Nothing gets people more excited than new stock. For us traders, it’s like the release of a new video game, or as Venture Society’s Marin Katusa put it, it’s like “fresh draft picks on a championship finals team.”
And there has been a lot of new stock over the past year or so, with several exciting companies doing initial public offerings (IPOs). And like any new draft pick, there’s a ton of talk about recent — and future — offerings.
So I thought we should take a moment to talk about how to profit from IPOs, using some recent examples that you may be able to still make some money on.
For those who need a refresher, an IPO is when a private company makes its stock available for public trading. The reasoning for IPOs is that a company wants to raise money by selling stock, usually to fund further growth… but sometimes so that a CEO can sell off the massive amount of stock he owns in the company and make it liquid.
But DoorDash is a prime example of why it’s important to know how to profit from IPOs.
Yes, it’s an exciting company that people know and were excited to buy. But a lot of trend chasers bought too late and lost some serious money. We don’t want you falling into that same trap.
In order to show you just how to profit from IPOs, I’m going to use an example of a popular recent one: Roblox Corp. (NYSE: RBLX), the popular video game developer that has a ton of in-game ways to make money from its users.
Full disclosure: I own this stock… and it’s not the only one I’m going to show you.
Roblox’s IPO was March 10, so just a few months ago. And the hype around it was big. On its first day of trading, it climbed over 50%, opening at $45 per share and closing at $69.50.
Then, it did what many newly IPO’d stocks do: It sank not long after the offering and undercut the low. But that ended up being a good buying opportunity, because in May of 2021, the stock broke out.
That should be your first takeaway if you’re wanting to profit from an IPO: Don’t chase the trend. Wait for it undercut the low if you believe in the stock.
Now Roblox has been pulling back from its recent new high, and could be in another buying zone…
If you want to know my thoughts on Roblox, how to profit from IPOs and some more recent offerings that could still generate profits, check out my video below.
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P.S. Did anyone know that a few dozen stocks have gone up on the same calendar dates every year for over the past decade?
We’re guessing most would answer with a resounding “No.”
Very few people have heard about these predictable calendar dates. But by tapping into them, traders have the chance to lock in consistent winners all year long — no matter what’s going on in the broader markets!
Legendary traders Roger Scott and Tom Busby are pulling back the curtain on this proprietary stock “calendar.”