BLSH Stock: Is Bullish a Good Investment? An IPO ETF Offers a Clue

Bullish (BLSH) did its IPO on last Wednesday. It enters a crypto trading space that is both crowded and potentially open-ended. If that sounds like a paradox, it probably is. Because as the legendary baseball player and philosopher Yogi Berra famously said, predictions are difficult, especially about the future.

Bullish.com home page.

Bullish trades with the stock symbol BLSH. And after raising $1.1 billion in cash, it is all geeked up to grow. That is, unless the crypto trade takes another header. We’ve seen it before, and we’ll probably see it again. We’ll also see dramatic rallies in Bitcoin and other currencies. Even some that will be ultimately rendered pieces of digital paper.

BLSH Stock Outlook: Peter Thiel Tailwinds, Cash Runway and Valuation

Peter Thiel is behind this company, and that alone bodes well for its chances of getting at least a fair share of the cryptocurrency bazaar. Thiel has been masterful over the years, particularly in this space. So BLSH has that, and a robust cash hoard going for it.

However, this is still a business in its early stages, after starting up in 2021. Not coincidentally, the Year of the Bull in the Chinese calendar. Its revenue and profit levels at this stage of the game do not justify its nearly $5 billion market cap, which might be a couple billion more or less by the time you read this.

That’s because IPOs are a different breed of bull. They are blank canvases as public companies. And there’s been a shortage of them this year. So the basic laws of supply, demand and meme stocks might apply here. That means the stock’s value is determined more by animal spirits and narratives, based on what could happen.

What the IPO ETF (Ticker: IPO) Tells Us About New Listings

And that’s why turning to a basket of IPOs might help traders and investors to see what’s possible when a company goes public and trades for a while. That’s why the $166 million in assets Renaissance IPO ETF (IPO) could offer some insight. It seeks to own the most liquid stocks that have gone public recently, and each quarter it rebalances the portfolio to include new ones.

A stock can remain in the index for 3 years after its initial public offering, and individual stocks are capped at 10% weightings. So while IPO the ETF traffics in Wall Street’s wild west, it is well-constructed as a portfolio tracking that theme.

Sector Tilt: Tech, Consumer Cyclical and Communication Services

IPO’s sector exposure is no surprise. Technology, consumer cyclical and communications stocks dominate, at a combined 76% of assets. You won’t find a lot of REITs or mining stocks here. Not unless coal IPOs become a thing again.

IPO ETF sector summary. Source: Ycharts.

Ultimately, it’s about performance. While IPO has been around since 2013, the past 3 years have been a unique time in market history. But since that might be the new normal, I drew up this chart below.

IPO ETF 3 year performance vs. peers. Source: Ycharts.

Bottom Line: Where BLSH Fits as IPO Activity Reawakens

This indicates that IPOs, using IPO the ETF as a proxy, have outperformed microcap stocks, as well as the main small cap benchmark, and the average stock among the top 1,000. That’s a testament to both the success of the portfolio and the tailwind from the 3 sectors it focuses on. IPO was well behind the Invesco QQQ Trust ETF (QQQ), but what hasn’t been?

IPO helps set the playing field for BLSH and future IPOs. Because that market, dormant for a while, is starting to perk up again.