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Hi
The average IPO drops 70% from the offering price, which is why I don't buy the latest demand/supply analysis on the market. The stock buybacks are only temporary.
Of course, I prefer value-investing. I think if you know the company offering the IPO and can get in on it, like with GOOG, than it is definately acceptable to buy even at the higher price. That's rare, however. GOOG is a great growth stock and is highly undervalued; this was not obvious to the casual investor who saw its $84 IPO. They financial statements however show this is an incredible company. You cannot get a much better balance sheet or cash-flow statement as GOOG. What an incredible company!!!!
I think it is up to the individual investor to determine if a company is worth buying; it is essential to evaluate each firm carefully. Those who invest in IPOs are pioneers who are willing to get into a company before anyone else. There's a lot of demand trying to be a pioneer and thus the payoff shrinks significantly.
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