Would you want to miss the next Amazon or Apple if we asked you this question? Obviously, you would say no. If that’s the case, you should investigate initial public offerings (IPOs). IPO stocks differ from other forms of stocks in that they allow ordinary people (like you and me) to invest in a growing firm that could become the next big thing.
IPO stocks may be quite profitable, and it’s not uncommon for them to quadruple in price just days after their original release. There are numerous examples of this, and you can see 25 IPOs that surged on their first trading day on this list – these are just one of many, and there are other examples as well.
You may believe that you are too late to the party and that the train has already passed you by. You might believe that catching another unicorn firm that will provide millions to the first stockholders is impossible. However, this is not the case.
Every week, new firms with a lot of promise announce their IPOs, one example being Zomato, a company that raised over $1 billion in stock value even before allowing the public to participate in the stock listing in July 2021.
There are numerous instances, such as Zomato, but you are mistaken if you believe that you, as an average Joe, cannot be among the first to participate in an IPO. You simply need to know where to look.
Yes, investing in IPOs, particularly in the crypto realm, is a tremendous risk – but on the other hand, if your IPO investment pays off, you may win the lottery.
In this post, we’ll discuss initial public offerings (IPOs), particularly in the bitcoin space. We’ll look at why initial public offerings (IPOs) are a viable option for investors, how to find them, why they are considered to be a good investment and what you should know before investing.
What is exactly an IPO?
All of this might sound like a fairytale – you might be wondering: “There is a chance that I can become a millionaire! Are you kidding me”? But, before you start spending your millions, we first need to distinguish what exactly is an IPO and how it is relevant in the crypto space.
Each of the three letters in the word IPO stands for a different term (IPO – Initial Public Offering). You may now have a better understanding of what an IPO is and what it stands for. But let’s delve a little deeper into the topic.
An IPO stock (or initial public offering stock) is a type of stock in which a corporation sells its stock to the general public for the first time. We say stock, because IPO is very popular on the stock market – but the same also applies for crypto, which we will talk more about later.
Let’s take a look at an example: imagine you’re the owner of a business. You are the owner of a promising little business that is booming and has grown significantly in the last couple of years. It doesn’t matter if you work in the crypto area or in another industry. You think that it can grow even more so, you want to raise funding to improve and expand your firm since it has potential.
But you’re short on cash, right? After all, you own a little business. As a result, you decide to sell your shares to the general public. A regular Joe may invest and buy your stocks, and you will receive money that you can utilize to expand your firm.
And everyone is happy: Joe because he made a potentially successful investment, and you, as a business owner, can use that money toward improving your processes and increasing your profits.
The recent IPO sale of the well-known Indonesian business Bukalapak is an excellent illustration of this. The first public offering netted the corporation approximately $1.5 billion, more than enough to grow and strengthen their business.
Let’s also go over the distinction between public and private businesses. Private corporations are not listed on any major markets (such as the London Stock Exchange), and they do not allow the public to acquire their stock. This is the case for many small/medium companies.
A public firm, on the other hand, allows the general public to acquire its shares (via an IPO, for example), and it is listed on major stock markets. When the company goes public, it generally means that it’s going a step further and aiming to become a bigger company.
Can you buy IPO stock?
Probably after reading all of this, you have a smile on your face. You now think that you will go to the nearest stock market and buy the first IPO you lay your eyes on. But, it’s more complicated than that – if not, everyone would be investing in IPOs!
Before you buy IPO stocks (or coins), it’s important that you understand the fundamentals of the trading and crypto space. Even though an IPO might seem complicated, they aren’t – but first, you need to get a hang of simple crypto trading strategies before you jump to this one. So, can you (and how can you) buy IPO stock/coins?
The simple answer is yes, IPO stocks can be purchased. The truth is a little different, and you’ll need to meet a few requirements before you can get your hands on those valuable shares that might increase in value by several times in the coming years.
To begin with, you cannot simply stroll down the street and purchase an IPO stock or coins. You must first open an account with a major brokerage firm that is licensed to trade initial public offering stocks/coins.
Giving a broker authority to acquire IPOs on your behalf is another, more traditional option. Many people have never traded and have never opened a brokerage account – so this is a simple solution for them. In any way, both choices work. If you have experience and the authorization, you can buy IPO stock/coins yourself, but if you feel more comfortable that someone else does it for you, that is totally fine.
IPOs in crypto
Initial public offers (IPOs) were largely available in the traditional stock market. However, because the crypto field has taken the globe by storm, IPOs for crypto enterprises have become available. And the majority of them have the potential to be quite profitable.
Let’s start with Bitcoin, which is the most well-known cryptocurrency. Although Bitcoin did not have an IPO in the traditional sense, it did have early bird investors who bought it at its lowest point ($0.0008)!
Consider how wealthy individuals who purchased Bitcoin at that price are now, given that its all-time high sits at $62.000 at the time of writing. If they had resisted the impulse to sell it sooner, they would today be billionaires.
But, Bitcoin, although it’s the most famous cryptocurrency, isn’t the only one that is now trending. Solana and Ripple are two examples since their price skyrocketed, and they offered an IPO to early investors.
Initial public offers (IPOs) for cryptocurrencies are incredibly prevalent, and with over 100 cryptocurrencies making the news every day, it’s clear to understand how IPOs play a significant role in the crypto market.
But, before you take a dive and go on an IPO investment binge, there are a few things you should know about cryptocurrency and initial public offerings. We have mentioned that IPOs are prevalent in crypto, but “rug-pulls” are much more common. What precisely are they?
Rug-Pulls in crypto
When someone creates a cryptocurrency through an initial coin offering (ICO – equivalent to the IPO in the stock world), only a small number of individuals will get the first batch of coins and wait for the cryptocurrency to be released. When the currency is made accessible to the general public, the first investors will conduct a “rug-pull,” or sell their coins for a greater price than the general public.
The IPO buyers won’t earn a fortune this way – in most cases, they’ll sell the crypto for 30% more than they paid for it – but hey, a profit is a profit, especially if you spent a lot of money.
This move will cause a quick decrease in the value of that coin, and the price will collapse in a couple of days, rendering the money useless.
Guys who acquired the coin during the IPO are pleased, while investors who bought the coin at the time of listing are not, since the coin price has plummeted dramatically as a result of significant players selling their holdings at the time of listing.
On the traditional stock market, this type of activity is strictly prohibited, and particular regulations are in place to prevent such “rug-pulls.” These sorts of frauds are common in the crypto sector, since everything is decentralised and not controlled by anybody.
This is why you should always double-check the source of the currency, the project behind it, and whether or not the project owners have identified themselves when purchasing crypto IPOs.
We could say that crypto is a double-edged sword. Even though it’s good that anyone can make a cryptocurrency and that there isn’t a centralized institution behind it, this can also turn out to be extremely fraudulent. Because anyone can do it, from the comfort of their own home, the security of the investors is not on a high level.
This is why you always need to invest in proven projects that have a credible team behind them. If you contemplate investing in a coin that is a meme or that doesn’t have any real-world use case, we urge you to think twice.
We’ll also offer you a little tip. NFTs are very popular, and new initiatives appear on a daily basis. Most of them are genuine, and if you act quickly, you can get your hands on that golden coin before it goes public.
IPOs might be your best bet
You should be aware of initial public offerings, especially if you are a crypto trader. Simply said, if you are the first to market and invest in a project with a strong idea and a good project team, you may expect a multiple-fold increase in your investment.
Are you afraid of missing the next Bitcoin or Ethereum? After all, your first investment may turn out to be a unicorn, and you could become a multimillionaire! If that’s the case, initial public offerings (IPOs) should be on your radar, and you should invest a modest portion of your portfolio in them.