The theme for this week is IPOs. An IPO, or initial public offering, refers to a stock that becomes publicly traded for the first time. When a company offers ownership for the first time to the public, it can seem like a great opportunity to get in on the ground floor, but investors should exercise caution when investing in IPOs.

So this week I’m sharing with you what you need to know when considering an investment in a newly minted publicly traded company.

Today, we’re going to dive a little deeper into that to discuss qualities you should look for if you’re serious about buying one of the upcoming IPOs in 2019.

If you want to be a smart IPO investor, you’ll want to look at an IPO the same way you would look at any other stock investment. That means you’ll want to look at revenue, profitability, debt-to-capital ratio, P/E ratios, etc.

Ah, but here’s the problem: Because an IPO isn’t a publicly traded company yet, that information is pretty limited.

You won’t be able to analyze historical trends in these fundamentals because there isn’t much history. A prospectus for an IPO will provide some basic financial data going back a few years, but it’s very limited.

On top of that, many IPOs are still losing money when they go public. You could find an IPO with strong fundamentals and a solid history of profitability, but it’s not typical.

Personally, I don’t want to invest in something that’s not profitable, and IPOs are no exception. That’s how investors got burned in the dot-com bubble in the late 1990’s. New internet IPOs were all the rage, and so investors usually didn’t look under the hood.  

That’s it for today. Thanks for listening!

My name is Ashley Micciche and this is the One Minute Retirement Tip.

---------

>>> Subscribe on iTunes: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Check out our blog: https://truenorthretirementadvisors.com/blog/

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance, wealth management, IPO, IPOs, what is an IPO, lyft IPO, uber IPO, recent IPO, pinterest IPO, initial public offering