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No. of Recommendations: 2
No. While the service may discuss a forthcoming IPO, it does not deal with pre-IPOs because you really have to be connected to have that opportunity. I'd be wary of anyone promising access to the pre-IPO market.

My feeling about IPOs is that they are risky business. For every Snow you're going to have a Facebook (which tanked out of the gate before catching wind weeks later) or GroupOn (which never caught on). 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 a 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.

The exception to this rule is to invest in a SPAC, or Special Purpose Acquisition Company. This is a relatively recent technique to sell shares in a company whose sole purpose is to buy some future private business. The catch is that investors do not know in advance what company will be acquired - it is a matter of faith in the company behind the SPAC. The market price of the SPAC is not expected to experience much movement until the acquisition is announced. At that point, investors need to decide whether the company is one in which they want to invest or to exit the SPAC before the acquisition is complete.

That said, there is a TMF Premium Service called IPO Trailblazers that exclusively invests in IPOs (defined as companies within their first 4 years of public trading) for Fools who want to include this investment strategy in their portfolio.

Who 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...

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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)
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