IPOs that are “Like Buying Apple in 1981?”

What are Jason Stutman's "3 Top IPOs of 2018 That Every Investor Needs to Know About?"

By Travis Johnson, Stock Gumshoe, October 17, 2018

Everybody looooves IPOs, they bring with them the allure of “getting in early” and being a special first-mover who can brag about “buying the future” … so it’s not unusual to see newsletters teased because they have some secret idea for “getting in the back door” or buying BEFORE an IPO, but this new IPO Authority currently being promoted by Angel Publishing is the first one that I’ve seen in a while that’s designed to get you revved up about buying after the IPO for selected stocks.

This is a fairly inexpensive newsletter ($49/year) from Jason Stutman, the hook is that he will give you his top IPO picks each month and update on the IPO market in general, but the immediate excitement he’s trying to generate is for three “IPO Tsunami” picks… they’re selling the subscription by promising a special report they call “IPO Tsunami: 3 Top IPOs of 2018 That Every Investor Needs to Know About.”

So let’s see if we can’t figure those out, shall we? I’m not such an enthusiast when it comes to investing in IPOs — it’s more fun to buy something that Wall Street isn’t trying desperately to sell to you — but I do occasionally find one that I like, so let’s dig through the clues and see which ones Stutman thinks we should have our eye on…

And yes, I’ll skip the few pages of promised blather that investing in these companies will be like “buying Apple in 1981,” since we all know that ie’s easy as pie to pick some old IPOs that would have been extraordinary investments (and, thanks to survivorship bias, to ignore the great many that fizzled or faltered).

Clues, please!

“IPO Pick No. 1: A Blockchain Solutions Superstar

“You know that investing in early-stage companies with leadership positions in today’s fastest-growing industries is the best way to generate huge returns.

“And that’s why, of the hundreds of IPOs that are coming out, we’re particularly excited about our first top IPO pick.

“This software and IT solutions company is less than a year old and has already lined up Microsoft, IBM, New York University, and health insurer Blue Cross Blue Shield as customers.”

And a few more details for the Thinkolator….

“This one-of-a-kind company has patented software solutions for today’s most demanding growth industries. This includes blockchain development and e-tail conversion.
It is growing so fast that it already has…

* “650 highly skilled employees.
* “Unheard-of revenue growth, with over $85 million from its first year of operations.
* “Satellite offices in seven states and several foreign countries.”

This one seems very likely to be SharedLabs (SHLB), which is an IT service company that did indeed generate more than $85 million in its first year and filed for an IPO back in the Spring — I haven’t seen a firm date for the IPO yet, but you can see their latest update to the S-1 here. Those details about number of employees and states are matches with some coverage of the company in the Jacksonville Business Journal, though the company is a little more than a year old now and has as its foundation several IT service companies that are several years older than that.

This is how they describe themselves:

SharedLABS is a global software and technology services company providing a broad range of software, digital, cloud, and security services to both commercial and government clients which enable businesses to innovate and compete in today’s competitive marketplaces. A respected partner to many of the largest technology companies in the world, SharedLABS creates, supports, implements, and manages the software, infrastructure, and e-commerce systems which drive today’s digital world.

That doesn’t tell me much of anything about how they’re differentiated or unique, and they’re not growing particularly fast, so I don’t know if the IPO will go through or be successful, but I’m no expert on that sector so yes, it’s absolutely possible.

This is a very low-profile IPO with one underwriter (ThinkEquity) and a low price and total valuation, which indicates that the market is not necessarily lusting for this stock — it has to be sold to them. It’s a very small company, so it could be quite volatile if anyone follows it, and the IPO range right now is $5-7, though that doesn’t really mean anything until they do the pricing.

At first glance, I can’t see why this little IT services company that’s not growing very fast (that might be charitable, from the S-1 it doesn’t look like they’re currently growing at all), is particularly interesting… but maybe I’m missing whatever their “special sauce” is. We’ll see — they could go public essentially any time now if they and their bankers decide to pull the trigger and the SEC approves their application, and they seem like they’ll probably need the cash if their accounts receivable don’t get paid down quickly (partly because they still have some big promissory note liabilities on the books that came from acquiring iTech and ExoiS, two of the companies they’ve rolled up), but that’s all I can tell from a quick look at the filing.

The “risks” section is always a little frightening, and sometimes illuminating… here’s just a little bit of it from last week’s S-1 that I’ll leave you with:

“Our ability to continue as a going concern is dependent upon our ability to generate profitable business operations in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities. To date, we have operated at a loss and remained in business through the issuance of shares of our common stock and warrants, stockholder capital contributions and entering into a short-term loan facility. Management’s plan to continue as a going concern is based on us obtaining additional capital resources through the sale of our securities and/or loans on an as needed basis. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described above and eventually attaining profitable operations.”

Next?

“IPO Pick No. 2: The Next Social Media Breakout….