An initial public offering is like a wedding proposal, in that the company planning on going public spends a considerable amount of time courting investment banking institutions and financial experts to find the perfect time to file with the Securities and Exchanges Commission (SEC). After months, perhaps even years, of strategic planning meetings, ring-shopping, and several run-throughs of the proposal to make sure every last bit is perfect, the company in question decides to take a leap of faith and go public. Continuing with this incredibly astute metaphor, on occasion, wedding proposals don’t always go as planned. I’ve heard stories of proposals that ended up with one or both individuals winding up in the hospital due to injuries correlated to the elaborate nature of the proposal. In the case of a company’s IPO, the first day of trading following the announcement is typically a strong indicator of the success of the offering. SoftBank Corp (SFTBF), the subsidiary division of conglomerate SoftBank Group (SFTBY) whose holdings include Sprint and the $100 billion Vision Fund, completely flopped after announcing one of the most highly anticipated initial public offerings in the history of the stock market.
Early on Wednesday, SoftBank Corp (SFTBF) went public, with the company’s shares opening at 1,463 yen, well below the initial 1,500 yen the company had originally set for its IPO price and closed out the day at 1,282 yen. You don’t have to be a mathematical wunderkind to understand that SoftBank’s (SFTBF) shares tanked nearly 15% on the Tokyo Stock Exchange, representing one of Japan’s worst-ever stock market debuts, according to several sources. SoftBank control’s one-fourth of the Japanese mobile phone market, but recent news has shown that CEO Masayoshi Son is more interested in investing in tech start-ups than flip phones. Despite a rather dismal trading day for the company, SoftBank Corp (SFTBF) managed to raise a total of 2.65 trillion yen (roughly $23.5 billion), making it Japan’s largest IPO and falling just a hair behind Alibaba’s record-setting $25 billion IPO back in 2014.
Market analysts suggest that several factors in-play may have caused SoftBank Corp’s (SFTBF) public offering to go sour, one of which relates to a decision made earlier in the week regarding the company’s telecommunications framework. According to a Nikkei report released early last week, SoftBank (SFTBF) decided to stop working with Huawei Technologies for a myriad of reasons, and replace them with hardware manufactured by Ericsson and Nokia. The Nikkei report goes on to explain that SoftBank’s dissolution from Huawei will undoubtedly have its consequences, given the company’s “involvement in China’s business landscape.” SoftBank’s parent company, SoftBank Group (SFTBY), owns 29% of Chinese e-commerce giant Alibaba Group Holding, but “appears to have viewed security concerns and the loss of major clients as greater risks than the potential repercussions for its China operations,” per the Nikkei report.
In addition to news of SoftBank’s (SFTBF) potential damage felt by ceasing its relationship with Huawei, SoftBank Group’s massive debt may have also contributed to its subsidiary’s poor market response to their initial public offering. According to TechCrunch, SoftBank Group has accumulated a substantial amount of debt following its investment in the Vision Fund, a strategic financial partnership with Saudi Arabia.
“…The Vision Fund and its affiliate have been borrowing money. They had around $5.6 billion in debt as of the end of September, up 28% in the past six months, according to SoftBank filings. That money has partly been going to pay the returns promised the funds’ investors, the filings say. And SoftBank is planning to have the Vision Fund borrow an additional $9 billion or so to boost the fund’s returns further and make more investments…”
–Mayumi Negishi, The Wall Street Journal
To put it nicely, news surrounding SoftBank (SFTBF) recently has been negative, and I can imagine the fact that when the company’s CEO decided that SoftBank Group would continue its partnership with Saudi Arabia despite reports surrounding the killing of Saudi journalist Jamal Khashoggi wasn’t well-received either.
“It was beyond our expectations that the shares would fall that much.”
–Anonymous Senior Executive from one of SoftBank Corp’s domestic lead underwriters
Biotech Stocks To Watch In June: Cara Therapeutics (CARA) & Intellia Therapeutics (NTLA)
Among biotech companies, the competition between Cara Therapeutics Inc (CARA) and Intellia Therapeutics Inc (NTLA) has been an intriguing one. The two companies had been on the same level as far as the market cap goes during most of the year so far.
But Cara has now pulled ahead by as much as $150 million following positive data from its lead product candidate. That being said, it is also important to keep in mind that if an investor is looking at a long term investment, then the disparity in market cap between the two companies is a minor. Here’s a look at the pros and cons of Cara and Intellia.
Cara Therapeutics (CARA)
Cara Therapeutics is currently on the rise. Its lead product candidate Korsuva injection delivered highly encouraging results in its Phase 3 trial. It’s now believed that it would not be long before Cara has its first product on the market.
It is meant for the treatment of moderate-to-severe chronic kidney disease-associated pruritus. According to reports, the results were great. Another late-stage test is going to be conducted soon. The results could be announced by the end of this year. If Korsuve is approved, then it will be marketed by Fresenius Medical Care and Vifor Pharma Group.
Cara has entered joint ventures with those companies to market the product in the United States, Japan, and South Korea. An oral version of Korsuva is also in the pipeline and could prove to be another important development.
Intellia Therapeutics (NTLA)
Intellia Therapeutics (INTA) is involved in creating CRISPR gene editing therapies. It is a segment that has a lot of promise in the future. Even though the company is some years away from having anything on the market, the promise of gene editing therapy is exciting. So much so that Intellia has already found partners in big-ticket firms like Regeneron and Novartis.
Intellia is expected to file for FDA approval for the clinical study into its lead product NLTA-2001 in 2020. It is meant for the treatment of transthyretin amyloidosis, an uncommon genetic disease. Studies into the products have proven to be promising so far. The company is also working on a product to treat myeloid leukemia.
Now when it comes to choosing between Cara and Intellia, experts believe that the former could a better company. It’s already on the verge of having an approved product on the market. Intellia, on the other hand, is likely to be some years away from winning approval.
4 Security Penny Stocks To Watch
As Threats Arise, Security Stocks Take Center Stage In 2019
With the Federal Reserve’s meeting coming, the general market is bracing for anything. Meanwhile, penny stocks are continuing to climb at absurd rates. Trading penny stocks as of late has brought many investors fruitful profits and they look to continue this trend. Here are some security penny stocks to watch for the remainder of June 2019:
Security Penny Stock #1
Liberty Defense Holdings (SCAN.V)
Market Cap: $46.404M
Liberty Defense Holdings Ltd. (SCAN.V) is a security company looking to take the industry into the next century. Liberty’s HEXWAVE product is a 3-dimensional scanning device that can detect weapons and threats of any kind. The product can do this both with speed and discretion ensuring privacy for citizens.
Liberty signed a Memorandum of Understanding with the soccer team FC Bayern München to beta test HEXWAVE in their arena. They join an ever-growing list of places that have signed MOU’s to beta test Liberty’s product. This MOU expands its ability to comply with and test the market requirements for their product internationally.
“The reception to our HEXWAVE product has been fantastic and we are excited about working alongside FC Bayern Munich, a team that is a household name in both Europe and North America, […] Our ability to deploy in both indoor and outdoor settings, with covert and overt applications, sets us apart and has also been driving increasing interest from the market.”Bill Riker, CEO of Liberty
Security Penny Stock #2
Magal Security Systems (MAGS)
Market Cap: $101.371M
Magal Security Systems Ltd. (MAGS) provides security solutions both online and physical. Some services provided include identifying potential security problems, integrating new systems, and custom designs for any type of security needs.
Recently, Magal received a $5.5 million contract for its advanced perimeter intrusion detection system. The system prevents people from illegally crossing border fences and walls.
Dror Sharon, CEO of Magal, stated, “Magal is a world leader in perimeter intrusion technologies. Our growing wins of orders such as this – providing sensors for active international borders, is due to the decades of experience that we have in providing systems that have more than proven themselves in-the-field.”
Security Penny Stock #3
Rekor Systems (REKR)
Market Cap: $27.502M
Rekor Systems Inc. (REKR) is a company that has developed surveillance technology to enhance public safety, banking, and traffic management. Primarily, the company takes their advanced software, which utilizes machine learning and upgrades IP cameras to the next level. This reduces the cost when collecting highway tolls and helps manage traffic congestion.
Throughout June, Rekor Systems has been gaining recognition and application across the US. On June 3rd Rekor obtained a contract to start deploying its Mobile LBR-2 vehicle recognition systems. After this deployment on the 3rd, the LPR-2 system North Carolina law enforcement placed an order. On June 12th, Colorado highway authorities chose Rekor’s cloud system called NUMERUS to read enhance their license plate reading.
Security Penny Stock #4
BIO-key International (BKYI)
Market Cap: $18.03M
BIO-key International Inc. (BKYI) is a security technologies company that is pushing past the limits of fingerprint scanning. BIO-key provides a plethora of finger scanning products that provide security for your computer, hard drive, and the government. They have a partnership with Microsoft to develop biometric sign-in for Windows 10.
The company recently announced that a foreign defense ministry ordered more BIO-key deployment for secure access to Microsoft applications.
“We were delighted that such a capable and prestigious technology team determined that BIO-key met their security and scalability requirements and have now made follow-on investments to grow their user base. Defense Ministries are constant targets of cyber-attacks, and we are glad to help them step up authentication to the highest assurance with NIST-verified accuracy and FIPS compliance.”Jim Sullivan, SVP of BIO
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