“Due diligence is crucial when investing in an IPO," says Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. The first thing you need to do is find out everything you can about the new stock. What do you need to know before investing in an IPO? IPOs are a way for a company to raise capital to grow their business, pay down debt, or make strategic acquisitions.
“It is the process of a company going from privately held to publicly traded by offering stock to the public for the first time,” says Ross Mayfield, investment strategy analyst at Baird Private Wealth Management. Here’s a primer on what you need to know about investing in IPOs: What is an IPO?
So while many IPOs come with great hype, investors must exercise caution and do their homework before buying. A more recent disappointment is ride-hailing service Uber, which fell 7% on its first day of trading in May 2019 and remains 20% below its offering price. The most famous IPO flameout arguably was, the money-losing online pet retailer that went public in 2000 during the dot-com stock boom only to fold nine months later. Sadly, rearview-mirror investing is more about woulda, coulda, shoulda than enjoying the ka-ching, ka-ching sound of profits.įor all the eventual IPO winners that make people rich, there are gargantuan flops in the often-risky IPO arena that evaporate peoples’ wealth. Beyond Meat soared 163% on its first day in May 2019.Īah, if investing in initial public offerings – better known as IPOs – were only that easy. Facebook, despite stumbling out of the gate, has gained more than 600% since its May 2012 debut. Zoom has zoomed nearly 1,000% higher since its April 2019 IPO.
Despite doubters, for example, Tesla shares have skyrocketed 2,100% in the decade since it went public. No doubt, betting on the right stock when it first trades as a publicly traded company can be immensely profitable. Watch Video: Secrets to successful stock investingĭaydream about being rich? Kick yourself for not buying shares of Tesla or Facebook or Zoom or Beyond Meat when they first started selling stock to the public? You’re not alone.
0 kommentar(er)
