What Is A Good Ipo ?
IPO is also known as a flotation. It happens when a firm decides to issue some or all of its shares or common stock to public investors for 1st time. Usually small and new companies do this in order to get capital for their expansion, but even larger private companies do so in order to become traded publicly. This investment can be really very risky.
Due to the lack of historical data of the firm, it is difficult to evaluate the firm and gets difficult to foresee what will happen in stock markets from the very first day to the upcoming future. The company’s future value is uncertain as they go through a growth period that is transitory.
There is no sure shot way of finding out which good IPOs are and which bad IPOs are. But while deciding which stocks to buy and where to invest one should keep a few things in mind. One should do research on the companies they want to invest in. One should not waste time. Usually there is brief window for firms to file their financials. Potential investors should keep track of whether the company has done so or not or else this will affect their investments. Good IPOs also keeps an eye out for who their buyers are. Investors and fund managers with a lot of money who are looking to invest in new ideas are the main targets. The pitch is catered to what they are looking for. The US IPOs do not usually have overseas buyers.
The recent unstable market situation left some investors with a chaotic balance sheet and they look to clean that up as soon as possible by investing elsewhere. It is important to keep the basics intact. Investors look for stability and comfort and that is usually what the bankers pitch with. Familiar names that people relate to and trust have higher chances of becoming an ideal IPO instead of the obscure ones. Mead Johnson is one such company who became a huge success in the field of IPOs as it is a veteran in the area of consumer goods. Fluctuating markets are like death knells for IPOs. It is imperative that the timing must be right. Thus keeping an eye on stock markets is very important. There are certain days when the market looks favorable. Companies must cash in on that otherwise the next auspicious day could be weeks away.
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