Collective Audience (NASDAQ: CAUD) stock is down 77% from that peak on Friday. Given that that was also the first day of trading that’s something of a reversal in the very short life of CAUD stock on the public markets.
We should be familiar with the way that IPO prices can swing wildly. That launch price is only an estimate after all - the bankers, brokers and even the company itself never do know quite how the market more generally is going to take to the new stock. So, there’s an estimate, that’s the first price and then everyone sees what happens.
A Spac merger, or a despac perhaps, is not exactly the same but in this one sense it is. No one really knows how the market is going to take to the new stock so the price at which it all takes place is something of a guess. So, a despac price can - even will be - highly volatile.
Collective Audience stock price from Google Finance
The business line: “DLQ, Inc. designs and develops an AI-powered e-commerce and digital consumer acquisition platform that allows brands and agencies to advertise across digital and connected TV publishers. The company was incorporated in 2019 and is based in Carson City, Nevada.” Well, how terribly exciting. Connecting people across Twitter and TikTok and with added AI! We would slightly suspect that the AI is there because it’s currently fashionable.
We’ve then got the Spac merger: “Abri SPAC I, Inc. (Nasdaq: ASPA, ASPAW, ASPAU, “Abri”), a special purpose acquisition company (“SPAC”), today announced the closing of its previously announced business combination (the “Merger”) with DLQ, Inc., a provider of e-commerce and digital customer acquisition solutions for digital advertising, and a subsidiary of Logiq, Inc (OTCQX: LGIQ). The common stock of the combined company, which will operate as “Collective Audience, Inc.”
Then we’ve what we around here call the despac: “Collective Audience, Inc. (Nasdaq:CAUD), a leading provider of digital consumer acquisition solutions, announced its common stock has commenced trading today on the Nasdaq Global Market under the new ticker symbol - CAUD.” At which point the market goes wild with excitement - no doubt that mention of AI - and isn’t that exciting.
Except near none of that valuation is being done on the basis of the objective value of the new CAUD stock. So, that price is, as we can see, highly volatile and comes off 77% from that peak reached only in that last trading session. The lesson for us here being that the early trades of a new float are often highly volatile and not based upon anything objective.