OPEN MINI PLAYERSacks Parente Golf debuted on the NASDAQ on Tuesday morning, looking to raise about $12 million in proceeds from the sale of 3 million common shares that would be available on top of the approximately 10.8 million shares outstanding prior to the initial public offerings (IPO).
The proceeds from the stock sale -- adding 30 percent of the total number of outstanding common shares -- were going to help the company expand its marketing efforts, ensure staffing on the PGA Tour and other major tours, pay off some debt and some accumulated executive pay.
It was a bold gambit, just like a lot of IPOs, that there's an appetite in the market for a company.
Sacks Parente reported first-quarter 2023 sales of approximately $90,000 in an S-1 filing with the Securities and Exchange Commission. The company reported a $917,000 net loss for that first quarter -- some six times the reported loss from the same quarter in 2022. Expanding required more employees, and that was the biggest chunk in the significant increase of the cost of goods sold. The IPO was clearly a siren song to investors that could see the potential for the company's putter technology and the expansion that could come with better capitalization
Around mid-morning, the IPO went live at $4.20, according to CNBC, at a price $0.30 lower than what Sacks Parente had anticipated in their last-amended S-1.
Like many IPOs, though, Sacks Parente saw a substantial, immediate increase in share value. By 12:30 p.m. Eastern, the shares had nearly doubled in value to $8. It was an incredible success for not only those who subscribed and purchased shares but also the owners of the millions of shares that weren't made available for the IPO. All of a sudden, Sacks Parente had a market capitalization -- the price of a share times the number of shares outstanding -- almost north of $100 million.
When stocks move like Sacks Parente did, they encounter automatic halts by the major stock exchanges on which they trade. This happened time and again for SPGC on big moves up and down as a volatile stock was consumed by the market. The net result after practically every halt was the same, though: The stock went higher. At one point, Sacks Parente stock was at $32 per share -- nearly eight times the IPO price, making the company worth a staggering $442,703,840.
Based on online chatter, it was clear amateur investors were pouring into the stock with a case of FOMO (Fear of Missing Out) based on the movements of some early adopters that encouraged their followers to jump in through private chat groups, like on Discord. With a relatively low float -- meaning the percentage of total outstanding shares available for trade -- the stock could be pumped up to stratospheric levels.
At market close at 4 p.m. Eastern, though, Sacks Parente stock started a precipitous drop. The dump part of the pump-and-dump was on. By the time 9:30 a.m. came on Wednesday morning, the stock had dropped to $21.46. Just 30 minutes into the session, the stock had been sold down to $10.90. By 11 a.m. Wednesday, the stock was below $6 -- still well above the IPO price but obviously having settled down after the dump.
For all the volume the stock saw on Tuesday, in the range of 8 million shares, there was a striking amount of volume on Wednesday morning to exit.
Still, the company succeeded. They sold the shares and got the revenue they needed. For shareholders, they still have a company with a market cap of approximately $65 million. Eventually, the velocity of the moves will settle down, and the broader market will appropriately evaluate the company. But for 24 wild hours, Sacks Parente saw its stock experience a full parabola.
