How can I subscribe to an IPO?
Julee asks:
With so much hype around the BlackStone IPO, I was wondering how I could buy shares of an IPO before they start being trading on the market. I remember the Google IPO being priced in the 80s and as soon as trading started it’s price jumped to about $108 or so. Similarly BlackStone’s priced at $31 but the as soon as the market opens the price might change. How could I have gotten it for $31?
With so much hype around the BlackStone IPO, I was wondering how I could buy shares of an IPO before they start being trading on the market. I remember the Google IPO being priced in the 80s and as soon as trading started it’s price jumped to about $108 or so. Similarly BlackStone’s priced at $31 but the as soon as the market opens the price might change. How could I have gotten it for $31?
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You can’t.
IPOs are structured so that demand exceeds supply to generate price support in the secondary market. Shares are allocated to the underwriters’ best clients.
Technically speaking, you must have a brokerage account with an underwriter. You then ask for an XX number of shares to be allocated but your chances of getting any are virtually zero unless you have done millions in business with the firm.
In an off chance you do get an allocation, it means there is not enough demand and your stock will probably sink when it opens.
It depends. For example, etrade handles about 2-3 IPOs a month but you can’t just pick from all the upcoming IPOs. You would need access to a broker that can buy from the underwriter. If you REALLY want it, I think you can find somewhere to buy at the IPO price. Generally, IPOs are overrated for the average investor. I was able to buy many IPOs via Etrade but had little luck. They frown upon “flipping” (selling quickly) but I think if I did that, I would have made money. I mostly lost with IPOs. I think there is a tendency for IPO to become popular right after a spree of good ones but then it is too late. It’s like there are bull markets of IPOs.
As the others have suggested, once you can get access to an IPO as a retail investor it’s lost the big gains or was a poor price to start with. The reason is that they are offered first to really wealthy people and fund managers, also called “accredited investors”. If these guys, who generally although by no means exclusively, know what they are doing - hence they are rich, don’t want it then you and I can buy it.
Of course the press will keep our noses pressed up against the sweet store window by telling us the insider buying price and the retail sales price but I’m afraid that if you can buy it at an “insider” price not enough smart people want it so you shouldn’t either.
The solution is to get $1M of assets outside of your main residence or earn $200K p.a for 3 years and then you can apply as as Accredited investor.
Look up Robert Kiyosaki and read some of his books he expains it all brilliantly.
you have to have a buy order in for x amount and if you get it good if not to bad—if it’s starting at 31 you might want to put an order in at a dollar amount a little higher, but not higher than you think the stock will go
IPOs can literally change overnight, usually in a tailspin. Be on your toes.