Investing “Tips” on Initial Public Offerings [IPOs]

Some Investing Tips and Pearls

By Dr. David Marcinko MBA

Initial public offerings, known as IPOs, tend to attract a lot of investor interest – especially when the company is well-known. However, that excitement isn’t always matched by investment returns.

“Tips and Pearls”

So, here are some tips to consider before you decide to invest in an IPO:

• Don’t let the excitement surrounding an IPO cloud your judgment. Too often, there is little financial information about the companies themselves, and many are not profitable. This can translate into extremely volatile stock prices.

• While an IPO’s stock price tends to rise on the day it begins trading, investors who bought shares at the end of the first day haven’t always fared well. The stocks have often fallen below the closing first-day price after six months.

High volatility and a falling stock price are not generally a recipe for attractive investor returns.

So what steps should you take if you’re still interested in an IPO?

1. Understand that the opening price will likely be different from the official IPO price. New issues can experience extreme volatility in the first few hours and days of trading in the secondary market. When the company’s stock opens for secondary trading and becomes more widely available, the price can be significantly different from the IPO price set by the security underwriters. In addition, new issues often do not begin trading the moment the market opens.

2. Use a limit order. This can help you avoid paying more for the stock than you intended. Once you understand the risks of purchasing a stock during its first public trading days, work with your financial advisor to determine the highest price you’re willing to pay for the stock, and then set that amount as your limit.

3. Remember that an IPO must be priced before an order can be accepted. For example, Edward Jones typically does not accept orders until after an IPO has been priced, which is usually the morning the new issue begins trading. In addition, your financial advisor is not permitted to accept market orders for any IPO prior to its trading in the secondary market.




Remember to always do your homework before deciding on any investment, including an IPO. This includes working with your financial advisor or accountant to determine whether the investment is suitable for your portfolio.


Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements.

Book Marcinko:

Subscribe: MEDICAL EXECUTIVE POST for curated news, essays, opinions and analysis from the public health, economics, finance, marketing, IT, business and policy management ecosystem.


Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™8Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™


5 Responses

  1. Highest 2017 Profit Margins Among S&P 500 Health Care Companies

    1. Celgene Corp – 46.27%
    2. Gilead Sciences – 44.64%
    3. Amgen Inc – 40.47%
    4. Biogen Inc – 37.85%
    5. Alexion Pharmaceuticals – 37.66%
    6. Allergen Plc – 36.45%
    7. Intuitive Surgical Inc – 33.43%
    8. Regeneron Pharm – 32.37%
    9. Abbvie Inc – 31.94%
    10. Pfizer Inc – 30.61%

    Notes: Profit Margin (Adjusted)
    Source: CommonWealth


    Dr. David E. Marcinko MBA


  3. So who’s in the newest IPO class?

    * Wish is an e-commerce app that sells ridiculously cheap items.
    * Airbnb is the home rental giant that managed to survive the pandemic. It would be one of the biggest U.S. IPOs of the year.
    * Roblox is the incredibly popular gaming platform that your kid is probably using instead of doing her homework.
    * DoorDash is a food delivery company that scored a big policy win last week when Prop 22 passed in California.



  4. Late 2020 IPOs

    This week, DoorDash and Airbnb will go public in back-to-back mega IPOs, basically the sports equinox for Wall Street investors. Up tomorrow, the food delivery giant.

    DoorDash reportedly priced its shares at $102 a pop, which, on a fully diluted basis, would equate to about a $39 billion market cap. The company had been aiming for $90–$95 a share just last week.



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: