This is an exciting year for tech start-ups, with Uber looking for a valuation of over $100 billion, over 4 times more than Snap’s IPO (Initial public offering) back in 2017, what investment opportunities are there a foot for the App’s we come to know and love?
Of course much is said about the risk’s of IPO’s – investing in a company when it offers it’s stock on a public stock exchange for the very first time. Early IPO Investors in Facebook who believed in the valuation and bought in at $38 per share would be full of optimism, only to find, and the media to very publically cover – the sharp share price fall with losing half that investment in the space of just a couple of months.
IPO’s are exciting, yet wary events. With Institutional investors purchasing a high amount of shares at that initial offering price, helping to drive up price, demand and excitement, only to sell all these shares en-mass for a quick profit, contributing to share price’s tumbling.
Likewise there is a distinct lack of information, there is no stock trading history, and the very nature of the IPO and the general public interest in a high profile tech company about to IPO create hype driving that share price up.
But you only lose that investment if you sell. Investors have full control over the share price they acquire their shares, and the time that they sell when done through a traditional Share dealing account, rather than Index trading platform; where Leverage and stop loss’s can result in these shares being auto cashed out and that share price reduction being actualised as a loss.
You should always review the business, it’s financials and rule with your brain, rather than following your heart and getting caught up in the hysteria that often surrounds a tech company’s IPO. Those investors who bought Facebook shares at $38, only to see them tumble to $17 through a Share dealing account, and rode out those hard times would happily be seeing those shares valued at $182 today.
With so many Tech unicorns coming to the fore in 2019, who should you look out for from Lyft; $25 billion, Zoom; $1 billion, Bumble; $1 billion, Cloudflare; $2 billion, WeWork; $47 billion, Pinterest; $11 billion, Slack; $7 billion and AirBNB; $35 billion, to name just a few.
Take the emotion out the company’s above, look at the business, it’s competitors and financials and add in the extra point that Founder Managed firms (Facebook, Amazon, Windows) tend to be lucrative investments. Pinterest could be one for the long term; the founder; Ben Silbermann, a product specialist at Google until 2009, before he quit to found Pinterest; is quiet, meticulous and isn’t burning through the high sum’s of cash than his other IPO counterparts.
Indeed his more conservative approach puts the long-term interests of both the company and its investors first and has allowed Pinterest to carve a segment of a highly competitive Social media market dominated by Facebook and Twitter by establishing a “Me time” niche. Allowing users to think and create board’s focussed on “What do I want my future to be?”, “Who am I?” and “What are the things that I want to do?”.
The site aims to resemble the real-life experience of spotting something in a window and thinking you like it, so that users naturally purchase the product from their own opinion, rather than it being forced upon them. It’ll be interesting and exciting to see what other revenue mechanisms Pinterest bring in to grow profit and that all important share price, but one thing future shareholders can probably count on is his public statements that he’s at Pinterest for the long term. Another Mark Zuckerberg perhaps? Initial IPO Investors can only hope so.
Sabe Interactive are not investment advisors, nothing in this article constitutes as investment advice and should not be read and acted upon for any other reason that topical debate.