Green Dot IPO News
Last week we saw two Smart Technologies (NASDAQ:SMT) and Qlik Technologies (NASDAQ:QLIK) trade at first day premiums. While QLIK held it’s gain and traded even higher during the next trading session, SMT plummeted and hasn’t traded back to it’s issue price of $17. These recent results are just another example of how unpredictable the IPO listings have been lately. Some IPO investors will sell a new issue once it breaks it’s issue price, figuring the stock is broken on a short term basis. These sell orders often have a ripple effect and trigger stop loss orders which often bring a stock down to the point where it becomes oversold. Other IPO investors will step in and buy shares when this happens. They are looking for a quick retracement to the issue price. In some ways the tape action is similar to trading hot penny stocks. Many penny stocks that have been beaten up are often flipped by traders who forsake the potential of huge gains for frequent, fast, small profits. It’s a game that’s generally played by experienced investors and may be played again this week with Green Dot (NASDAQ:GDOT).
Green Dot is based in Monrovia, California and was founded in 1999. The company is a provider of prepaid MasterCard and Visa debit cards. As of the entry there is a lot of interest in this IPO. The offering size has been increased and most IPO services are anticipating a premium of 1-2 points. Green Dot also has corporate partnerships with companies like Walmart and Kmart. Walmart also happens to own 2 million shares of GDOT. Another big investor in Green Dot is Sequioa Capital which owns a 31.9% stake.
The fundamentals of Green Dot are better than most IPO’s. As of 3/31/2010, they earned $4.4 million on $92.8 in revenues. Now here’s the unpredictable part. The Green Dot IPO is a private equity deal and the shares offered are all from selling shareholders. Recently the street has not been too kind to these offerings. However, sentiment can change. This is just another example of why investors need to do research. The selling shareholders might be a non-event, but it doesn’t hurt to have this knowledge as an arrow in your quiver. Like penny stocks, finding information on IPO’s is sometimes difficult. So try to find out what you can before you invest or trade. It could be the difference between a massive gain or a loss.
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