This post was just published on ZYX Buy Change Alert.
Signal(s) to enter, add, reduce, exit, hold or change.
Tomorrow Is The Big Day
LYFT (LYFT) will stat trading tomorrow. As has been our norm for popular IPOs, there will be several posts tomorrow as appropriate. The first post will be to give you the early opening indication as soon as it becomes available.
The price is expected in the range of $70 – $72 per share. There are some indications that the price may be raised. The previous indication was $62 to $68 per share.
Target Based On Fundamentals
Based on fundamentals an optimistic target for LYFT is $80 per share. It is conceivable that LYFT may open above $80 per share perhaps by a significant amount.
Since LYFT is being priced so high and may open close to the fundamental target or even higher than the fundamental target, the risk is high.
Supply And Demand
At least initially, LYFT is not likely to trade based on fundamentals. It will trade on supply and demand as well as sentiment. The momo crowd can run it up much higher than any rational price.
As a cautionary note, investors will need to be very nimble. Remember Facebook – it fell after the IPO.
Two Types Of Investors
Our subscribers fall into two categories.
- Those who are getting shares in the LYFT IPO.
- Those who are not getting shares in the LYFT IPO.
Those Who Are Getting Shares In The IPO
The Arora Report has previously issued a buy signal for those who are getting LYFT in the IPO. Please be sure to keep previously given stops. Based on your relationship with the underwriters and the quantity obtained, consider taking profits on up to one-quarter of the position at the open and move stops on up to another one- quarter 8% below the open if such stops are higher than the previously given stops.
This is being given in advance to get you prepared. If appropriate we will attempt to provide more guidance tomorrow.
It is important for you to consider your relationships with the underwriters. If you take profits, you may have difficulty getting shares in future IPOs.
For Those Not Getting Shares In The IPO
For those not getting shares in the IPO, it will come down to how the stock opens and trades immediately after the opening. Any trading will be suitable only for super aggressive experienced nimble investors due to high risk.
If probability adjusted risk reward becomes favorable, we may give a buy signal.
In the absence of a buy signal, those who are experienced and want to buy, consider watching a one minute candlestick chart with a five minute exponential moving average.
The following two scenarios may help.
- Often there is a 3% to 6% pullback. Consider scaling in on a green candle after such a pullback with close stops.
- If there is no pullback after a few minutes, consider scaling in on price slightly dipping below the moving average and then going higher, again with a close stop.
There are many other scenarios possible and it is not practical to discuss all of them. The two scenarios discussed above historically have the highest probability of success when new IPOs start trading.
Buy Signals Down The Road
Of course, we may issue several buy/ sell/ short signals on LYFT down the road as appropriate.
LYFT is likely to provide numerous opportunities.
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