The IPO Market is getting hot

Good Morning,

Over the past couple of days, various news sites have posted about Initial Public Offerings (IPOs), because Uber is supposed to be going public next year. Bloomberg published an article yesterday about IPOs and the possibility of a bubble. A couple takeaways from this article were:

1. Some of the big tech companies have frothy valuations that are remarkably higher than the average company in the S&P500
2. Tesla which went public in 2010 has failed to make a profit and some of the most recent tech IPOs continue this trend
3. This is similar to the dot.com bubble of the late 90's early 2000's

While this article paints a gloomy picture, it does highlight that fundamentals (and more importantly profit) matter. When taken into context of what we have seen domestically since September 20, in a falling market, companies that do not earn money carry a higher risk (i.e., Tesla, Snapchat, Pot Stocks, etc.). Also, the companies coming public now are not like the Amazon, Google, or some others that are quasi-monopolies.

At the end of the day, IPOs are a way for the first group of investors to cash out, so as the investor you need to think about why someone else is selling and you are buying. As always do your own research before buying these companies.

Primary link
https://www.bloomberg.com/view/articles/2018-10-23/big-tech-ipos-look-like-the-buildup-to-a-bubble?srnd=premium

 Most anticipated IPOs for 2019
https://www.cnbc.com/2018/10/18/tech-ipos-expected-in-2019.html

#financialliteracy #bloomberg #ipo #tesla #dotcom #snapchat #potstocks #stockmarket #cnbc #technology #financialfloyd #uber #phillyfinance

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