2020 seemed to be much 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. Some top hedge funds reportedly were shorting the IPOs as soon as they could, and now it appears that many of the same hedge funds could be piling back 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 companies that have had some wild price swings in 2021. We found four companies that are rated Buy across Wall Street and also offer stellar technologies and applications. While these are not suited for conservative investors, they make sense for more aggressive ones looking for solid ideas. All four have Buy ratings at major Wall Street firms, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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) operates a platform for digital and mobile-first commerce. It 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.
For the quarter that ended Dec. 31, 2020, Affirm financed gross merchandise volume of $2.1 billion. The most likely reason for the drop is that Affirm’s stock was priced for phenomenal growth. Since its IPO in mid-January, Affirm’s stock rose by more than 180% before coming back to earth, so it is fair to say that investors had extremely high expectations to justify the lofty valuation. Hence, the heavy selling that brought the shares down from the stratosphere.
Last week, Vacasa, a leading vacation rental management platform in North America, and Affirm, announced the companies 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.
Truist Securities recently started coverage with a massive $160 price target. No consensus target was available, and the last trade for Friday was reported at $93.06 per share.
Context Logic
This stock plummeted after it came public, staged a huge snapback rally and has come all the way back to near the initial IPO pricing Context Logic Inc. (NASDAQ: WISH) is a value-focused, mobile-centric, e-commerce marketplace targeting over a billion households with annual incomes less than $75,000 (excluding China and India).
The company also partners with over 50,000 brick-and-mortar stores for its Wish Local pickup service. Wish’s largest categories in terms of units sold include fashion, accessories and hobbies. As of last year, Wish generated close to 50% of revenue from Europe, 40% from North America, 5% from South America and the rest from Asia and the rest of the world.
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