How do you invest in an IPO? Do they release the date and time the ticker will be publicly available for trade?Thanks in advance!
Traditionally the company works with a major investment bank to work out details. The bank allocates blocks of shares to a collection of brokers.You let your broker know of your interest and they will see about allocating shares. But often shares in popular issues are over subscribed. Then your broker may not be able to meet your request. You might be best off in that case to buy on the open market day of the ipo.In the dot com bust there was a scandal over IPOs. Insiders were contracted to place large orders on opening day to drive up the price. Some of the companies had dicey prospects but were promoted anyway by investment banks seeking fees.New issues are risky in that often they are heavily promoted, but performance and earnings can be months away. Better to wait until they have earnings and the initial heavy hype has worn off.
My feeling about IPOs is that they are risky business. Not only do you never really know how a company is going to perform as a publicly traded entity vs. their history while private, but you cannot predict how the market will treat them. IPO promoters, and don't fool yourself into thinking they aren't heavily marketed and promoted by the financial institutions hoping to profit, try to convince you that this is a can't-lose opportunity, but most IPOs are more mixed. Facebook stumbled out of the gate but later found its feet and continues to roar. GoPro blasted into the scene and has subsequently struggled to maintain momentum. The trick to an IPO, as is the case with any investment, is to research the heck out of the company, which can be tricky when they are private and there is limited information available, to make the decision to invest based on rational factors and not an emotional attachment or expectation, and to commit yourself to sitting on the investment for 3-5 years at least. It takes at least 4 quarters of public earnings to get a feel for how a company is performing, how management has been impacted by the IPO, and perhaps most importantly, for insider blackout periods to expire and and market share price to settle down to a baseline.FuskieWho personally would rather wait for a new public company to prove it can consistently grow revenues and net income before he would invest in it...-----Ticker Guide: The Walt Disney Company (DIS), Intuit (INTU), Live Nation (LYV), CME Group (CME), MongoDB (MDB), Trip Advisor (TRIP), Vivendi SA (VIVHY), Mimecast (MIME), Hain Celestial (HAIN), Royce Micro Capital Trust (RMT)Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate adviceDisassociation: The views and statements of this post are Fuskie's and are not intended to represent those of The Motley Fool or any other sane bodyDisclosure: May own shares of some, many or all of the companies mentioned in this post (tinyurl.com/FuskieDisclosure)Fool Code of Conduct: https://www.fool.com/legal/the-motley-fools-rules.aspx#Condu...Invitation: You are invited to interactively watch Motley Fool Live online television: https://livechat.fool.comCall to Action: If you like this or any other post, Rec it. Better yet, reply to it. Even better, start your own thread. This is YOUR TMF Community!
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