1 Chart Shows Why You Should Not Buy an IPO Stock on its IPO Date
Like SpaceX, five of the seven Magnificent Seven stocks sank below their IPO price during the first year after their IPO.
Overview
It's easy to get caught up in the frenzy surrounding hot initial public offerings (IPOs), and want to buy shares as soon as possible. Investors should generally resist this urge, because the market will almost always soon -- within the first year -- allow you to buy shares for a lower price than their IPO price.
This dynamic has played out recently with Space Exploration Technologies (NASDAQ: SPCX), or SpaceX. And it also played out with five of the seven so-called Magnificent Seven stocks, which are dominant technology-focused stocks with large market capitalizations. Yes, that means there were two exceptions -- Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), then known as Google.
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Originally published at www.fool.com.