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Early Harvest for FRUIT and Floats

Photo by Allie Smith on Unsplash
IPO fans and traders today rejoice once again after the latest initial public offering in the Philippine stock market opened at 8% higher than the initial price. Fruitas seems to be a relief after the last two IPO which failed to make a good short term return at the open. Until today Axelum Resources, Inc. is still trading below their IPO price level and All Home Corp is near its initial price. Let's discuss a little bit of FRUIT's background. Fruitas Holdings, Inc. opened its first store at SM Manila last 2002 which then grew into more than 800 stores around the Philippines. It expanded to several brands including Buko Loco, De Original Jamaican Pattie Shop and Juice Bar, Juice Avenue, Johnn Lemon, Black Pearl, Buko Ni Fruitas, and Fruitas Ice Candy. In their IPO prospectus, the initial public offer proceeds will be used majority for expansions and acquisitions although some will be to pay up existing debts.

I've seen several posts and comments in the social media regarding weight of a particular stock that made it easier to go up and down and one factor is the free float. Free float is not that drink with ice cream on top that your friend bought for you (But it sound yummy though). Free float also known as public float refers to the shares of a company that can be publicly traded and are not restricted. In formula Free Float = Total Shares issued by the Company - Locked in shares (Shares held by insiders and institutional investors not available for trading). Free float is inversely proportional to volatility. The higher the float, the lower is the volatility and lower float can have higher volatility. Of course there are other factors to consider other than float and one of those is the actual price of stock.

Free Floats of recent IPO in PSE: (from PSE Edge website)

HOME : 34.5% of 3,750,000,002 shares = 1,293,750,000 shares = 14.88 B Pesos @11.5
AXLM : 23% of 4,000,000,000 shares = 920,000,000 shares = 4.6 B Pesos @ 5
FRUIT : 32.06% of  2,133,680,000 shares = 684,057,808 shares = 1.15 B Pesos @ 1.68

The data above shows that using the same amount of cash you can buy 4 times of FRUIT compared to AXLM and 13 times more of FRUIT compared to HOME. This will play a significant role in the volatility whether buying or selling pressure.

FRUIT closed the trading day at 1.71 which is 1.79% higher than their IPO price after trading at high of 2.42 or 42% up. Congratulations to those who took the risk and profits early. We will be waiting for that sweet drink with ice cream on top treat!
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