If you can get in on the ground floor of an IPO, that is getting an allocation in the initial share offering before the stock starts trading, there is evidence that you are likely to make a profit; IPOs tend to be underpriced. While this might seem like an obvious way to easy profits, there are a few crucially important things for you to consider.
References in this episode:
– Understanding the IPO share allocation process:
– Quid Pro Quo? What Factors Influence IPO Allocations to Investors?:
– IPO Allocations and New Mutual Funds:
– The Long-Term Performance of IPOs, Revisited:
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Wonderful content. Greetings from Colombia
The fact that you used cited sources so the viewer can conduct further research, 5 stars.
So I should not buy fresh IPOed company stocks?
As always, thank you for the terrific info! Presently, there's a lot of SPAC activity in the market. Perhaps a video on stock behavior post-merger between a SPAC and a private company?
You can get in via a ipo etf as an institution.
How do you invest in pre ipo’s?
What if you are an employee in the company which goes IPO and you have access to stock options? That would be pre-stock allocation, wouldn't you go for it?
What is minimum amount that you can invest in an ipo in Canada?
en español……o con subtitulos
So when you do a search for what the price of a share was during the ipo, is what being reported the initial allocation that you couldn't get, or the first day of trading? Because when I just looked up what a few recent ipos started at per share, and compare that to what it is trading for now, I figured I would have made quite a bit if I had got in. But after watching this video, I don't even know if that price is the price I thought it was (opening day of trading) or not?
What if a company goes public via a SPAC? Does it make sense to buy stock warrants and then convert them into shares once the merger goes public? Is that the cheat code I’m understanding or am I off?
Hi Ben, the script of this video is missing. By mistake, you added it to the Home Country Bias video so that the script of the Home Country Bias video would need its transcript.
I'm so glad I found you Professor.
Why aren't IPO shares distributed based on an auction system? That seems like a more fair allocation and price discovery system
I have been trading since last 5 years and have recently started investing in IPO's. Although this video could have been more comprehensive, it is still better than other IPO Intro videos on Youtube !! Kudos to you man !
What you are talking about shows that the stock market is very much rigged in favor of the privileged few. I just now started looking at IPOs as an investment strategy and discovered that those who can actually get in on the actual IPO have a huge advantage over those who can only get in on the follow-on after the IPO allocation of shares. And as you correctly pointed out, ordinary retail investors are usually unable to get in on the actual IPO.
Thank you
I learnt a long time ago never to buy IPOs. It's bad enough I'm picking an individual stock, but now it's a company without any track record on the stock market. Lol, no thanks.
I don't wanna share because i wanna keep this important knowledge to myself
IPO = Is Probably Overpriced 😅😅
Wonderful! What an excellent, crisp explanation, as always. Ben, if you would create a full video tutorial series for the CFA curriculum, you’d put Kaplan and all the other providers out of business immediately 😂