Risks in IPO Investment

Risks and rewards are common in every industry. But, choosing how and where we expect and anticipate the risks and reward is most important. Doing our bit of research and working towards our goals is most important when it deals with finances.

IPO, aka Initial Public Offering, is a policy or an activity undertaken by the company to raise funds for improvement and expansion, with the help of the general public. Seeking more investors in one single region alone would reduce the value of the company while seeking the public investments has every chance of raising the company value and publicity!

But, as they say, ‘not all glitters are gold’ you must be careful enough to choose the one you need and the one that needs you. These days the IPO release is so gimmicked that public is drawn into confusion and hype and the decision-making skill is altered with marketing and digital space.

Here are few risks that you may encounter while subscribing to an IPO, or some things that you may want to consider before subscribing.

Don’t chase the IPO on the first trading session:

You might have missed the chance to buy the IPO in the listing period, that doesn’t mean that you rush in the first trading session and buy all that you can! Buying a stock in the IPO doesn’t mean you are buying it for a cheap price or at sale!! It just gives you a chance to become a part of the growth right from the very beginning and also gives a chance to get a confirm lot if you are an early bird (very early)!

Otherwise, refrain from rushing on the first trading session of the stock. If the company is good, then surely the stock price will increase in the first few trading sessions. We recommend that you wait for a week and see its opening and closing price for the week, make your research and then buy.

Never fall prey to Hype:

This is the worst part and a perfect marketing gimmick!! Creating a hype in media, so that the IPO gets over-subscribed and the company can make huge profits is the new trend. But, believe that ‘Empty vessels make more noise’! any company that has a perfect business model, and knows Plan A and Plan B, and has given consistent performances in the previous years will surely know its future outcome too and doesn’t rely much on marketing gimmicks. Their marketing would be just to reach to the public, unlike the normal overhyped commercials.