IPOs are definitely some of the most exciting investments that you can take on as someone interested in shares, trading and investing.
Initial Public Offers or IPOs usually arrive at the market with bulls and hype, attracting many investors, experienced and those with less experience alike.
Not many of these investors consider the dangers of investing in IPOs that come alongside great rewards in case that IPO turns out to be a true success.
That being said, investing in IPO is not entirely good or bad, as IPOs have their advantages as well as disadvantages for investors who decide to place their money and trust on initial public offers.
Reasons Why Investing in IPO is Good
IPOs can make millionaires it wouldn’t be the first time that would happen through an in initial public offer. The fact that IPOs are vested in hype and more likely bull runs due to the hype, greatly contributes to share price increases, which further makes profit returns to investors.
Even the riskier IPO can become gain if you do your research and know the numbers the company is dealing with – financial reports and estimates, as well as sales and even the sector the company is basing its business model on, are all very important for a successful IPO investment.
Reasons Why Investing in IPO is Bad
Aside the fact that not many investors are fully informed about the company going public through an IPO, which includes profitability and finances, as well as price share and estimates in oppose to the number of offered shares, IPOs can make you lose your investment through several other factors.
What is important to note is that almost none of the tech companies going public is actually profitable, while almost all are recording losses over their revenue, which is actually one of the riskiest things about IPOs.
If you want to avoid investing in “bad” IPOs that failed through their offer, the best is to do your research.