Every large company sooner or later enters the world market and the first step for this is the initial public offering of shares. If at first the assets of the enterprise are owned by a limited circle of persons, during the auction, anyone can purchase shares of the companies. Entering the international market allows you to increase interest in the enterprise, find large investors.
A balanced approach to trends
In the most “hype” areas, ambiguous situations can develop. On the one hand, they pay more attention to them, and they grow, on the other hand, sometimes this growth is not supported by anything other than the enthusiasm of investors. As in the case of Reddit, when private investors inflated shares of the sinking company GameStop unthinkably. Now Robinhood is going to allow customers to participate in an IPO, which causes some investors to fear a repeat of the situation with GameStop.
The same Tesla is an example of a mainstream project that for many years showed losses and at the same time not only rose in price but also received constant capitalization from large investors, despite losses and the formally classic need to close such a business. But if Tesla is viewed as a project to create a culture of consumption and infrastructure for expanding consumption, then everything falls into place.
As in the case of common stocks of companies, and IPOs, investors cannot always correctly predict when stocks will rise and when they will fall.
It is better to invest in all companies that seem promising, noting that all public companies have gone through an IPO or direct listing at one time (not new securities are sold, but shareholders are selling already issued shares).
While uncertainty always remains, the risks associated with buying shares in an IPO can be managed through diversification and deep expertise.
Different times for investing
When deciding whether to participate in an IPO, pay attention not only to the scope of the company but also to the general state of the market at the time of the company’s IPO.
You can earn on different horizons. You could make phenomenal money on Facebook if you held the company’s shares for 5 years or more, and in the first months, you could only lose. The largest IT companies could make fantastic money by investing after the “Internet bubble” collapsed.
Investments through public funds
Invest through public funds. This advice is for unqualified investors who want to participate in an IPO. This way of participating in an IPO reduces the risk for investors. An unqualified investor can invest in an IPO not directly but through public funds. Funds take on the expertise of investments in IPOs. This reduces the risk for the end investor.
Purpose of the IPO
Assessing the chances of an IPO for success, according to experts, it is important to understand for what purposes the company entered it. Perhaps she wants to partially exit the business while she is at her peak, then these are additional risks for the investor. If the purpose of the placement is to attract investments for a significant expansion of the scale of the business, and your assessment of the prospects indicates the preservation of significant potential of the company, then if the assessment of the placement is acceptable, you should participate in the placement.
How to prepare for the first public sale of shares