Ep 155: Before Trading or Investing in an IPO: What YOU Should KNOW!

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Today we’re going to take a look at investing in IPOs or initial profit offerings. Investing in IPOs is something that people are often attracted to because they think that company could be the next Google, it could be the next Facebook or the next Microsoft, and as those companies increase their value in the future, you’re able to make money from your investment.

Let’s take a look at some IPOs and I’ll share with you my own personal insights and wisdom about trading or investing in IPOs and maybe it’ll give you another perspective, and then you can make your own decisions.

IPO basics.

An IPO is an initial public offering. Which means you get to purchase a stock early on, when that company is new to the public market. Basically, you can’t buy a piece of a company if it’s a private company, but if it’s an IPO or public, you can get a little piece of that company before it gets to stage 10 as far as profitability goes.

If the company is just starting, then you’re able to get it at level 1 or 2, other than waiting until it’s already a mature company, allowing you to capitalize on that growth from the beginning.

Companies do an IPO in order to raise money, rather than getting a loan from a bank and having to pay the bank an interest rate. Instead what they do is get money from investors by doing an IPO. And then they can use that money to grow their business.

What’s the big problem with most IPOs?

Most IPOs are horrible investments. The problem is that when a company is just starting and it begins to grow, things start to change, and the company needs to figure things out.

When a company does an IPO, there are a lot of new tasks that need to be done, there are a lot of new headaches that come, and it needs to figure those things out, and it’s kind of like a deer trying to stand up for the first time. The company is just trying to find its footing because it’s going to that next stage and level. So the growth of the company is on shaky ground. That’s why you need to be careful when investing in IPOs.

Usually, the enthusiasm pushes those stocks initially, sometimes to extreme valuations and higher prices, and if you’re able to get in at the right time and get profits at the right time, you can definitely capitalize and make a great deal of money if your timing is correct. But that doesn’t happen to every IPO or every single company.

If the IPO is really good, if it’s a strong company, you don’t need to get in it the first day, week, month or even the first year. It takes one to two years for companies to digest things and start moving up. So there’s no need to rush into IPOs.

In this video, we’re going to take a look at some recent IPOs and evaluate how they’ve done in the past, and how you should be looking at investing in an IPO.

#ipoinvesting #trading #ipo #stockmarket #ipotrading

Posted at: https://tradersfly.com/blog/ep-155-before-trading-in-an-ipo/

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