💥Friends, we are launching a new project. That is investing in IPOs (initial public offerings)💥
Actually, we have been investing in IPOs for a year so far. We are greatly satisfied with earned profit. Our team has become a genuine expert in IPOs market taking into account gained experience and skills in this field.
That is why we want to share our knowledge with you. Our ultimate goal is to help you make money by investing in IPOs.
We will be your reliable guide in this market.
Welcome to the exciting world of IPOs!🔥
Look at investment returns we have in the picture below (as to February 19th, 2020)
Actually, we have been investing in IPOs for a year so far. We are greatly satisfied with earned profit. Our team has become a genuine expert in IPOs market taking into account gained experience and skills in this field.
That is why we want to share our knowledge with you. Our ultimate goal is to help you make money by investing in IPOs.
We will be your reliable guide in this market.
Welcome to the exciting world of IPOs!🔥
Look at investment returns we have in the picture below (as to February 19th, 2020)
📌 What is an IPO? 📌
An IPO (initial public offering) is a process by which a private company becomes a publicly traded company by selling its shares to the public for the first time. It's also called "going public." After the IPO, shares trade freely on stock exchange (such as NYSE or NASDAQ).
Prior to an IPO, a company is considered private. As a private company, the business has grown with a relatively small number of shareholders including early investors like the founders, family, and friends along with professional investors such as venture capitalists or angel investors.
An IPO (initial public offering) is a process by which a private company becomes a publicly traded company by selling its shares to the public for the first time. It's also called "going public." After the IPO, shares trade freely on stock exchange (such as NYSE or NASDAQ).
Prior to an IPO, a company is considered private. As a private company, the business has grown with a relatively small number of shareholders including early investors like the founders, family, and friends along with professional investors such as venture capitalists or angel investors.
🔔 Why do companies go public?
Companies undertake an IPO for one of two reasons:
➡️ To raise capital for the company’s use (expansion, research and development, marketing etc.)
➡️ To allow early investors to exit their shares to monetize the investments they put in the company early on.
Capital raising
Companies that are raising capital by issuing and selling new shares do so to improve the financial health of the business.
Equity has two great advantages over bank loans and other forms of debt: it does not have to be repaid, nor are there regular payments to be made – dividends are paid at the option of the directors. In general, capital raising IPOs are undertaken in order to:
👉 raise cash in order to expand the business of the company;
👉 reduce the debt levels of the company.
The decision to go public for many companies is a strategic decision, not just a fund raising decision. The IPO process can be a catalyst for developing the company’s strategy more fully. It can also be seen as the final step in the financial development of a company.
Companies undertake an IPO for one of two reasons:
➡️ To raise capital for the company’s use (expansion, research and development, marketing etc.)
➡️ To allow early investors to exit their shares to monetize the investments they put in the company early on.
Capital raising
Companies that are raising capital by issuing and selling new shares do so to improve the financial health of the business.
Equity has two great advantages over bank loans and other forms of debt: it does not have to be repaid, nor are there regular payments to be made – dividends are paid at the option of the directors. In general, capital raising IPOs are undertaken in order to:
👉 raise cash in order to expand the business of the company;
👉 reduce the debt levels of the company.
The decision to go public for many companies is a strategic decision, not just a fund raising decision. The IPO process can be a catalyst for developing the company’s strategy more fully. It can also be seen as the final step in the financial development of a company.
⚡️Advantages of an IPO for a company:
📌 Raising equity capital. The company gets access to investment from the entire investing public to raise capital. Raised money can be used for things such as expansion, research and development, marketing, and whatever else a company needs to grow and make money.
📌 Access to alternative sources of capital and reduction of overall cost of capital. Another benefit is the ability to gain access to alternative sources of capital in the future. Quoted companies are often able to raise money for expansion more easily and at better rates than private companies of similar size. The public debt markets are more accessible to stock exchange quoted companies than to companies without a listing.
📌 Prestige/enhanced image. A significant, but intangible, benefit of a flotation is the increased visibility of the company through its ongoing disclosures to the stock exchange or securities commission. Many believe there is considerable prestige attached to managing and working for a publicly listed company. This can lead to the recruitment and retention of higher quality employees.
We will review some other benefits in the next post.
📌 Raising equity capital. The company gets access to investment from the entire investing public to raise capital. Raised money can be used for things such as expansion, research and development, marketing, and whatever else a company needs to grow and make money.
📌 Access to alternative sources of capital and reduction of overall cost of capital. Another benefit is the ability to gain access to alternative sources of capital in the future. Quoted companies are often able to raise money for expansion more easily and at better rates than private companies of similar size. The public debt markets are more accessible to stock exchange quoted companies than to companies without a listing.
📌 Prestige/enhanced image. A significant, but intangible, benefit of a flotation is the increased visibility of the company through its ongoing disclosures to the stock exchange or securities commission. Many believe there is considerable prestige attached to managing and working for a publicly listed company. This can lead to the recruitment and retention of higher quality employees.
We will review some other benefits in the next post.
⚡️4 more benefits of IPO for a company:
✅ Motivation of management and employees. Public companies can use such incentives as stock options and stock bonuses to attract and retain both higher quality management and employees.
✅ Helps in mergers and acquisitions. If the company wants to acquire another business, it can offer shares as a form of payment.
✅ Valuation and liquidity impact. Companies listed on a stock exchange are typically worth more than similar companies that are privately held. The information contained in an IPO prospectus and subsequent annual reports reduces the uncertainty around performance and hence increases the value of a business. In addition, investors are willing to pay a premium for liquidity: the ability to easily buy or sell shares. Private companies have limited or no liquidity.
✅ Ancillary benefits. Going public often forces a company’s management to formulate and articulate a clear business strategy for the first time. This clearly should be beneficial to the future success of the business. Along similar lines, the anticipation of public ownership leads many companies into improving their management and financial structure.
✅ Motivation of management and employees. Public companies can use such incentives as stock options and stock bonuses to attract and retain both higher quality management and employees.
✅ Helps in mergers and acquisitions. If the company wants to acquire another business, it can offer shares as a form of payment.
✅ Valuation and liquidity impact. Companies listed on a stock exchange are typically worth more than similar companies that are privately held. The information contained in an IPO prospectus and subsequent annual reports reduces the uncertainty around performance and hence increases the value of a business. In addition, investors are willing to pay a premium for liquidity: the ability to easily buy or sell shares. Private companies have limited or no liquidity.
✅ Ancillary benefits. Going public often forces a company’s management to formulate and articulate a clear business strategy for the first time. This clearly should be beneficial to the future success of the business. Along similar lines, the anticipation of public ownership leads many companies into improving their management and financial structure.
💥 Disadvantages of IPO for a company:
✅ Increased disclosure. When a company moves from private ownership to public, it vastly increases the number of people who have access to its financial records. This can be a huge shock to the existing owners, not just the reporting of the company’s results, but the disclosure of management salaries.
Companies are required by stock exchanges, securities commissions and regulators to disclose information on a regular basis so that investors and potential investors can make buy, sell or hold decisions.
✅ Costs of IPO. Initial public offerings aren’t cheap. Investment bankers take commissions of between 2 and 7 per cent of the total amount raised; lawyers and accountants bill by the hour, and many hours are required. The ancillary costs, such as public relations, printing, corporate advertising and others can add several hundred thousand more dollars.
In addition to the initial costs of the IPO, there are the costs of maintaining a quote (stock exchange fees, management time, more extensive audits and reporting, reconciliation of accounts to US GAAP if listed on a US exchange, etc.).
We will review some other disadvantages in the next post.
✅ Increased disclosure. When a company moves from private ownership to public, it vastly increases the number of people who have access to its financial records. This can be a huge shock to the existing owners, not just the reporting of the company’s results, but the disclosure of management salaries.
Companies are required by stock exchanges, securities commissions and regulators to disclose information on a regular basis so that investors and potential investors can make buy, sell or hold decisions.
✅ Costs of IPO. Initial public offerings aren’t cheap. Investment bankers take commissions of between 2 and 7 per cent of the total amount raised; lawyers and accountants bill by the hour, and many hours are required. The ancillary costs, such as public relations, printing, corporate advertising and others can add several hundred thousand more dollars.
In addition to the initial costs of the IPO, there are the costs of maintaining a quote (stock exchange fees, management time, more extensive audits and reporting, reconciliation of accounts to US GAAP if listed on a US exchange, etc.).
We will review some other disadvantages in the next post.
🔔 2 more disadvantages of IPO for a company:
📌 Potential loss of control. Vulnerability to takeovers. With the shares of the company being publicly traded, the shareholder’s ability to control their ownership on the company is reduced, and being exposed to threats of unsolicited takeovers.
📌 Meeting investor expectations. Investors and analysts often focus exclusively on the current quarter/reporting period, without giving due consideration to the long-term impact of decisions. Shareholders generally judge management’s performance in terms of profits and stock price.
Significant pressure exists to increase profits each period and to meet analysts’ expectations. This pressure may cause management to emphasize near-term strategies instead of longer-term goals. Managers may feel compelled to follow strategies that support the share price in the short term, rather than over a long time horizon.
📌 Potential loss of control. Vulnerability to takeovers. With the shares of the company being publicly traded, the shareholder’s ability to control their ownership on the company is reduced, and being exposed to threats of unsolicited takeovers.
📌 Meeting investor expectations. Investors and analysts often focus exclusively on the current quarter/reporting period, without giving due consideration to the long-term impact of decisions. Shareholders generally judge management’s performance in terms of profits and stock price.
Significant pressure exists to increase profits each period and to meet analysts’ expectations. This pressure may cause management to emphasize near-term strategies instead of longer-term goals. Managers may feel compelled to follow strategies that support the share price in the short term, rather than over a long time horizon.
💥 What is the IPO Process?
❗️These are the 9 key steps in the IPO process:
✔️ Select underwriters (investment banks) to advise the company on its IPO and to provide underwriting services.
✔️ Due diligence.
✔️ Filing the SEC (The U.S. Securities and Exchange Commission) Form S-1 (Registration Statement).
✔️ Marketing. The IPO Roadshow.
✔️ Pricing.
✔️ Allocation.
✔️ Going Public.
✔️ Stabilization.
✔️ Transition to market competition.
We are going to review each step in details in the following posts.
❗️These are the 9 key steps in the IPO process:
✔️ Select underwriters (investment banks) to advise the company on its IPO and to provide underwriting services.
✔️ Due diligence.
✔️ Filing the SEC (The U.S. Securities and Exchange Commission) Form S-1 (Registration Statement).
✔️ Marketing. The IPO Roadshow.
✔️ Pricing.
✔️ Allocation.
✔️ Going Public.
✔️ Stabilization.
✔️ Transition to market competition.
We are going to review each step in details in the following posts.
🔥 Zoom Video Communications - one of the best companies that went public in 2019 and one of the best IPOs we participated (+161,4% for 3 months)
Zoom is the leader in modern enterprise video communications, with an easy, reliable cloud platform for video and audio conferencing, collaboration, chat, and webinars across mobile devices, desktops, telephones, and room systems. Zoom helps businesses and organizations bring their teams together in a frictionless environment to get more done.
IPO price - 34$
Current price - 138,11$ (+306,2%)
💰The company's shares are significantly outperforming the main US stock market index S&P 500 in this year.
Zoom is the leader in modern enterprise video communications, with an easy, reliable cloud platform for video and audio conferencing, collaboration, chat, and webinars across mobile devices, desktops, telephones, and room systems. Zoom helps businesses and organizations bring their teams together in a frictionless environment to get more done.
IPO price - 34$
Current price - 138,11$ (+306,2%)
💰The company's shares are significantly outperforming the main US stock market index S&P 500 in this year.