What is an Initial Public Offering?
An Initial Public Offering (IPO) is an event that occurs when a private company offers its shares to the general public for the first time. You can monitor upcoming IPOs through global market exchange websites such as NYSE or NASDAQ, or you can subscribe to IPO alert services for a monthly fee. Investing in initial public offerings can be a great investment opportunity when proper research is conducted on the underlying company.
Benefits of Investing in Initial Public Offerings
The biggest benefit of investing in initial public offerings is the opportunity to buy shares of a company at a lower price and benefit from its long-term growth. Consider the following companies and their growth since going public:
- Zoom Video Communications (NASDAQ: ZM) – Total growth of 452.66%
- Peloton Interactive, Inc. (NASDAQ: PTON) – Total growth of 347.37%
- Roku, Inc. (NASDAQ: ROKU) – Total growth of 2,631.71%
- Pinterest, Inc. (NYSE: PINS) – Total growth of 223.83%
If you had invested just $1,000 in any of these companies on their first day of trading, your investment today would be valued between $2,238 and $26,317. Additional benefits of investing in initial public offerings include portfolio diversification and owning a part of a company that may change an entire industry.
New York Stock Exchange
The New York Stock Exchange (NYSE) is one of the largest stock exchanges in the world. You can view past, current, and future initial public offerings through its IPO center. Here you can view upcoming offerings, recent offerings, IPO price statistics, and charts of past offerings through its IPO section.
NASDAQ
The NASDAQ is also one of the largest stock exchanges in the world and provides reliable information about upcoming initial public offerings. It offers details about upcoming offerings through its IPO calendar with IPO submission statuses such as:
- Upcoming: upcoming public offerings and their corresponding listing dates
- Price Set: offerings that have set a price per share
- Submitted: a list of offerings that have been previously submitted
You can view IPOs here that will be listed on both NASDAQ and the New York Stock Exchange.
Yahoo! Finance
Yahoo Finance can be a great resource for tracking upcoming public offerings listed on almost all global stock exchanges, such as the New York Stock Exchange, NASDAQ, London Stock Exchange, Australian Stock Exchange, and many more. Through its IPO calendar, you can view past and upcoming IPOs with additional details such as the exchange they will be listed on, their status, the number of shares, and potential price ranges.
Google News Alerts
Google Alerts is a great way to track upcoming initial public offerings. By setting an alert for specific keywords like “upcoming IPOs” or “initial public offering,” Google will track the web for news and content related to those keywords and send regular email updates. Here’s how to set up a Google alert for upcoming IPOs:
- Go to Google Alerts to enter the keywords you wish to track.
- Type “initial public offering” and other related keywords to add to Google Alerts.
- Adjust the settings to customize how you receive alerts.
Based on the alert parameters you set, you will receive regular email notifications about new web content related to the keywords you chose.
Subscription IPO Alert Sites
You can stay informed about upcoming IPOs to invest in by subscribing to IPO alert sites. For a small fee, you will receive details about upcoming IPOs and their current status. Some popular IPO alert sites to consider include:
- IPO
Scoop: Paid subscribers get access to the public offering calendar and public offering documents such as S-1 filings, new pricing, popular ratings, email alerts, and exclusive emails every Friday morning with a summary of public offerings from the previous week. Cost: $19.95 per month, $199.50 annually. - IPO Monitor: For a small monthly fee, you get access to exclusive public offering calendars, pricing, public offering news, important dates like lock-up expirations, performance indicators, industry analysis, and quarterly reviews. Cost: $29 per month, $290 annually.
- Renaissance Capital: Subscribers receive news on upcoming public offerings and exclusive educational material on public offerings, IPO statistics, timelines of public offering statuses, and customized email alerts. Cost: Free (IPO Center), $97 per month or $948 annually (IPO Pro).
Note: To subscribe to these joint services, create an account with your email, password, contact information, and payment details. You have options to pay monthly or annually.
Frequently Asked Questions (FAQs)
Are initial public offerings a good investment?
Like most carefully studied investment strategies, initial public offerings can be significant investment opportunities, but they may not be suitable for all investors. Before investing in an IPO, ensure you conduct some research to understand the company you are investing in. Due to the lack of sufficient information about newly listed companies, it may be challenging to find the basic facts for investing in an IPO. The best place to find relevant information about an upcoming IPO is through the company’s documents filed with the U.S. Securities and Exchange Commission, such as the S-1 statement and the preliminary prospectus.
Are initial public offerings profitable?
Whether initial public offerings are a profitable investment depends on good research about the underlying company. Choosing a company with a strong competitive advantage in the industry, favorable financials, and excellent leadership are some positive traits to look for in a fair stock investment like an IPO. But remember: annual IPO returns can vary significantly from year to year.
Can you buy an initial public offering before it goes public?
Yes. However, you must be a client of the dealing bank or its affiliates, or a trading app that offers initial public offerings, to participate directly and purchase IPO shares before they are listed on public markets.
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Sources:
Yahoo Finance. “Zoom Video Communications, Inc. (ZM).”
Yahoo Finance. “Peloton Interactive, Inc. (PTON).”
Yahoo Finance. “Roku, Inc. (ROKU).”
Yahoo Finance. “Pinterest, Inc. (PINS).”
IPOScoop. “How To Subscribe.”
IPO Monitor. “IPO Monitor Subscriptions.”
IPO Pro. “Pricing.”
Source: https://www.thebalancemoney.com/new-ipo-alerts-how-to-find-and-invest-in-upcoming-ipos-5194392
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