The IPO market is back on fire and investors are once again falling over each other trying to get a piece of the newest publicly traded companies. The recent initial public offering of Lyft (LYFT) is a perfect example of why investors really should avoid getting caught up in the hype of a big IPO. To see why all you need to do is look at the stock chart of Lyft and see how it has fallen after its amazing ‘pop’ on its first day of trading.
The stock has a high of $88.60 per share, but is currently trading below the $60 per share range and has fallen as low as $54 per share. Lyft is not the only example of this flawed IPO process. Facebook (FB), Snap (SNAP), Blue Apron (APRN), DropBox (DBX) are just a few of the other bigger name IPOs that have had lots of hype surrounding them and nice jumps on the first days of trading but soon fell out of favor with investors. With Facebook, while it may have taken some time to gain traction, the stock did come back from its post IPO fall and has performed well for investors, but the others have yet to do so.
The issue with heavily hyped IPOs is that the companies rarely live up to the hype and the stock soon falls below IPO prices as investors realize growth and actual fundamentals of these companies don’t match the pre-IPO hype.
Now, this isn’t to say that all IPOs are failures. Roku (ROKU), DocuSign, (DOCU), BJ’s Wholesale Club (BJ) are all examples of recent IPOs that are trading higher than their initial public offering price and have rewarded shareholders.
So, you may be wondering how you filter out the IPO winners and loser? Continue reading "IPO ETFs A Better Way To Play Lyft, UBER, And Other Hyped Listings"