Don't Invest in SpaceX on Its First Day of Trading. Wait for This to Happen First
Buying an IPO on its first day of trading is often not a good idea.
Don't Invest in SpaceX on Its First Day of Trading. Wait for This to Happen First
Overview
SpaceX (NASDAQ: SPCX) is expected to be one of the largest and most highly anticipated initial public offerings (IPOs) of all time. However, that doesn't mean you should rush out and buy the stock on its first day of trading, which is expected to be June 12. In fact, according to the book, The Lifecycle Trade, more than 90% of IPOs trade below their first-day trading low at some point.
The SpaceX IPO, meanwhile, has another quality that makes buying the stock on its first day of trading even more potentially perilous. Typically, most hot IPOs are allocated to select institutional investors with strong relationships with the lead underwriters. Only about 5% to 10% is typically allocated to retail investors, and those are generally very high-net-worth individuals.
Details
However, SpaceX's IPO is being heavily peddled to retail investors, with about 30% of its allocation going toward this group. Investors will be able to put in for allocations through various platforms, including Robinhood, SoFi, Morgan Stanley's E*TRADE, Fidelity, and Charles Schwab. The IPO is also reportedly being heavily pushed by JP Morgan to its clients. While investors who receive allocations are generally asked to hold the shares for at least 30 days -- or it could keep them from participating in future IPOs -- there are no restrictions on selling right away.
Source
Originally published at www.fool.com.
