An IPO is often preceded by many months to years of planning: the success factor is in particular the selection of a consortium of banks - in addition to other work steps such as due diligence (analysis of strengths and weaknesses, investigation of risks, etc.) and the listing procedure.
For the new issue, primarily institutional investors play a role - such as investment companies and corporations. A smaller share is taken by private investors, whose demand can nevertheless help fuel share development.
What should I look out for as an investor?
An IPO - especially with large companies - is always followed closely in the run-up. Investor interest decides whether the share price takes off on the first day of trading in exness personal area login or whether the stock falls short of expectations. But how do newcomers to the stock market recognise whether the entry is worthwhile and which shares remain profitable? In fact, many new stock market starters disappoint and turn out to be rather expensive teaching money for private investors.
The following tips will help you with your research and provide initial indications of possible success or failure:
Entrepreneurial growth is a key factor. If sales figures stagnate or even decline, the share price is less likely to move upwards. If the growth of a public company slows down, investors often turn away in droves and send the security on a downward slide.
The second component is profit. Quite a few start-ups set their sights on expansion in recent years, but they did not make a profit. The best example of this is the ride-hailing company Uber, which has made a name for itself with strong increases in sales. However, profits have so far failed to materialise. Accordingly, the share price is also highly volatile and is currently well below the issue price of 45 US dollars.
The results of a study by Goldman Sachs are also significant on this topic. The US bank looked at 4,481 IPOs over a period of 25 years and examined these five aspects more closely:
Sector and industry (e.g. the healthcare industry had the highest failure rate).
Company age (not a decisive factor, but younger companies often have the highest growth rate)
Valuation (not very meaningful, e.g. IPOs are more expensive just before a recession)
Profitability (the first three years after the IPO are a good indicator)
Sales growth (most important indication of how the share will develop in the future)
Which IPO are you looking forward to next year? Discuss your opinion with us and the community!
Conclusion:
For 202, stock market players are eagerly awaiting IPOs from Vantage Towers, AUTO1, Ant Group and other corporate giants.
For your investment decision, first and foremost check sales growth and profit (profitability).
Other indicators (such as the age of the company and the valuation), on the other hand, only provide minor clues as to whether the entry is worthwhile.