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How to Get in on an
IPO... Page 2
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5. Befriend a pre-IPO company. Friends
of the company - customers, subscribers, employees - often receive an allotment of shares
when the company goes public.
TheStreet.com (TSCM), for example, used a lottery to distribute IPO shares among its
subscribers. Lottery winners had the pleasure of watched the stock soar from an offering
price of $19 to $60 on day one; the rest of us got a Street.com tee-shirt. Flycast
Communications (FCST) gave its advertising clients a chance to buy shares at an offering
price of $25, but unless you flipped on day one, you'd have been happier with a tee-shirt.
6. Buy stock in an Internet "holding company." One that has
announced its intention to share its IPO wealth is CMGI (CMGI). The company recently
announced a "direct share program" to give CMGI shareholders an allotment in any
of the internet companies it takes public. This might be an iffy proposition with some
companies, but CMGI owns a majority interest in more than 40 internet companies, including
the recently acquired AltaVisa search engine. One of its properties (Engage Technologies,
Inc.) is scheduled to go public this week.
7. Pay Your Money and Take Your Chances. When all else fails, buy the IPO
the minute it opens and pray for hype.
Market hype can send an IPO straight through the roof, and if you buy your shares in the
open market you can flip with impunity. Keep in mind that IPOs are risky by any measure,
but buying at the open presents additional risks.
If you use a market order, you could end up paying the highest price of the day, which you
may never recover. If you use a limit order, a hot IPO could shoot past your limit price,
leaving your money safely in your account and your nose pressed longingly against your
monitor. And there's always the risk that the IPO could fizzle, even a dot-com company.
Internet.com (INTM), for example, closed below its opening price on day one and for
several days thereafter.
Fizzle or sizzle, paying our money and taking our chances may be the only way for many of
us to play the IPO game.
Of course, you can always wait for the IPO to shake off the initial hype and buy it on its
second wind.
Copyright © 1999 Kassandra Bentley, President, CyberInvest.com.
Stock Calculators:
-------------------
• What is my return if I sell now?
• Should I sell before or
after one year?
• What future return makes selling now
worthwhile?
• What selling price provides my desired
return? |
