant content to maximize user engagement and drive campaign performance.

DoubleVerify also provides DV Publisher suite, which includes unified analytic, campaign delivery insight, media quality insight and optimization, industry benchmark and video delivery automation solutions. Its Pinnacle provides customers with access to data on all the digital ads and enables them to make changes to ad strategies on a real-time basis. Connected TV (CTV) solution detects fraudulent device signatures.

The company’s software solutions are integrated across the digital advertising ecosystem, including programmatic platforms, social media channels and digital publishers.

The analysts covering the stock said this after first-quarter earnings were reported:

DoubleVerify got off to a strong start in its first quarter as a public company: total revenue came in 2% ahead of our estimate, and management provided a FY21 outlook which also came in 2% of our prior estimate. The upside to the quarter – and the year – reflected strength in social channels, with transaction volume growth of 75% y/y, and to a lesser extent growth in CTV, which still has a relatively small base.

Goldman Sachs has set its price target at $48. As with some of the others, no consensus was available yet. The stock closed most recently at $36.72 per share.
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Once again, it is important to remember these stocks are only suitable for aggressive growth investors with a high risk tolerance. With that caveat stated, they all offer excellent entry points and have posted some solid results out for the gate.
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