What is IPO in stock market? And is it worth investing in IPO?

 

Are IPOs Worth Investing?

We all are very well excited about new stuff coming our way. Be it gifts, new clothes, a new smartphone or a smartwatch. We all also love the feeling of getting to use something new since it is ours, and if it is the first of the kind, we love it more.

That is a similar excitement we see in the stock market too when IPOs are announced. People invest in IPOs as they feel it will be a start of something new, or it will help them build enough wealth.

But, are these IPOs worth investing? We will help you understand the answer and who is actually benefitted from IPOs.

 

Why are people excited about IPOs?

 

There are various reasons why people consider investing in an IPO. We will take you through various reasons why IPO investment is a point of excitement for most people. Let us take a look at different reasons why people are excited about IPO investment.

• The Myth

A company launches the IPOs and people presume that the value of the share is much lower than the true price. People are also excited about the fact that they are the first ones to own. Plus, they will be earning big when the stock is listed on the bull market.

• Herd Mentality

People tend to follow herd mentality since everyone is doing it, we should do it too. So, that is one reason why people are more excited about buying IPOs.

• Overhype

Of course, if a privately-owned firm is new in the market, it has to spend a bit more on advertising. Only then you would you know about it and only then will you be willing to spend on these shares. 

 

Is it worth investing in IPOs?

 

So, is it good to invest in IPOs? Let us understand more. Long back when Infosys came into being and launched the IPO, people bought it and that was one of the few IPOs that became successful.

Putting your money in IPOs does not guarantee wealth or profits. Do not hear everything in the news, marketing and overhypes, since they are meant to lure you into the game. But, if you really want to make this investment worth it, make sure you invest in the right market.

Researching the company that offers IPOs and understanding their business prospects will help you make the right choice.

For example, Reliance Power came 91.84% down from its listing price, DLF limited came down 89% from its listing price and so on.

 

Who benefits from IPOs?

 

Frankly speaking, only the company that has launched the IPOs are benefited from the IPOs. Until the IPO does wonders in the bull market, the investor is not benefitted. The real gainers are the top executives of the company.

So, we are sure you got your answer. IPOs are sure worth investing unless you know that you have put your hard-earned money in a good company after researching well.

Open a Demat account with us and start your investment journey today!