Initial public offerings (IPOs) are companies that list on stock exchanges for the first time. IPOs are often referred to as new issues. The demand for IPOs depends on the company; in highly anticipated offerings, the market demand is often hot and can easily drive up the share price much higher on the stock’s debut.
There's an ongoing debate over whether the stock market is overvalued and vulnerable to a bigger correction than we have seen in the recent year. Based on the earnings growth, the valuation of the stock market may be somewhat high, but pricing is more based on the prospects going forward. One area in which investors need to beware of valuations, though, are in the newest IPO debuts.
Pre-IPO Valuations Utterly RidiculousWhat really concerns me is the insane valuation given to many of the venture capital–backed pre-initial public offering (IPO) companies. In my view, the valuations are not sustainable and deserving; albeit, there is so much froth swirling around here. Take the case of Uber, the provider of private car servic ... Read More
As many people know, one of the hottest areas in the market right now is technology stocks. Investor sentiment has continued piling into this sector—with good reason in some cases. The danger for investors is when investor sentiment becomes too bullish—technology stocks might be entering this territory. The latest of the technology stocks that has announced it is going public is the Chinese powerhouse Alibaba Group. Started in 1999 by a former English teacher, the company has now grown to be the largest e-commerce company in China and will soon be a public firm with a valuation of more than $140 billio ... Read More
The much-anticipated debut of Chinese Internet powerhouse Alibaba Group Holding Limited (NYSE/BABA) has arrived and gone. Even if you missed out on getting your hands on China-based Alibaba at its pre-initial public offering (IPO) price, you could still have purchased the stock at $82.81 on October 15 and made more than a 30% gain in two weeks. The stock traded at a record on Wednesday, as excitement continues to hold and gain traction in the U.S. stock market. With the gain and a market cap in excess of $265 billion, Alibaba is now bigger than Facebook, Inc. (NASDAQ/FB), but about $100 billion ... Read More
In the late 1990s, the demand and market for initial public offerings (IPOs) was sizzling with the promise of staggering one-day gains for those lucky enough to get in on the ground floor with share subscriptions. We saw millions made in one day for the chosen ones—the rich. But that was then. The IPO market, while still quite popular, is nowhere near where it was back then. Investors are now pickier on the issue. Recall King Digital Entertainment plc (NYSE/KING), the maker of Candy Crush Saga. In my view, this has to be one of the most hyped-up IPOs in recent times. Debuting at $20.50 ... Read More
The 3D-printing sector may be currently in an impasse but trust me folks, when I say the sector will be significant going forward and a buying opportunity as the price of the 3D-printing machines fall. My stock analysis is that 3D printers will become a common sight on the desk of many homes. Recall what happened when the laser printer first debuted in May 1984 with Hewlett-Packard Company’s (NYSE/HPQ) desktop laser printer. The initial cost was staggeringly high at more than $3,000, but now a laser printer sells for less than $100.00. The same thing will happen for ... Read More