How easy is it for a small investor to get in on a IPO? Will a discount broker be able to handle this kind of investment? The answer is no, correct? What kind of account do I need? Do I approach the company myself? If you could spare a line or two to share some light on this subject:
If you're not already a well-placed billionaire insider, you wait a good 6-9 months until the lockup period expires for the insiders to sell and you have a quarter or 2 worth of earnings reports and forecasts made public for you to base a sound decision on.
There's no way. Got it. By the end of the lockup period that big boom in stock value dramatically cools down, right?
That's your best chance of longterm (or even short term) success - wait for the insiders to sell whatever they plan to sell and for the froth and mania to have likely died out. You can hopefully get some sort of realistic idea of the company's value and go from there. Anything you might do very early on will be highly speculative. You'll quite likely buy at a highly inflated price right out of the gate and perhaps for a while after. Sometimes quick profits can be made shorting fairly early on once shares are made available for shorting (usually so many days after the opening day), but that's always a risk and can certainly go against you as well.
In depends on whether you can find a broker that can get you an allocation. You can subscribe for an IPO and if you're lucky you'll get a percentage of what you asked for. Unless it's a really hot IPO that is expected to jump significantly on the first day, the risk-reward of getting into it often doesn't pay off. You can often just as easily get in on the second or third day.
Sometime in the 1990s, the pager provider offered us shares of stocks worth 6,000 (about $150). We didn't know anything about stocks but since it was the number 1 pager company so we bought it. After some years, there came the cellphone and you can expect the pager to die a natural death... including our IPO shares. That served us a neat lesson so now we are very careful in parting with our money.
