What is an IPO or how to make money on a company's first public offering of shares
Despite the global economic crisis, the stock market continues to attract potential investors.
After all, the best time for investment has always been considered to be the time when the price is at its minimum; it is at these moments that you can purchase assets with the greatest growth prospects.
One of the most interesting assets in the current situation is new shares of companies that are just beginning to be traded on the stock exchange.
IPO (Initial Public Offering) is the initial placement of securities on the stock exchange as a result of which a closed joint stock company becomes open to any investor.
How to make money on an IPO?
To make money on the first placement of shares, you need to find a promising company that will enter public trading in the near future.
First, you should open an account with one of the brokerage companies - https://time-forex.com/vsebrokery/brokery-fondowogo-rynka
Then you should submit an application to participate in the upcoming placement, then wait for the start of trading and act depending on where the price goes.
Very often, after the free circulation of shares begins, their price increases by tens of percent; promising companies are always in great demand on the stock exchange, and investments in them are considered good investments.
After purchasing, shares can be sold without additional commissions only after 30 days, otherwise you will have to pay 1.75% of the sale amount.
How to choose the right company to invest in
In our case, this is the most important question, since new shares do not always immediately begin to rise in price after entering the market; there are cases when the price fell and never reached the offering price:
Therefore, the issue of choosing an IPO must be approached with maximum responsibility; there are several aspects that you need to pay attention to:
• Reputation of the underwriter - the company that evaluated the shares before entering the market. Since the underwriter, if he has a personal interest, can significantly inflate the value of the security.
• Popularity of the product – investors are much more willing to buy securities of companies that produce well-known brands. Product recognition plays a role here.
High demand increases the price in the first days of trading, and increases the possible amount of profit.
• Financial condition – this factor cannot be ignored either; it is clear that no one will want to buy shares of a company that ended the previous year with losses.
• Situation in the industry – this factor should also be noted; when planning, one should take into account which market segment the company belongs to and what the general situation is in this sector of the economy.
• News analysis – often the news contains information about the company we need, we should evaluate how positive or negative they are and what impact they may have on the price.
With the right approach, it is quite possible to buy securities that will bring tens, and possibly hundreds of percent of profit to their owner.
The main thing is not to rush and choose a truly promising company whose shares you can make money on.