Afya Could Slide Further When IPO Lockup Expires

Competition: Universidade de Sao Paolo, Federal University of Sao Paolo and Others

Brazil has a number of medical schools that compete with Afya including Federal University of Sao Paola, Universidade de Sao Paolo, Federal University of Minas Gerais, and Federal University of Rio Grande do Sul. In addition, many of the world’s top medical schools attract students from many countries. These include Harvard Medical School, John Hopkins University, Stanford University, and Columbia University.

Early Market Performance

The underwriters for Afya priced its IPO at $19. The stock had a first day return of 26.8%. It reached a high of $32.32 on August 27 only to drop sharply to $21.90 on August 30. AFYA currently has a return from IPO of 43.9%.

Conclusion: Short Shares of AFYA ahead of Lockup Expiration

When the AFYA IPO lockup expires on January 15th, pre-IPO shareholders and company insiders will be able to sell more than 13 million currently-restricted shares. We believe that these pre-IPO shareholders and company insiders will be eager to cash in on some of those gains since AFYA has a return from IPO of nearly 44%.

When the currently-restricted shares are unlocked, there is a potential for these shares to flood the secondary market for AFYA and cause a sharp, short-term downturn in share price. Aggressive risk-tolerant investors should consider shorting shares of AFYA ahead of the IPO lockup expiration. Interested investors should cover short positions during the January 16th and 17th trading sessions.

Interested in learning more about IPO Lockup investment opportunities? Check out our subscription service, IPO Insights. We update subscribers with actionable investment opportunities that follow the debut of select companies on U.S. exchanges.

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Disclosure: I am short AFYA.

Disclaimer: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any ...

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