ATAI Life Sciences is poised to get to be the brand new industry frontrunner among general public organizations whenever it commences trading as a brand new psychedelic stock.
Over the short-term, Psychedelic inventory Watch views the investment opportunities that are best from this IPO in other psychedelic stocks.
Big IPOs in an industry that is emerging exciting events – and not soleley for the organization going general public.
In 2020, whenever Compass Pathways (US:CMPS) commenced trading in September it ignited the sector that is whole. Volume spiked and several stocks that are psychedelic multi-bagger returns for investors.
Flash ahead to 2021 february. Now psychedelics investors are eagerly anticipating the IPO of ATAI Life Sciences.
ATAI is expected to immediately become the industry that is new among general public organizations when it begins trading. It was the greatest capitalized player that is private the industry.
Psychedelic Stock Watch has previously described ATAI as “a kingmaker” in the psychedelics industry. Its big-tent business model features research that is numerous with a few of the very exciting other personal players in the market.
But Is investing in ATAI itself the way that is best for investors to prosper from this high-profile IPO? A closer look at price action in the sector following the CMPS IPO is instructive.
Compass Pathways was NOT the winner that is big a unique IPO
Compass raised an impressive $146.6 million from the IPO funding, costing $17 per device. Compass quickly rose above $40/share in its week that is first of.
On the surface, it was a double that is fast/easy investors purchasing in in the IPO. Nevertheless the the reality is that hardly any investors that are retail a gain anywhere near that size on CMPS.
CMPS opened at close to $29. It traded no lower than ~$26 on its trading that is first time. By its trading that is 2nd day it was already over $30 per share and investors have never had a chance to buy CMPS lower after that.
Its highest close was a very spike that is brief $59. Simply speaking, also for retail investors whom purchased CMPS only feasible, the return that is best they could have made on this investment is a bare double.
Those who bought in to the other leading stocks that are psychedelic that time did much, far better.
Buying stocks of CMPS (since near that you can towards the IPO cost) had been a investment that is good. But buying shares of any of these other stocks – instead of CMPS – was a great investment.
ATAI Life Sciences about to commence trading that is public*)Now it’s ATAI’s move to get general public.
When it finished its last financing that is private ($125 million), ATAI declared its intention to go public in the spring of 2021. Some market speculation is that this IPO announcement could come at any right time now.
ATAI is anticipated to own a valuation of $1 – $2 billion according to its IPO cost. Psychedelic inventory Watch views that as a figure that is conservative its capitalization and strong R&D portfolio.
If the expected IPO pricing is correct, there should be some gains that are nice
off of the IPO cost. But exactly how low will retail investors actually have the ability to purchase in?That’s the question that is first. Two other obvious questions.
How high will ATAI run off of its IPO?
How far will other psychedelic stocks rise based upon the investor that is positive through the IPO?
It’s the responses to these concerns which will determine the perfect investor strategy right here. To generate quotes of these responses, an added concern must certanly be addressed.
How similar will the trading that is initial of ATAI be, in comparison to CMPS?
The ATAI IPO strategy: buy other stocks first, ATAI second
There will be at least as much market attention and investor excitement concerning the ATAI Life Sciences IPO as there was for Compass Pathways – and probably more. ATAI has a larger and more business that is diverse that should be expected to interest a bigger wide range of investors.
The stock to expect to start well above its IPO rates, meaning (as with Compass) retail investors won’t have almost the profit-making that is same as insiders who are already holding stock when trading begins.
Given the (expected) stronger sentiment for ATAI, share price performance will probably exceed Compass, but by how much?
ATAI insiders would likely be thrilled if it performed twice as well as CMPS. Then retail investors who get in as low as possible may see up to a 4X return off the IPO.
What should we expect in terms of share price performance for the other leading players in this emerging industry?
At the time of the Compass IPO, share prices in the sector were depressed and trading volumes were low if that is the case. The IPO ignited belief. It introduced a surge that is huge volume and other stocks broke out to new all-time highs.As the ATAI IPO approaches, share prices are depressed and trading volumes are low. We recently alerted investors to the “low tide”
in leading psychedelic stocks at present.
Along with significant declines in the share prices of these companies, trading volumes are roughly only half of what these stocks were generating during their run that is big in.This drop-off in belief comes despite over $500 million in brand new business growth capitalflooding in to the sector
because the Compass IPO. These firms are completely cashed up.
From an standpoint that is operational news flow from these psychedelic drug companies is robust and most companies have clearly advanced operations from where they were during the last rally.
There is plenty of room for these stocks to run. And there is every reason to expect them to do so – as soon as some catalyst that is new a spark.
The ATAI Life Sciences IPO definitely appears to suit you perfectly when it comes to supplying a shot that is major the arm for the sector. “IPO fever” is currently at least as rampant among investors as COVID-19.
Will we see other companies ten-baggers that are recording associated with the ATAI IPO, once we saw with all the Compass IPO?
Perhaps perhaps not. But all indications are we will be looking at a scenario that is similar ATAI commences trading.
Solid gains to be made on ATAI (for those who get in really early). But larger/easier gains to be made on other stocks that are psychedelic
For a very important factor, there isn’t any investor bottleneck to construct jobs as you will see with all the ATAI IPO. Also players that are large the opportunity to load up on other psychedelic stocks – at attractive prices – at their leisure.
But don’t wait too long.Several psychedelic stocks at least doubled in the week that is first of CMPS IPO. People who wait to see if
you will see brand new multi-bagger returns in psychedelic shares through the ATAI IPO may overlook these gains by maybe not contributing to their jobs now.
Buy ATAI later on?
Compass Pathways has hit an all-time intraday that is( high of $61.69 since it went public. But it has fallen well off that known degree.
In present days, investors were in a position to purchase CMPS near to $40. Also it presently sits at $45.85.
Compass Pathways has possibly the best-positioned R&D that is individual initiative the industry: its psilocybin-based therapy for treatment-resistant depression.
CMPS is in a Phase 2b clinical trial, which the FDA has already fast-tracked via Breakthrough Therapy Designation. The company is well-capitalized and over the longer term could generate strong returns that are additional investors.
But You didn’t need to buy into Compass at the right time of its IPO to be positioned for those returns. These companies have still locked in larger gains than CMPS at the most, investors missed out on half of the long-term profit potential by not adding a position right away.In contrast, even after the pullback in other psychedelic stocks. Buying into Compass (during the time of its IPO) in the place of these other drug that is psychedelic was clearly an inferior strategy.Even
if ATAI significantly outperforms Compass immediately after its own IPO, investors still have better odds buying these other stocks. Think about it.If ATAI outperforms Compass, it shall attract also more media attention and
more investors dollars
to your sector. Some of these other stocks could (potentially) get an even bigger boost from the ATAI IPO than from the CMPS IPO.(*)For psychedelics investors who are understandably interested in acquiring a position in ATAI, be patient.(*)Look in other words for better gains in other stocks that are psychedelic. (Ideally) fund your situation in ATAI with all the earnings from those trades.(*)DISCLOSURE: The journalist holds stocks in MindMed Inc, Numinus health, Cybin Inc and Mind Cure wellness. Mind Cure wellness is a customer of Psychedelic inventory Watch.(*)