how to invest in an ipo in the us?
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In order to get an allotment of the stock at the initial price ($44/share for VISA, for instance), you need to be a client with a substantially sized account of one of the underwriting brokerage firms.
Everyone else has to buy at the price when it hits the exchange. If you bought yesterday at in the mid-50’s, you’d still be up big today. It’s not too late to make money in Visa!
Hi, Gemini,
IPOs are generally high risk investments for small investors.
Brokerages do reserve them for their best (”best” means customers who have made the brokerage the most money — not necessarily the same thing as customers who have made the most money for THEMSELVES!) customers.
The easier it is to get hold of an IPO, the less you should want to buy it.
Bear in mind that studies show that most IPOs lose money for a few years.
The underwriters hype them up, which raises the opening price. In a few months, the insiders who own the stock since the company was small, can sell their shares, which can depress the price. These insiders — company founders, top management and venture capitalists — make the real money from an IPO, since they got their shares when the company was worth next to nothing.
There’re thousands of companies already listed on the stock exchanges. You don’t have enough money to invest in all the great ones.
So you have plenty of companies to choose from.
When you hear about IPOs, for the most part you’re just reacting to the hype machine the PR people are paid to generate and the lure of scarcity, since those stocks are hard to obtain.
You can make plenty of money without ever risking your money with an IPO.
best, Rick Stooker