≡ Menu

Why You Should Not Invest In IPOs

Open ZERO Brokerage FREE Share Trading Account - Buy and Sell Stocks Without Brokerage - Set GTT (Good Till Triggered) Orders on System and Forget

Traditional brokers charge a lot for brokerage; however, this broker does not charge anything for stock buying and selling. Also, you can set GTT (Good Till Triggered) order after buying a stock, so that the system can sell the stock automatically at your target price even if you are not monitoring the market. Only 25k is blocked for option selling with hedge. Also, you get a lifetime free account in Sensibull (virtual trading app & strategy builder) which charges Rs.800/-+GST a month. Learn option hedging strategy if you open an account today. It takes 5 minutes to open an account online. Click here and Open Free Account with Them Today >>

In an Initial Public Offering, there are usually two components:

1. Fresh issue of shares from the company
2. OFS – Offer For Sale from its promoters. Through this OFS component, early investors, including the company’s promoters, can sell a portion of their stake to the public.

When promoters hold a significant percentage of a company’s shares, it shows their confidence in the company. Promoters will likely have information about the company’s operations, financials, and industry outlook.

Their decision to hold a significant stake in the company suggests they are optimistic about its growth potential. Conversely, if promoters sell their shares (OFS), or reduce their stake in the company, it may signal that they are losing confidence in its prospects.

Either way, both Fresh issues of shares and Offer For Sale (OFS) are best avoided. The reasons are given below.

Whenever an IPO hits the market we start getting emails/SMS from our brokers or other sources to invest in the IPO. This is the reason why almost all IPOS gets oversubscribed.

However, data suggest not investing in IPOs.

Here is a List of Recently Failed IPOs:

Zomato – Online food delivery company – IPO came in July 2021 – A known brand yet failed
Sona BLW Precision Forgings – Auto parts manufacturer company – IPO came in June 2021
Nazara Technologies – The mobile gaming company – IPO came in March 2021
UTI Asset Management Company – An asset management company – IPO came in October 2020 – A known brand yet failed
PayTM – Digital payments and financial services company – IPO came in November 2021 – A known brand yet failed

And some others:

Reliance Power – A known brand yet failed
RateGain Travel Technologies
Cartrade Tech
Krsnaa Diagnostics
SjS Enterprises
Kalyan Jewellers India – A known brand yet failed
Fino Payments Bank
Aditya Birla Sun Life AMC
Suryoday Small Finance Bank
LIC – A known brand yet failed

No doubt investors of all these IPOs must be ruining their decision to invest.

And do not forget that you cannot invest a huge amount in IPOs. It is somewhere between 10 to 15k. So even if you make 10% on the listing day, what will you do with One Thousand Rupees?

If you want to invest in an IPO then have a long-term view. IPO is just another stock. When you invest in a stock, you do research before investing, right? Similarly, you should do research before investing in any IPO.

Many good company stocks are available relatively cheap compared to their valuations – invest your money there not in a new company. Not much is known about a new company except what we hear from brokers or some business channels. It is better to avoid them altogether.

I hope this article will help you to understand why it’s not good to invest in an IPO.

TheOptionCourse.com © Copyright Since 2013 ® All Rights Reserved

Click to Share this website with your friends on WhatsApp

COPYRIGHT INFRINGEMENT: Any act of copying, reproducing or distributing any content in the site or newsletters, whether wholly or in part, for any purpose without my permission is strictly prohibited and shall be deemed to be copyright infringement.

INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However, every trade depends on the trader and his level of risk-taking capability, knowledge and experience. Moreover, stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website.

DISCLAIMER: I am NOT an Investment Adviser (IA). I am an Authorized Person (AP) of a Stock Broker. I do not give tips or advisory services by SMS, Email, WhatsApp or any other forms of social media. I strictly adhere to the laws of my country. I only offer education for free on finance, risk management & investments in stock markets through the articles on this website. You must consult an authorized Investment Adviser (IA) or do thorough research before investing in any stock or derivative using any strategy given on this website. I am not responsible for any investment decision you take after reading an article on this website. Click here to read the disclaimer in full.

Disclaimer | Privacy Policy | About Me | Conservative Option Course | Bank Nifty Weekly Options Strategy
Find 200+ testimonials of my course on these pages too posted year-wise:
What Traders Say About This Course
Testimonials Year 2015
Testimonials Year 2015 Page 2
Testimonials Year 2015 & 2016
Testimonials Year 2016
Testimonials Year 2017
Testimonials Year 2018
Testimonials Year 2019
Testimonials Year 2020
Testimonials Year 2021
Testimonials Year 2022
Testimonials Year 2023
Testimonial of one of my client making 25k per week
Emotional Testimonial by a Young Woman Trader and Her Mother
Difference Between other Courses and Mine
What others charge for online courses
What People Say Just After Doing My Course
Bank Nifty Course Testimonials

My student gets the Winner's Certificate of Zerodha 60-day Challenge - Click here and Open Stock Buy and Sell Free Account with Them Today!!!

Traditional brokers charge a lot on brokerage, however this broker does not charge anything for stock buying and selling. Also, you can set a Good Till Cancelled order after buying stock so that the system can sell the stock automatically at your desired price even if you are not monitoring the market. Plus only 25k is blocked for option selling. It takes 5 minutes to open an account online. Click here and Open Stock Buy & Sell Free Account with Them Today >>

About the author: Dilip Shaw I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

{ 4 comments… add one }
  • Neha Kayastha August 10, 2023, 2:35 pm

    Thank you

  • konka Anand August 10, 2023, 8:12 pm

    Especially promoter’s stake selling IPO are worth less. Must avoid.


    Sent from my iPhone

Leave a Comment