Sacks Parente Golf (SPGC), a golf company that manufactures golf shafts, grips, and other products used for golfing, experienced a remarkable surge during its listing on the New York Stock Exchange on August 15 this year. The stock price surged by an astonishing 624% in just one day, starting at USD 4 per share when it was initially offered to the public and closing at USD 28.97 per share.
Moreover, this impressive increase in stock price on the first day of trading made it the best performance for any new company going public in the United States this year, according to information from Dow Jones Market Data.
On that day, Sacks-Parente’s trading was suspended 19 times because of the stock price’s unpredictable behaviour or excess volatility.
However, the excitement didn’t last long. The day after its impressive debut, the IPO stock plummeted by a whopping 85%. As a result, it is now trading at a price lower than what it was initially offered for. As of the time of writing this article, the shares are trading at USD 1.63 each.
Usually, when a company goes public (IPO), there’s a lot of excitement, and people rush to buy its stock on the first day, causing the price to go up.
However, it’s common for some of those gains to be lost in the following days. What’s unusual in this case is that the stock rose by such a large amount on the first day and then quickly lost almost all those gains. This doesn’t happen very often.
The company was offering 3,200,000 shares of its common stock, with a par value of USD 0.01 per share, to the public. The initial public offering price is USD 4.00 per share.
In addition to the company, some stakeholders were also selling their shares, which accounts for 1,561,375 shares.
However, the company has mentioned in its SEC filing that, “Sales of the shares of our Common Stock registered in this prospectus and the selling stockholder prospectus may result in two offerings taking place concurrently which might affect price, demand, and liquidity of our Common Stock”.
Here is a chart representing the stock:
Investors who acquired the shares at a very low price surely made a profit when they sold them on the day they were listed. In addition, intraday traders who bought the shares at the opening also made money.
However, those investors who bought at high prices, let’s say between USD 28 to USD 30 per share, lost their entire investment on the very next day. Currently, the stock is trading below its listing price and is not showing any signs of recovery from these levels.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.