27 Aug 2020
Initial Public Offering (IPO): Tech, tech, tech
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
IPO or Initial Public Offering refers to the process of offering shares of a private company to the public to raise capital using a public exchange.
For over half a decade it has been all about tech, tech, tech IPO’s which have generated massive amounts of investor and media attention.
In 2019 for example, public exchanges globally saw 263 IPO’s in the tech sector with total US$62.8 billion raised.
Must agree that the tech sector is exciting and sexy but the real question is whether all this hype converts into profitable returns for investors?
The answer, not surprisingly is both a yes and a no.
Some tech IPO’s have made insane returns for investors but in aggregate, the tech sector has been a disappointing investment.
For instance, the tech sector IPO’s in the United States returned -4.6% as a whole since 2019. This includes Uber which is currently trading at US$32.30 or 28.2% down from its US$45.00 IPO in 2019.
Click for chart.
Our point is that sexy and investing should never be used in the same sentence when investing because sexy businesses usually fail when it comes to making money over multiple decades.
At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.