Initial public offerings or IPOs became popular and part of everyday speech in the late 1990s. Since that period, they have ridden the ups and downs of the market and followed its overall trend. If the SandP goes up, then IPOs go up, however, if the market goes down, then IPOs also go down. Since 2015 was considered the best year for IPO?s since 2000, here are some other facts you may want to take into consideration when looking for your next big investment as part of your prime brokerage services for professional traders.
? When an IPO is offered, the company usually only releases 10% to 15% of the company for sale. Therefore prime brokerage services for professional traders need to find a way to capitalize on the tiny bit offered.
? Those that are given stock in an IPO company are required to sign a contract and hold onto the stock for a period of no less than three months and no longer than two years.
? The price of an IPO is generally 10% to 15% below the regular trading price of the stock being offered.
? IPO data indicates that institutional investors, such as hedge funds and investment banks, who are willing to buy large quantities of stock before it is made public benefit the most, especially when they make a triple-digit gain on the first day of trading, as is usually the case.
? IPO news is reported by the ETF or exchange traded fund which tracks the top 100 US IPOs for their first 1,000 days of trading.
Prime brokerage services for professional traders can back this up by citing the IPOs of Etsy, Shopify and Fitbit. The IPO data for Etsy showed that it opened up 94% from its indicated price. Shopify IPO reports an increase of over 65% when it began trading and Fitbit, which offered more than 36 million shares worth an estimated $741 million has seen its price rise by over 50% and maintain the 50% increase for over six months.
Of those prime brokerage service for professional traders that offered secondaries in the second quarter of 2015, over 40% had positive first-day performance. In addition, about 2% were unchanged and over 50% went down on the first day of trading. However, if you were to look at the market trends, you would see that the market performed about the same as the new issues. It is best to research a company before making an investment and not rely on market performance alone.
