Should you invest in IPOs?

  1. The answer is no. Let me tell you a story. I was told I couldn't invest in IPOs until I had 6 figures in my account, I did that, they told me no it's now 7 figures, I did that too, then they ignored me. Anything you're allowed to buy at IPO is hot garbage, you'll never be let into a snowflake, an NCNO at a quarter of what it opened at, anything worth anything is reserved for the homies to dump on retail at 5x... if your broker is trying to sell you an IPO is cause it's hot garbage they can't sell it, like webull IPOs... OTC pink sheet trash.

  2. This is generally the case. I will just add that IPOs are high risk high reward and there are a lot of restrictions and problems OP might not know about. The grass isn't always greener and it's not literally risk-free free-money.

  3. Occasionally yes and have done very well at times but I think it increasingly feels like anything that's even a remotely noteworthy growth story is swarmed now. The Rivian IPO next week will probably be ridiculous. Bought PTLO and it was up like 65% in 4 days. Eventually that sort of appetite will stop and I think people have to have some awareness about market environment and look for signs that it's changing. Healthcare IPOs were more appealing for a while because it felt like they got less attention - did well with GH and TXG - but feels like if those sorts of things ipo'd today they would have more attention and open differently than they did.

  4. Let's clarify something first for newer folks: The IPO happens through an underwriter. As in the stock market bubble of 1999, today there are many newer investors who think the day they see the stock hit the public exchanges like NASDAQ it is an IPO. No, that's when the shares purchased by IPO participants are then immediately distributed on the open market. These may include institutional buyers who create liquidity and accredited or otherwise private investors who have been allocated blocks to purchase directly through the underwriter.

  5. Thanks for sharing your experience. Yes, I'm not even considering companies that went bust in the analysis, but if we take those into account then it's considerable more than 60%. What did they gain from delaying the process? didn't they make their cut already when they sold you the block (unless they placed some bets that benefited from a drop in price?)

  6. A significant number of the companies in that ETF are mature public companies, and not IPOs. Renaissance adds a few truly new IPOs every year but vast majority of the holdings are previous year(s) carryovers. Somewhat misnamed ETF.

  7. Ouch… worse than investing in an IPO is an IPO ETF. If investing directly in IPOs at least you have a chance, albeit small, of the stock doing ok or even getting exceptional returns.

  8. If you just throw money at an IPO because "Oh look! An IPO!" then no, it's not a good deal. Just because a company issues shares doesn't mean it has a good business model. Summing up over all IPOs tells you little to nothing.

  9. Absolutely. I like how most of the replies in this thread amount to just "investing into an IPO for the sake of it being an IPO is a bad idea."

  10. yes, but at that point you can just open your options to all available non-IPO stocks and you will more likely find better and safer bets in more mature companies.

  11. It ALL depends on the company in question. There is no one size fits all answer for IPO's if you like the company, BUY IT. Buffets wisdom should be used sparingly.

  12. Sure. I made armchair evaluations of NET and BYND before the IPO. I sold BYND real quick and made a chunk. I sold some NET, but am keeping the rest.

  13. Usually not a good idea. A lot of IPOs take a minute to establish a price, but that could be a positive or negative depending how you view it.

  14. I'm glad you did the actually book work level research too quantify all of the things my beginner mine has been feeling since Robinhood started pelting me with IPO offers.

  15. All depends on which IPO, lots of dogs out there these days. I prefer to invest pre-ipo in a company I have a strong conviction will do well once they go public. It’s a long game but can pay off really well if you’re patient.

  16. I’m curious how this calculation would change if you used IPO price and not price at close after the first day of trading. Now obviously most of us can’t get in at IPO price without being accredited investors, but more and more we’re seeing brokerages (Sofi, Robinhood) letting average investors in on the action.

  17. Just ran the numbers for you, the difference is not that significant but figures do improve slightly. Instead of 60% we get around 56%.

  18. I have put in for shares for a couple ipos on Robinhood and i have not been awarded any of the shares i requested. I am not sure what the justification is or the process they use to select who gets some and who doesn't. I have tried just asking for 1 share. Got zero. Tried asking for 10 shares. Got zero. Tried asking for 20 shares got zero. I give up. Not interested in ipo unless i can get in at ipo price and sell off some profits on opening day..... then hold residual for the long game

  19. Yes -- IF and ONLY IF you do the valuation work to determine a range of fair value share prices that you're willing to pay, BEFORE the market prices. Otherwise, your estimate of fair value will be influenced by the market (which usually overprices any halfway-decent looking IPO).

  20. I joined a company post series C funding, and believe they are on a path to IPO. I was too late/not senior enough to get equity.

  21. Nah. Why FOMO into something before price discovery settles out? No once in a lifetime opportunities in the market.

  22. While I do understand the point you’re trying to make here, I also believe at the same time that if it manages to sway the market and rake in profits, we can actually make great profits from IPOs. IPO investments are basically equity investments. This means that they have the potential to bring in some massive returns in the long-term, and can thus, help you fulfill long-term financial goals such as retirement or even buying a house. It’s a pretty good deal, in my opinion. You can also get the latest updates about upcoming IPOs with open date, offer price and issue size to invest in profit earning stocks from HDFC Securities

  23. One issue is that you have insiders offloading shares post ipo. The other question is if the company can actually use all the cash from the IPO effectively or if it is just wasted or if it all just goes to the founders.

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