When investing does anyone just play IPO’s? Or is that a bad idea?


IPO
Mariette asks:

Pro and Cons to new companies and where on yahoo can I see all the new IPO’s and upcoming Ones

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IPO

3 Comments to "When investing does anyone just play IPO’s? Or is that a bad idea?"

  1. Roselia

    Getting in on a true IPO is a matter of connections otherwise you will be forced to buy at the opening price on Day 1 which is not the same as their IPO price.

    There is no data showing that buying on DAY 1 of a new company is any better then any other investment. Plus if you are just looking up new IPOs chances are you never heard of the company.

    You can see IPO’s and earnings announcements if you search Yahoo Finance.

    Good luck, I hope I didn’t discourage you but for every IPO that shoots way up there are plenty of other that stagnate or go down.

  2. Inell

    IPO investing is tricky because of the nature of the deal. In reality the stock should be issued at a price that accurately reflects value. The reason a company issues stock is to raise money and the underwriters get a percentage of the deal. It is in everyones best interest to determine the highest price that the stock can be issued at because the company gets the most money as do the underwriters. So IPO’s in the land of reality should stay flat or move up/down a little bit because they are fairly valued. The only reason an IPO would logically climb on issue is that the underwriters and issuign company were idiots and completely missed the valuation of their company. This is EXTREMELY unlikely.

    We have all see what happens in pumped up markets (like now) where people pour money into IPOs driving the price skyward and making some people wealthy. This can create some issues because it’s common to require people who are allowed to purchase IPOs via the syndicate to keep their shares 30 days or risk getting restricted from purchasing future offerings.

    Trading in IPOs would be an option. You could probably try to get into the IPO at somwhere near the offering price via a limit order and hope that the volume simply drives the price up enough to score some profit and then sell out. It’s fairly common to do that. Investing in IPOs is a bit of a different story. Probably not a bad idea to get in on the ground floor of a company who’s product interests you. The unfortunate side of this is that many companies going public are doing so to raise the cash to further their business and some fail to accomplish their goals. It’s a bit riskier in some cases than buying established issues but when it comes to Visa or the like going public it’s hard to say they hold more risk than a long public company.

    Investing is all about due dilligence. If you like the company and they have a future why not get in at the bottom?

  3. Shayne

    If an IPO is anticipated to be a good deal, insiders, friends of insiders, brokerage houses, and big investors (clients) of investment brokerages get all the stock, there is none available to the little guy.

    If the IPO is not anticipated to be a winner, only the little guy will buy in,

    So I think it is a useless idea
    you want the good stuff, not the bad and you can’t have what you want.

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