The biggest stock market winners typically make their major price moves within a few months or years of their initial public offering (IPO). So it pays to identify and track companies that are getting ready to go — or have recently gone — public.
What Is An IPO?
An initial public offering or IPO is when a privately-held company makes its shares available for trading on public markets, such as the New York Stock Exchange (NYSE) or Nasdaq.
Going public is a way for a company to raise capital, and can offer opportunities for secondary offerings of shares in the future.
An IPO can also be an opportunity for venture capitalists and other early investors to cash out and take profits. After a lockup period (typically from 90 to 180 days from the initial public offering), employees with vested stock options can also sell their shares on the open market.
When And How To Buy IPO Stocks
No matter how much hype there might be surrounding a new company getting ready to go public, resist the temptation to buy a stock right when it has its IPO.
You can greatly reduce your risk and still reap big rewards by waiting for the stock to prove itself before you invest. As a rule, look for companies that have the CAN SLIM traits of winning stocks and let it form an IPO base and breakout first.
As Snap (SNAP), Facebook (FB), Square (SQ) and many other IPO stocks have show, new issues often struggle before they find their footing and take off. So be sure to heed the lessons of big-buzz IPO stocks like Snap, Facebook and Square before your money at risk. Waiting for the stock to prove itself and establish a trading history will dramatically reduce your risk and still leave plenty of opportunity to reap rewards.
|Curevac N V||CVAC||8/14/20||16.0||120.43||652.7||13||Medical-Biomed/Biotech||Bofa Securities Inc|
|Kymera Therapeutics Inc||KYMR||8/21/20||20.0||78.06||290.3||25||Medical-Biomed/Biotech||Morgan Stanley|
|Montrose Environmentl Gp||MEG||7/23/20||15.0||39.78||165.2||20||Pollution Control||Bofa Securities Inc|
|Telus International Inc||TIXT||2/3/21||25.0||31.58||26.3||99||Computer-Tech Services||J P Morgan|
|Pulmonx Corporation||LUNG||10/1/20||19.0||60.24||217.1||14||Medical-Products||Bofa Securities Inc|
|Signify Health Inc Cl A||SGFY/NSE||27,025||17.0- 19.0||4304.3||Computer Sftwr-Medical||n.a./ 77||Goldman Sachs & Co.|
|Hylete Inc Cl A||HYLT/NSE||1,917||8.0- 10.0||60.9||Apparel-Clothing Mfg||n.a./ 65||Maxim Group Llc.|
|Irvine, CA. Provides advertising buying process for ads on desktop, mobile, TV, streaming audio and digital billboards.|
|Loandepot Inc Cl A||LDI/NSE||16,412||19.0- 21.0||6972.0||Finance-Mrtg&Rel Svc||5/ 17||Goldman Sachs & Co.|
|China. Chinese Co offers Anti-Counterfeiting Tax Control System tax devices and hardware and software sale.|
|High||% Chg||% Chg|
|Foghorn Therapeutics Inc||FHTX/ NDQ||10/23||17.0||16.0||-5.9||17.8||11.4||Medical-Biomed/Biotech||Goldman Sachs & Co.|
|Omega Alpha Spac Cl A||OMEG/ NDQ||1/7||10.0||10.0||.0||10.5||5.0||Finance-Blank Check||Jefferies Llc.|
|Kuke Music Hldg Cl A Ads||KUKE/ NSE||1/12||12.0||10.0||-16.7||9.2||-8.4||Consumer Svcs-Education||Deutsche Bank Sec.|
|Patria Investments Cl A||PAX/ NDQ||1/22||16.0||17.0||6.3||22.1||29.9||Finance-Investment Mgmt||J P Morgan.|
Risks And Rewards Of Buying IPO Stocks
In the right market environment, newly issued stocks can rise quickly, particularly those showing exceptional earnings and sales growth and strong demand among mutual fund managers and other large investors.
But new issues can also be quite volatile, and not all of them generate such impressive gains.
So before buying an IPO stock, be sure to do your homework.
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