4 Formerly Red-Hot IPOs Have Huge Long-Term Upside Potential Now

By Lee Jackson Published Apr 21, 7:43AM EDT

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4 Formerly Red-Hot IPOs Have Huge Long-Term Upside Potential Now — © ipopba / Getty Images

Last year seemed rather 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 stocks retreated to much lower price levels or traded lower right out of the chute. Some top hedge funds reportedly were shorting the IPOs as soon as they could, and now it appears that many of those same hedge funds could be piling into the shares after another bout of short selling this year.
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We screened our 24/7 Wall St. research database looking for back-draft trade ideas on some of the companies that have had some wild price swings in 2021. We found four stocks that are rated Buy across Wall Street and also offer stellar technologies and applications. While not suited for conservative accounts, these stocks make sense for aggressive investors looking for solid ideas. Remember that Facebook was cut in half after its IPO and traded down to $17. However, it closed recently at $303.

It also is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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Affirm

This top fintech stock has given back a huge chunk of the initial gains and is offering an outstanding entry point. Affirm Holdings Inc. (NASDAQ: AFRM | AFRM Price Prediction) operates a platform for digital and mobile-first commerce.

The company offers integrated checkout, virtual cards, split pay, Affirm app and marketplace, and savings accounts and are building the next-generation platform for digital and mobile-first commerce, making it easier for consumers to spend responsibly and with confidence, easier for merchants to convert sales and grow, and easier for commerce to thrive.

Vacasa, a leading vacation rental management platform in North America, and Affirm have announced that they have partnered to provide flexible payment options to those planning their next vacation. Through the partnership, Affirm will expand its travel category and increase payment flexibility to more vacation rental guests.

Morgan Stanley has an Overweight rating and a huge $146 price target. That compares with the $121.50 Wall Street consensus target and Tuesday’s closing print of $60.51, as the stock hit a 52-week low.

C3.AI

Founded by Wall Street and Silicon Valley legend Tom Siebel, this company was just named one of the Financial Times fastest-growing U.S. companies. C3.AI Inc. (NYSE: AI) operates as an enterprise artificial intelligence (AI) software company. It provides software-as-a-service applications for enterprises. Its software solutions include C3 AI Suite, a platform-as-a-service application development and runtime environment that enables customers to design, develop and deploy enterprise AI applications. Its C3 AI Applications include industry-specific and application-specific turnkey AI solutions.

The company’s C3 AI applications include C3 AI Inventory Optimization, a solution to optimize raw material, in-process and finished goods inventory levels. Its C3 AI Supply Network Risk provides visibility into risks of disruption throughout the supply chain operations for enterprise supply chain managers. C3 AI Customer Churn Management enables account executives and relationship managers to monitor customer satisfaction using transactional, behavioral and contextual information, as well as to take action to prevent customer churn with AI-based and human-interpretable predictions and warning. C3 AI Production Schedule Optimization is a solution for scheduling production, and C3 AI Predictive Maintenance provides insight into asset risk to maintenance planners and equipment operators. it also offers C3 AI Fraud Detection solution and C3 AI Energy Management solution.

Needham’s Buy rating comes with a street-high $195 price target. The lower consensus target is $135.56, and shares closed on Tuesday at $60.86 apiece.
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Corsair Gaming

For anybody big into esports and gaming, this company is very familiar. Corsair Gaming Inc. (NYSE: CRSR) designs, markets and distributes gaming and streaming peripherals, components and systems in the Americas, Europe, the Middle East and the Asia Pacific.
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The company offers gamer and creator peripherals, including gaming keyboards, mice, headsets, and controllers, as well as capture cards and studio accessories. It also provides gaming components and systems comprising power supply units, cooling solutions, computer cases, and DRAM modules, as well as pre-built and custom-built gaming PCs. Its PC gaming software includes iCUE for gamers and Elgato’s streaming suite for content creators.

The company sells its products through a network of distributors and retailers, including online retailers, as well as directly to consumers through its websites. With the summer break around the corner, this could be a solid idea.

The street-high $55 Wedbush price target accompanies its Overweight rating. The $48.33 consensus target is also well above the most recent close at $32.42 a share.
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PubMatic

This company had another explosive IPO that blew up out of the gate, traded higher and has come back in some. PubMatic Inc. (NASDAQ: PUBM) provides a cloud infrastructure platform that enables real-time programmatic advertising transactions worldwide. The company’s solutions include PubMatic Cloud, which offers a customizable platform as a service to deliver a proprietary solution; openwrap and openwrap OTT, the Prebid-powered header bidding solution; openwrap SDK, which is an in-app header bidding technology; and media buyer console.

PubMatic also provides RTB advertising technologies, digital advertising inventory and real-time creative scanning for ads. Furthermore, the company offers audience encore for audience data transaction, and cross-platform video for multi-integration support for video bidding. Its platform supports an array of ad formats and digital device types, including mobile app, mobile web, desktop, display, video, over-the-top, connected television and media.

Top analysts see PubMatic as an ad-tech winner with multiple drivers, including the shift to programmatic advertising, buyers consolidating spend around fewer supply-side players and growth in new verticals like Connected TV. Some across Wall Street believe 20% or more revenue growth over the next two years is achievable and could be conservative.

JMP Securities has an Outperform rating and a street-high $64 price target. The consensus target is $60.33, and shares pulled back almost 9% on Tuesday trade to close at $47.51.
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Some of these stocks are down more than 50% from the highs printed not long after their debuts. We have kept a close eye on all four to see when the insider selling starts to diminish and, in at least one case (for C3.ai), it appears to be almost over. Aggressive investors with a longer time frame could make some huge gains with a little patience. With that noted, the current market appetite for aggressive momentum plays is weak now, so caution is warranted, as is scale buying positions.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.