Profit From The Booming IPO Market With These ETFs
Zacks Investment Research | Mar 23, 2014 01:20AM ET
After a strong 2013, the IPO market continues to be hot this year. High investor demand, low interest rates, rising stock market and improving economy are the main reasons driving the IPO boom. Investors are now much more willing to invest in these fledgling companies, in anticipation of high rewards later.
Some of the highly anticipated IPOs continue to feed the frenzy. The most hyped IPO event this year undoubtedly is the US stock market debut of Chinese e-commerce giant Alibaba. The IPO is likely to be one of the largest in history with an expected valuation of ~$130 billion.
Strong Momentum in the IPO Market in 2014
49 deals have been priced so far in 2014, up 81.5% from the same period last year and proceed raised ($8.0 billion) are up 24.2% from last year, according to Renaissance Capital. That is a strong rebound from the lows seen in 2008, at the height of the financial crisis, when just 31 companies went public.
Looking at the industry breakdown, Healthcare has seen the most offerings (26) this year though the rise has been spread out across various industries. This is nice change from the dot-com bubble days when the IPO space was totally dominated by the tech companies.
Are all IPOs successful?
Investors hoping to profit from this surge should however remember that not all IPOs are successful. While a handful of these fledgling companies may turn out to be excellent investments, some may result in big losses.
If you have excellent skills in picking newly public companies, which may later turn out to be like Google Inc (NASDAQ:GOOG), Apple Inc (NASDAQ:AAPL) or Tesla Motors Inc (NASDAQ:TSLA), then individual IPOs are the best for you.
But actually investing in smaller, rather unknown companies can be quite risky. Original post
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