Initial Public Offering Investing Strategy is the process of investing in IPO’s. IPO’s are securities that have not been publicly traded before, and are being offered for sale to investors by a company seeking capital or going public. The IPO process begins with the underwriting of an IPO, which includes creating an IPO prospectus, offering shares on behalf of the company to institutional investors, and then having these institutions offer shares to their clients. IPO Investing Strategies can be carried out through any number of investment channels including directly from issuers via online marketplaces such as Second Market Inc., or indirectly through intermediaries like banks or brokers who participate in IPOs on behalf of their customers.
A different investment strategy
Investing in an IPO is a strategy based on growth. The investor who buys the shares of a company on the first day of trading expects that the business will grow in the coming years. IPO Investing requires a long term view and faith in the IPO company.
The IPO investing process
The IPO investing process usually takes between three to six months, with some IPOs taking up to several years before they are available for purchase on the stock market. The IPO is only accessible at certain points of time throughout this period; thus, an investor will have limited opportunities to purchase IPO shares. Most IPO’s are sold to large institutions, such as hedge funds and mutual funds who then distribute them among their clients based on a pre-set investment policy or investment strategy.
Examples of IPO successes
Here are a few cases where investing in the initial public offering of a company were a great success.
The social media company, Facebook Inc., had its IPO in 2012. On May 18th of that year, the IPO priced at $38 per share and the stock opened around 11% higher at $42 a share, making it one of the most successful IPOs since Google’s IPO back in 2004. In fact, Facebook ended up being the biggest IPO in history, when measured by market capitalization.
The computer and mobile device company Apple Inc., had its IPO in 1980 at a share price of $22 per share. At that time, it was under Steve Jobs’ leadership who turned out to be an all-time great entrepreneur after creating one of the best IPO’s of all time.
Before eBay Inc., became a household name, it had its IPO back in 1998 under the leadership of Pierre Omidyar as one of the most successful IPOs to date.
IPO Investing Strategy Summary
Initial Public Offering (IPO) investing is an investment strategy that can be carried out through any number of investment channels including directly from issuers via online marketplaces or indirectly through intermediaries like banks or brokers who participate in IPOs on behalf of their customers. IPO Investing Strategies are based on growth and require a long term view, faith in the IPO company, as well as limited opportunities to purchase IPO shares.
Here are a few cases where investing in IPO’s have been successful:
– Facebook IPO – Apple IPO – eBay IPO.