In this piece, we will take a look at ten recent IPOs in micro cap stocks.
There are a variety of benefits and drawbacks to listing a firm’s equity for trading on the stock market. The single biggest benefit of the process called an IPO, is that it allows management to raise large amounts of funds and investors to potentially profit by seeing their existing stakes multiply in value. At the same time, the IPO process also brings in a variety of constraints. Publicly listed companies are subject to corporate financial reporting requirements of the jurisdictions in which their shares trade. At the same time, share prices can be a volatile affair, and while investors stand to gain significantly if their companies are well received by the market, they also risk equally massive losses should the opposite occur.
The onset of the coronavirus pandemic and the resulting flurry of retail investors that directed their energies and capital into the stock market also saw several firms take an unconventional path toward listing their shares for public trading. While traditionally companies contact investment banks and directly apply to the exchange for a listing, a process that ends when the IPO debuts for trading, the post pandemic stock market environment saw firms choose shell companies called Special Purpose Acquisition Companies (SPACs) instead. A SPAC typically lists its shares for trading and then seeks a merger partner. The ticker is generally changed when the merger finishes all formal obligations, and the process is relatively quicker than a traditional IPO process.
One of the biggest SPACs, at least when it comes to the financial world, was Bill Ackman’s Pershing Square Tontine Holdings. It was the largest blank check company of its kind, with Ackman raising $4 billion in capital to acquire a target firm. However, he had a change of heart last year when he announced that regulatory hurdles and a general souring of mood for SPACs had convinced him that seeking to list a public company through one would prove to be unwise.
But while Ackman’s IPO was for thousands of millions of dollars, there are others that go for significantly less. When it comes to segregating stocks through their market capitalization, there are six distinct categories. The second smallest of these is the micro cap category which covers firms that have a market capitalization ranging between $50 million and $300 million. These are small firms with a limited number of employees and low capital needs. Looking at data for IPOs in 2023, a large portion of firms are currently trading in the micro cap segment right now, and within these, a significant number is represented by shell companies.
However, just because a firm is micro cap, doesn’t mean that it is inconsequential to the world. In fact, since the revenues of micro cap stocks are low, they can provide for booming growth should the underlying industry experience big tailwinds. For instance, consider the story of Ranger Energy Services, Inc. (NYSE:RNGR). A small oil and gas equipment and services provider based in Texas, its revenue jumped from $336 million in 2019 before the onset of the coronavirus pandemic to $608 million by 2022 end, in the aftermath of the oil industry boom due to the Russian invasion of Ukraine. Ranger Energy effectively doubled its revenue during a time period of industry catalysts, and its trailing twelve month revenue sits at $652 million hinting that perhaps the growth in market size is permanent. We’ve identified a number of top high growth micro cap stocks in our coverage of 10 High Growth Micro-Cap Stocks to Buy According to Hedge Funds so check it out if you want to find out about similar companies.
Of course, as is true about the stock market in general, investing in micro cap stocks comes with its own sets of risks and benefits. The benefits are related to high growth in percentage terms due to lower share prices of micro cap stocks. On the flip side, there are equally larger risks of losses as well as scams such as those which involve pumping up the share price and then selling in bulk to defraud other investors. Additionally, a key drawback in micro cap investing is liquidity in the market. Not many people engage in trading shares of specific companies, so cashing out on profits or avoiding losses in the case of a share price slump can become tricky as well depending on the situation.
With these details in mind, let’s take a look at some recent micro cap IPOs in 2023.
Photo by Jonas Leupe on Unsplash
Our Methodology
To compile our list of ten recent micro cap IPOs in 2023, we compiled a list of firms that have listed their shares for trading this year and have the highest market capitalization which is less than $300 million. Only firms with established business models were considered, which led to SPACs or shell companies that remained un merged with a target being eliminated from the list.
10 Recent IPOs in Micro Cap Stocks
10. Pixie Dust Technologies, Inc. (NASDAQ:PXDT)
IPO Date: August 1, 2023
Latest Market Capitalization: $117.6 million
Pixie Dust Technologies, Inc. (NASDAQ:PXDT) is a Japanese consumer electronics company. It provides devices for self care, differently abled people, sound absorbing materials, and other interesting gadgets and products.
9. SYLA Technologies Co., Ltd. (NASDAQ:SYT)
IPO Date: March 31, 2023
Latest Market Capitalization: $149.92 million
SYLA Technologies Co., Ltd. (NASDAQ:SYT) is a rather interesting Japanese company that engages in both the real estate industry and the software sector – two widely different segments of the economy. The firm makes and sells apartments and computers that are used to provide artificial intelligence services, making it quite lucrative when the current hype about AI is considered.
SYLA Technologies Co., Ltd. (NASDAQ:SYT) announced a big win earlier this year when its real estate crowdfunding platform in Japan was considered the top in its category for two consecutive years. The shares though have been quite cyclical on the market, with both July and August proving to be unstable months for the stock.
8. VCI Global Limited (NASDAQ:VCIG)
IPO Date: April 13, 2023
Latest Market Capitalization: $169.69 million
VCI Global Limited (NASDAQ:VCIG) is a Malaysian industrial consulting company headquartered in Kuala Lumpur, Malaysia. It provides a variety of solutions to customers such as financial consulting and money lending. VCI Global Limited (NASDAQ:VCIG) is also a fresh feature of the stock market, having listed its shares on the NASDAQ exchange in April.
Not deciding to wait after listing its shares through an IPO, VCI Global Limited (NASDAQ:VCIG) announced in April that it is acquiring a marketing agency for a $3 million price tag. August was a good month for the stock after VCI Global Limited (NASDAQ:VCIG) announced a partnership with Microsoft Corporation (NASDAQ:MSFT) to use the latter’s artificial intelligence platform.
7. Xiao-I Corporation (NASDAQ:AIXI)
IPO Date: March 9, 2023
Latest Market Capitalization: $175.79 million
Xiao-I Corporation (NASDAQ:AIXI) is a Chinese firm that provides architectural and associated products and services. It allows customers to use artificial intelligence to manage their data and other associated needs. The firm scored a big win in July 2023 when it announced that it had entered into a contract with a major Chinese aviation company to help the customer digitize processes and other operational regions.
Xiao-I Corporation (NASDAQ:AIXI)’s shares soared in July when it announced a string of important announcements in addition to the aviation contract win. These include receiving a new patent for serving the contact center industry and an announcement that its LLM model could be China’s ChatGPT.
6. Himalaya Shipping Ltd. (NYSE:HSHP)
IPO Date: February 10, 2023
Latest Market Capitalization: $209.28 million
Himalaya Shipping Ltd. (NYSE:HSHP) is a dry bulk shipping company based in Hamilton, Bermuda. The firm has 12 Newcastlemax shipping vessels in its portfolio out of which six are currently being constructed in China. While new ships might sound worrying for a shipping company competing in a well developed industry, they often offer owners advantages such as low polluting engines and greater operating and fuel efficiencies. Himalaya Shipping Ltd. (NYSE:HSHP)’s latest ship delivery came in August after it received the Mount Belina and announced a charter of the vessel with a major commodities dealer.
5. Golden Heaven Group Holdings Ltd. (NASDAQ:GDHG)
IPO Date: April 12, 2023
Latest Market Capitalization: $209.58 million
Golden Heaven Group Holdings Ltd. (NASDAQ:GDHG) is a Chinese leisure company that builds and operates properties such as water and amusement parks. The firm’s earnings and revenue are tied to the state of the Chinese economy and during the latest Chinese Labor Day holiday, its annual traffic grew by 30% in an optimistic sign about China’s recovery.
Golden Heaven Group Holdings Ltd. (NASDAQ:GDHG) listed its shares on the stock market in April this year. Since then, the stock is down 20%, with the downward trend starting in July and somewhat accelerating after the firm reported its first financial results as a publicly listed company.
4. Turnstone Biologics Corp. (NASDAQ:TSBX)
IPO Date: July 21, 2023
Latest Market Capitalization: $217 million
Turnstone Biologics Corp. (NASDAQ:TSBX) is an American biotechnology company headquartered in LA Jolla, California. The firm develops treatments for cancer and tumor patients, and its products are in clinical trials. Analyst sentiment is quite strong for the stock, as Bank of America rated the shares as Buy in August and Piper Sandler set an Overweight rating.
Turnstone Biologics Corp. (NASDAQ:TSBX)’s second quarter earnings results saw the firm report that its cash position is slated to last its operations for more than a year. However, investors it seems were less than impressed since the shares tumbled from trading at close to $12 before the results to dropping to $9.
3. U Power Limited (NASDAQ:UCAR)
IPO Date: April 20, 2023
Latest Market Capitalization: $228.96 million
U Power Limited (NASDAQ:UCAR) is a Chinese electric vehicle startup that also has a presence in the U.S. Like the American firm Canoo, the company is also designing a skateboard chassis for electric vehicles – which it claims is the first of its kind in China. The chassis is called the ‘Super Board’ and it will feature major vehicle components such as its suspension, wheels, steering, and propulsion systems.
As of Q2 2023 end, only one hedge fund out of the 910 that were part of Insider Monkey’s database had invested in U Power Limited (NASDAQ:UCAR).
2. Sagimet Biosciences Inc. (NASDAQ:SGMT)
IPO Date: July 14, 2023
Latest Market Capitalization: $274.40 million
Sagimet Biosciences Inc. (NASDAQ:SGMT) is an American biotechnology company. The firm was set up in 2006 and it is developing treatments for cancers and liver problems. Looking at analyst sentiment seems like Wall Street is quite in favor of Sagimet Biosciences Inc. (NASDAQ:SGMT), as Goldman Sachs has rated the shares as Buy, while Piper Sandler and TD Cowen have set Overweight and Outperform ratings, respectively.
1. Hanryu Holdings, Inc. (NASDAQ:HRYU)
IPO Date: August 1, 2023
Latest Market Capitalization: $290.38 million
Hanryu Holdings, Inc. (NASDAQ:HRYU) is one of the youngest IPOs on our list since it listed its shares for trading on the market in August. It is a South Korean social media company that seeks to connect fans of Korean popular media, called K-POP. Most of Hanryu Holdings, Inc. (NASDAQ:HRYU)’s users are international, and the firm plans to upgrade its FANTOO application by adding new chat features through an upgrade that should come soon.
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