Caesars Entertainment (CZR) IPO Success Could Be Short Lived

Yesterday’s IPO of Caesars Entertainment Corp. (NASDAQ: CZR) was an uber success in the closest form of illegal stock market manipulation without being illegal with shares jumping 98.89%, as high as $17.90, before closing at $15.39, a 71% gain. So, is it a hot stock to buy now or is it just the flavor of the day?

Well, the float yesterday was incredibly small, just 1.8 million shares and, according to reports, CZR has already worked out a deal with dozens of private investors who absorbed huge losses previously to minimize those losses by allowing them to sell shares right away. So prepare for the possibility of more than 5x the amount of shares currently available to hit the trading floor soon.

As would be expected from Vegas, CZR created buzz and led investors to chase the stock with no regard to the much larger chunk of CZR that traders can now dump into the market. CZR stated in its regulatory filing details of its offering plan that dozens of insiders can now sell more than 11 million additional shares. It also enables New York investor John Paulson’s hedge fund to sell nearly a 10% stake in CZR, 12.4 million shares.

In 6 months, the remaining shares, 100 million or so shares mainly owned by the bailout private equity firms Apollo Management Group and Texas Pacific Group, will begin trading as securities laws allow.

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