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
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]
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 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
Your go-to is the prospectus - the Bible for an IPO
Here's the Airbnb prospectus - check it out
https://t.co/jSxk2zwfuZ
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!
If there's a pipeline of acquisitions or a perfectly crafted growth plan - great! If the uses of capital are for day to day activities - it's worth pausing.
That's amazing! Surely everyone should be celebrating. This is what success looks like right? Management must be popping champagne.
No - this is a complete fuck up... read on
You hire me to sell your house. I sell it for $1m.
The same day the new buyer RE-SELLS your house to someone else for $2m.
You should be pissed off.
(Besides investment banks getting it wrong...)
1. IPOs are generally underpriced to fill up the order book
2. Retail investors have fuelled the IPO pop
3. Companies price lower to avoid a failure
4. The market right now is HOT
Investment banks are also underwriters. This means if they don't sell their blocks of stock they have to pick it up themselves.
Wait, isn't that an incentive to underprice... sadly, yes
Here's all the banks on the Airbnb IPO - literally everyone
Managing the order book is tricky. You need to balance liquidity/ trading volume with price tension. Short term investors create price action at the expense of volatility.
Recently, retail investors are far more active & drive up demand.
"Under promise/ over deliver"
Failed IPOs can happen for a number of reasons but most of all it's a fucked up signal to the market.
Many times it's not the companies fault, it's terrible timing resulting in valuation expectations not being met.
In a market fueled through Fed stimulus, stock splits and a deep disconnect of forward valuation multiples to the real economy - the market for equity issuances is attractive (albeit risky)
In short: stocks are fucking expensive right now
Nothing major - a few billion $
Underwriting fees in Hong Kong are as low as 2.5% on the size of the IPO but I have seen clients pay more than 4% on IPOs
There's A LOT of money out there but it is VERY competitive
Sure it's exciting to switch on Bloomberg & see your company trading or read about your IPO on the front page of the financial times BUT most of the IPO process is VERY dry...
Enter the wave of direct listings, hybrid listings & SPACs
A SPAC is basically an empty vehicle that lists on the exchange which promises to fill up passengers (companies) within a short space of time
Massive business!
Sure - but be VERY selective
Cash burn rates are very important especially when it ends up in higher leverage (debt) or more equity issuances
Traditional "value" investing has underperformed growth during this bull market
No!
For every hot listing, there's another that doesn't get talked about which is a black hole that soaks up all your capital and returns less than nothing...
Here are a couple NASDAQ IPOs
here's another thread on IPOs which deals with Aramco
https://t.co/6k5Ap1bTiG
Saudi Aramco, the world's most profitable company plans to IPO.
— Koshiek Karan (@iamkoshiek) November 3, 2019
Aramco produces 10m barrels of oil per day (roughly 10% of global demand).
First half of 2019, net profit = $47bn! (Apple made $21.6bn)
Here's a few juicy "inside tips" on what actually happens in an IPO [Thread]
For more IPO analysis & terrible jokes, feel free to join our Telegram channel:
https://t.co/v3uNq6IvBk
More from Koshiek Karan
Here are 20 of my best threads from 2020 covering personal finance, entrepreneurship, economics & finance, investment banking ++ useful resources.
Massively grateful to everyone who took time out to read, comment & share these across the year. I really appreciate you.
[Thread]
1. Breaking-in – study notes, free textbooks & past
2. Breaking-in – the job connector
3. Breaking-in – book smart vs. street
4. Personal Finance – MEGA Property
Massively grateful to everyone who took time out to read, comment & share these across the year. I really appreciate you.
[Thread]
1. Breaking-in – study notes, free textbooks & past
If you have any study notes, past exam papers, quick excel models... anything you feel could help Twitter peeps, post the links below \U0001f4aa\U0001f4aa
— Koshiek Karan (@iamkoshiek) May 29, 2020
2. Breaking-in – the job connector
The interview job connector thread. If you're currently job hunting, please post the industry/role & someone who is already in the field can give you tailored tips ++ share their experiences \U0001f4aa\U0001f3fd\U0001f4aa\U0001f3fd
— Koshiek Karan (@iamkoshiek) December 4, 2020
3. Breaking-in – book smart vs. street
Anyone who has ever worked a corporate job will tell you where you studied means very little.
— Koshiek Karan (@iamkoshiek) August 8, 2020
Education doesn't guarantee ability.
4. Personal Finance – MEGA Property
The Reserve Bank cut the repo rate by 25bps & just like clockwork, the rats who are paid to sell houses are encouraging people to go out & buy
— Koshiek Karan (@iamkoshiek) July 23, 2020
The usual "influencers"/ estate agents/ mortgage brokers/ banks/ loan sharks/ excavator salesmen
Here's a useful MEGA property thread:
Step by step guide on how to buy/ sell tweets
You're essentially minting a tweet, creating a NFT, transacting on the blockchain & settling payment in ETH
NFT is a non-fungible token
Fancy term for a digital certificate for intellectual property. Think of it like an autograph. Someone pays for your autograph and keeps it as an investment.
Your autograph (NFT) here is a digital certificate of your tweet.
What info is on the digital certificate?
The tweet remains on Twitter under your account. The digital certificate contains metadata of the original tweet.
Metadata = when you posted the tweeted, the time, contents, your digital signature from your crypto wallet
Here's the steps:
1. Verification & Tweet Listing
Login to https://t.co/2UhT8QJTFQ so Twitter can verify which tweets are yours
2. Set up crypto wallet
Add the metamask extension to your browser to interact with cryptocurrency https://t.co/59kxXX5JUt
3. Review & accept offers
You're essentially minting a tweet, creating a NFT, transacting on the blockchain & settling payment in ETH
NFT is a non-fungible token
Fancy term for a digital certificate for intellectual property. Think of it like an autograph. Someone pays for your autograph and keeps it as an investment.
Your autograph (NFT) here is a digital certificate of your tweet.
What info is on the digital certificate?
The tweet remains on Twitter under your account. The digital certificate contains metadata of the original tweet.
Metadata = when you posted the tweeted, the time, contents, your digital signature from your crypto wallet
Here's the steps:
1. Verification & Tweet Listing
Login to https://t.co/2UhT8QJTFQ so Twitter can verify which tweets are yours
2. Set up crypto wallet
Add the metamask extension to your browser to interact with cryptocurrency https://t.co/59kxXX5JUt
3. Review & accept offers
More from Trading
TradingView isn't just charts
It's much more powerful than you think
9 things TradingView can do, you'll wish you knew yesterday: 🧵
Collaborated with @niki_poojary
1/ Free Multi Timeframe Analysis
Step 1. Download Vivaldi Browser
Step 2. Login to trading view
Step 3. Open bank nifty chart in 4 separate windows
Step 4. Click on the first tab and shift + click by mouse on the last tab.
Step 5. Select "Tile all 4 tabs"
What happens is you get 4 charts joint on one screen.
Refer to the attached picture.
The best part about this is this is absolutely free to do.
Also, do note:
I do not have the paid version of trading view.
2/ Free Multiple Watchlists
Go through this informative thread where @sarosijghosh teaches you how to create multiple free watchlists in the free
3/ Free Segregation into different headers/sectors
You can create multiple sections sector-wise for free.
1. Long tap on any index/stock and click on "Add section above."
2. Secgregate the stocks/indices based on where they belong.
Kinda like how I did in the picture below.
It's much more powerful than you think
9 things TradingView can do, you'll wish you knew yesterday: 🧵
Collaborated with @niki_poojary
1/ Free Multi Timeframe Analysis
Step 1. Download Vivaldi Browser
Step 2. Login to trading view
Step 3. Open bank nifty chart in 4 separate windows
Step 4. Click on the first tab and shift + click by mouse on the last tab.
Step 5. Select "Tile all 4 tabs"
What happens is you get 4 charts joint on one screen.
Refer to the attached picture.
The best part about this is this is absolutely free to do.
Also, do note:
I do not have the paid version of trading view.
2/ Free Multiple Watchlists
Go through this informative thread where @sarosijghosh teaches you how to create multiple free watchlists in the free
\U0001d5e0\U0001d602\U0001d5f9\U0001d601\U0001d5f6\U0001d5fd\U0001d5f9\U0001d5f2 \U0001d600\U0001d5f2\U0001d5f0\U0001d601\U0001d5fc\U0001d5ff \U0001d604\U0001d5ee\U0001d601\U0001d5f0\U0001d5f5\U0001d5f9\U0001d5f6\U0001d600\U0001d601 \U0001d5fc\U0001d5fb \U0001d5e7\U0001d5ff\U0001d5ee\U0001d5f1\U0001d5f6\U0001d5fb\U0001d5f4\U0001d603\U0001d5f6\U0001d5f2\U0001d604 \U0001d602\U0001d600\U0001d5f6\U0001d5fb\U0001d5f4 \U0001d601\U0001d5f5\U0001d5f2 \U0001d5d9\U0001d5e5\U0001d5d8\U0001d5d8 \U0001d603\U0001d5f2\U0001d5ff\U0001d600\U0001d5f6\U0001d5fc\U0001d5fb!
— Sarosij Ghosh (@sarosijghosh) September 18, 2021
A THREAD \U0001f9f5
Please Like and Re-Tweet. It took a lot of effort to put this together. #StockMarket #TradingView #trading #watchlist #Nifty500 #stockstowatch
3/ Free Segregation into different headers/sectors
You can create multiple sections sector-wise for free.
1. Long tap on any index/stock and click on "Add section above."
2. Secgregate the stocks/indices based on where they belong.
Kinda like how I did in the picture below.
You May Also Like
1/ Some initial thoughts on personal moats:
Like company moats, your personal moat should be a competitive advantage that is not only durable—it should also compound over time.
Characteristics of a personal moat below:
2/ Like a company moat, you want to build career capital while you sleep.
As Andrew Chen noted:
3/ You don’t want to build a competitive advantage that is fleeting or that will get commoditized
Things that might get commoditized over time (some longer than
4/ Before the arrival of recorded music, what used to be scarce was the actual music itself — required an in-person artist.
After recorded music, the music itself became abundant and what became scarce was curation, distribution, and self space.
5/ Similarly, in careers, what used to be (more) scarce were things like ideas, money, and exclusive relationships.
In the internet economy, what has become scarce are things like specific knowledge, rare & valuable skills, and great reputations.
Like company moats, your personal moat should be a competitive advantage that is not only durable—it should also compound over time.
Characteristics of a personal moat below:
I'm increasingly interested in the idea of "personal moats" in the context of careers.
— Erik Torenberg (@eriktorenberg) November 22, 2018
Moats should be:
- Hard to learn and hard to do (but perhaps easier for you)
- Skills that are rare and valuable
- Legible
- Compounding over time
- Unique to your own talents & interests https://t.co/bB3k1YcH5b
2/ Like a company moat, you want to build career capital while you sleep.
As Andrew Chen noted:
People talk about \u201cpassive income\u201d a lot but not about \u201cpassive social capital\u201d or \u201cpassive networking\u201d or \u201cpassive knowledge gaining\u201d but that\u2019s what you can architect if you have a thing and it grows over time without intensive constant effort to sustain it
— Andrew Chen (@andrewchen) November 22, 2018
3/ You don’t want to build a competitive advantage that is fleeting or that will get commoditized
Things that might get commoditized over time (some longer than
Things that look like moats but likely aren\u2019t or may fade:
— Erik Torenberg (@eriktorenberg) November 22, 2018
- Proprietary networks
- Being something other than one of the best at any tournament style-game
- Many "awards"
- Twitter followers or general reach without "respect"
- Anything that depends on information asymmetry https://t.co/abjxesVIh9
4/ Before the arrival of recorded music, what used to be scarce was the actual music itself — required an in-person artist.
After recorded music, the music itself became abundant and what became scarce was curation, distribution, and self space.
5/ Similarly, in careers, what used to be (more) scarce were things like ideas, money, and exclusive relationships.
In the internet economy, what has become scarce are things like specific knowledge, rare & valuable skills, and great reputations.
