IPO (Initial Public Offering) is the process of a company going public by selling a portion of its shares to an unrestricted group of investors and raising capital for further development. However, IPOs are not only beneficial for the company, but also for investors. Often, shares in an IPO can grow by tens or even hundreds of percent on the first day of trading. Investors who participate in IPOs can significantly increase their capital. Here are a couple of examples:
- Recently, the well-known property rental service, Airbnb, conducted an IPO. On the first day of trading, its shares rose by 112.78%, and by the end of the lock-up period, the income of investors who participated in the IPO increased by 194%. That’s just one deal.
- Another often cited example is that of the software developer, Linux. On the first day of trading its shares rose by 737%.
There are many such examples, and participating in an IPO can bring investors very high returns. So, let’s figure out together how private investors can participate in an IPO.
In reality, not all stockbrokers can provide clients with access to purchasing shares in the primary offering. Many brokers simply do not have such capabilities, while in other cases, there are many restrictions on jurisdictions, investor status, capital size, and so on.
How a private investor can participate in an IPO in 3 steps:
Step 1: Choose a company for the IPO in which you want to participate. You can do this in the “Assets” tab. Open the chart.
Step 2: Place an order to participate. As you can see, the IPO chart differs from the familiar charts of currency pairs or CFD assets. This is a flat line with a fixed price. This is the price at which the company plans to sell shares at the time of the stock exchange listing. You can only place an order at this price. You cannot set a different order price in the order settings menu. Specify the number of shares you want to buy at the IPO.
Step 3: Wait for the listing day. On the day of the IPO, the price will change sharply. As mentioned above, the increase can reach hundreds of percent on the first day. If you choose the most promising IPO correctly, you can significantly increase your capital.
After the IPO day, you need to wait for the end of the lock-up period (this is the period during which shares cannot be sold, usually three months). After this, you can already fix the result.
Take advantage of this opportunity. Now you can participate in the IPOs of major global companies just like professional investors.
