What exactly is an IPO? An IPO is an initial public offering refers to the process of offering shares of a private corporation to the public in a new stock issuance. Public share issuance allows a company to raise capital from public investors. This allows public investors to participate in the offering.
IPOs have been a huge thing recently, every company that is going to IPO, gets hyped up. Some companies are worth the hype but for most, it is really just because people have beliefs that the stock will grow because there are some heavyweight backers or the idea of the business sounds good.
In any case, recently Big Hit Entertainment IPO-ed and it is the largest listing in the last 3 years and I can understand why. BTS is really huge worldwide and so influential, them alone can carry the whole company. Big Hit priced the IPO at 135,000 won (US$115) per share. All seven members of boy band BTS have become multimillionaires as the CEO, Bang Si-Hyuk, gave each of the BTS band members 68,385 shares which are now worth $7.9 million at issue price. Bang owns about 43% of Big Hit, according to a stock exchange filing. The IPO has made Bang a billionaire.
Snowflake had a super crazy IPO as Warren Buffett's Berkshire backed it. Snowfake provides SQL data warehouse and breaks down its data warehousing architecture into storage, virtual warehouses (compute), and cloud services and customers can either pre-pay for its services or buy it on demand. Its competitors are said to be Amazon and Microsoft as it provides similar service like cloud services.
Not just in the US markets is there a IPO fever going on, in China as well where a new billionaire created every week by world's hottest IPO market. In China, at least 24 people have become billionaires this year through June from the country’s raging market for initial public offerings, including former teachers, accountants and software developers as 118 companies that went public in Shanghai and Shenzhen this year raised about $20 billion through June.
Stocks that have just IPO are volatile as they might be overly hyped up to get a good initial price hence usually after the IPO, the stock price will drop and slowly stabilise over the long term.
If you have confidence in a company's business model and can see it as a gem in the making depending on it's products or services, it is definitely good to get it when it IPOs otherwise you should always do your research and make sure it is what you want before you plunge your money in.
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References:
https://www.investopedia.com/terms/i/ipo.asphttps://seekingalpha.com/news/3613488-snowflake-heading-for-blockbuster-ipo-berkshire-backing-key-fact
https://www.livemint.com/market/ipo/a-new-billionaire-created-every-week-by-world-s-hottest-ipo-market-11595559225962.html
https://edition.cnn.com/2020/09/28/investing/bts-big-hit-entertainment-ipo/index.html
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