A Profitable IPO With Major Upside

 

Massimo Group (MAMO) is a new IPO that went live last week. It raised just under $6 million by issuing 1.3 million shares at $4.5 million. The IPO crashed out of the gate on heavy volume, but has been rising back up since on light volume. If you're looking for a big runner, this is the type of volume profile you want to see leading up into it. Rising price on low volume:

MAMO has the makings of the next IPO runner. It's fundamentally worth far more than $4.00 while also having the potential of running like other legendary small float Asian-related IPOs like HKD, MEGL, UCAR, ATXG and dozens more that spiked to $10+ and sometimes even $100+ or $1,000+ out of the gate before eventually tanking. What makes MAMO different is that it's actually profitable, growing fast and is very undervalued at its current market cap. It had $10.4 million in net income in 2023, leading to a $0.26 EPS. That's a 15 P/E at $4.00, but that doesn't tell the full story. Revenue growth was 33% on the year. That growth as well as growth in the EPS was heavily weighted towards the back of the year. That means 2024 should see far higher revenue and EPS figures than 2023. 

What also makes MAMO stand out is that while it's "Chinese-related", it's really an American company. CEO David Sham has lived in the United States since 1995, immigrating from China back then. While some manufacturing takes place in China (no different than most companies), the main operations are in Texas. This is an American company with ties to China as opposed to a Chinese company with a confusing VIE structure. 

There are 41.3 million shares outstanding, but 34 million of those belong to the CEO with another 6 million owned by a seed investor called ATIFUS. That leaves only the shares in the capital raise as part of the float. With volume drying up, all it would need is a catalyst to spark an explosion upward in price. We think that explosion will be the next financial update. 

ATIF's association with MAMO leads to another important point in favor of MAMO going on a massive run. ATIF played a significant role in NCL and GMM going public. Both of those stocks rose from $5.00 to $15 or more within three weeks of listing. So they clearly know how to push a stock strong out of the gate. 

This is the price history of GMM shortly after it listed. Notice how leading up to its run from $5 to $15, it ran up on low and dissipating volume before picking up again at the high. Very similar to what we have seen on MAMO so far:

NCL tells much the same story. In fact its story is even more similar to MAMO as it initially tanked out of the gate then started to rise back up on only 100,000 or so of daily volume. The first four days of NCL's trading is very similar to MAMO's first four days:

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Disclosure: We are long MAMO