Initial Public Offering (IPO) stock investment has the potential to deliver attractive returns. An IPO refers to the process of offering shares of a private company to the public in a new stock issuance. To invest in an IPO, investors can purchase shares as the IPO stock become available on the public market. Before investing in an IPO, be sure to do the following steps.

  • Do deep objective research (search online for info on the company, its competitors, financing, past press releases and industry health) about the company that is going public.
  • Select an IPO company that has the backing of strong underwriters, such as Goldman Sachs or Morgan Stanley.
  • Consider waiting for the lock-up period (lasting 3 to 24 months) to end, which prevent underwriters and company insiders from selling any shares of stock during the lock-up period.

Basically, investing in a newly public company, IPO, can be financially rewarding if investors follow the steps as listed above.

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