You're about to invest in the next biggest company to list on the stock exchange. You dream of a luxury island & a private jet - but you end up eating canned food instead.
Here's a guide to the insider secrets of IPOs [Thread]
Hold on, what is an IPO? Indian Police Officer?
No, it's an Initial Public Offering
It's when a private company issues stock to the public to raise capital. Facebook, Airbnb & Apple are IPO companies
It's not just US companies. I worked on IPOs in London, Johannesburg & Lagos
"The Roadshow/ Marketing"
The IPO process can be long!
The company hires a few investment banks to go out & sell the story to investors. Think of it as a series of dates. Do you tell her you leave towels on the floor on the first date? No.
Investment banks sell the highlights
Pro-tip: NEVER invest into a company purely off the company roadshow materials. Having spent hours curating these docs - the wording is ALWAYS massaged.
Your go-to is the prospectus - the Bible for an IPO
Here's the Airbnb prospectus - check it
What should I be looking for in the prospectus?
Just like your cheating ex - don't focus on what he's saying, focus on what isn't being said.
- Forecasts: always take these with a pinch of salt
- Key risks: dry but important
- Why we need the money: MOST IMPORTANT!