Webull (NASDAQ:BULL) has recently gone public through a SPAC (Special Purpose Acquisition Company) merger with SK Growth Opportunities Corp. This makes it a wholly-owned subsidiary of SK Growth Opportunities, and the stock began trading on the Nasdaq under the ticker symbol “BULL” since Friday last week.
We’re looking at a Newsmax-esque (NYSE:NMAX) post-IPO rally here as shares have surged over 300% as of writing.
The stock has a limited public float estimated to be at around $200 million and has created a scarcity effect that made the stock explode in value. This is something we saw earlier with NMAX stock.
There’s plenty of excitement here but not enough shares. Webull is one of the top digital financial platforms and has a mobile-first experience with very advanced analytics. It already has over 22 million registered users globally, and the SPAC merger will now give it the firepower to expand rapidly. It has already added Treasuries to its investment options, along with ETFs, cryptos, and options trading.
Around 2.1% of shares are available for trading, according to GuruFocus’ 459.36 million outstanding shares figure. Hence, there is a significant supply-demand imbalance as retail investors are rushing to get their hands on shares. Also, Webull has 17.27 million public warrants and 20.91 million incentive warrants outstanding.
Low-float stocks often attract traders looking for quick gains, but it’s not worth chasing if you don’t have an iron gut to swallow big swings to the downside. Much like NMAX, BULL stock could also see massive declines in the coming days as investors gain the right to sell shares.
There are private placement warrants subject to a 30-day lock-up period following the merger's closing date (April 10, 2025). This means these warrants become eligible for trading starting May 10, 2025. The Webull Articles allow for the discretionary release of insider-held shares from lock-up restrictions. If the stock price equals or exceeds $12.00 per share for any 20 trading days within a 30-day period, Webull may release up to 25% of locked shares from restrictions.
As insiders sell, the float will likely expand rapidly from here. The supply shock should taper off, and BULL stock will lose its current premium. Public and private placement warrants can be exercised at $11.50 per share within five years post-merger. and Webull plans to file a resale shelf registration statement within 15 business days after the merger (by May 1, 2025) to register the exercise of these warrants. I’d stay away before the bubble pops like it did with NMAX.
