Thursday, June 21, 2007

Hyped IPOs - A Get Rich Quick Scheme?

I was thinking that perhaps a good idea for those looking to make a quick buck is to buy a hyped IPO right when it comes out and then then sell it soon thereafter. It's risky, but I figure a few bucks on a flier never hurts, and it makes investing a lot more fun.

-Google (GOOG) was offered at $100 on 8/19/04. It was at $130 by the end of September, and hit 200 on November 3.
-Under Armour (UA) was offered at 31 on 11/3/05, but fell to 25 by the end of the day. It took until December 23 to make it back to 31, but by 12/29, it was at 39.36. For those of your scoring at home, that's a 27% gain in about 6 weeks. However, it's been kind of average since, closing at 46.17 today (17% increase in 18 months.)
-If you go here, you'll see how many IPOs have doubled in the first day of trading. However, take careful note that a great many of these came at the peak of the tech bubble. On the other hand, a lot of those companies are still good companies today (LA Gear, Fuddrucker's, QVC, Home Shopping Network, eBay, Yahoo!, Ask Jeeves, Chipotle, etc).
-Then there's Palm Inc (PALM), whose IPO went for 145 on 3/2/00, rose to 165, closed at 95.06 the same day, and was below 30 by the end of April. Whoops!

Anyway, with Blackstone (maybe) coming out Monday, June 25, this all might be something to consider.

1 comment:

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