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What is an Initial Public Offering and Which IPOs The Market Awaits?

What is an Initial Public Offering and Which IPOs The Market Awaits?

 

Initial Public Offering (IPO)- Concept

Initial Public Offering or going public is the process that companies go through when they issue securities for the first time. The entity qualifies for an IPO once has strong fundamentals and proven profitability potential. IPO transforms a business from a privately owned entity into one that is owned by public stockholders.

Initial Public Offering- Opportunities

Going public provides a great opportunity for the company to raise a lot of money in the hope of growing and expanding the business. It enables the entity to attract better management talent and provide them with an incentive to perform well.

On the other hand, it poses a good trading opportunity for the public to acquire the company’s shares. IPOs are known for having volatile opening day returns that can attract investors looking to benefit from the discount involved and target the appreciation of their investment and possibly dividends.

One of the biggest advantages IPO offers is raising capital more than once, as the company can issue in the future new shares and sell them through secondary offering because it already has access to the public markets through the IPO.

Initial Public Offering - Challenges

Going public involves significant changes for business including a loss of flexibility and control for management. To offer shares for sale via IPO, the enterprise must be a public limited company, and when applies for listing on the stock exchange, it must comply with a series of rules.

Once listed, it should comply with another series of ongoing obligations such as making public all price-sensitive information and issue the annual and interim report with accounts to shareholders within a set time frame. Price sensitive information is news that would be expected to move the company’s share price once in the public domain, such as changes to the company’s forecast trading prospects, dividends announcements, etc.

However, there is no guarantee that an IPO will succeed in selling all offered shares, and in times of turmoil, it is common to withdraw the IPO or maybe postpone it.

Impending IPOs to Watch

The Coronavirus pandemic has impacted the IPOs market and caused companies to postpone going public. Companies like Airbnb, Robinhood, Palantir, Snowflake are among the hottest IPOs to watch for in 2020.

Maklumat/penyelidikan ini disediakan oleh Mahmoud Alkudsi dan tidak mengambil kira objektif pelaburan tertentu, keadaan kewangan atau keperluan khusus individu. Penganalisis penyelidikan bertanggungjawab terhadap kandungan laporan penyelidikan ini, samada sebahagian atau keseluruhannya, memperakui bahawa pandangan mengenai syarikat dan sekuriti mereka yang dinyatakan dalam laporan ini jelas mencerminkan pandangan peribadi dan pedagang bertanggungjawab sepenuhnya ke atas risiko mereka sendiri.

Penyelidikan yang disediakan bukanlah pandangan JME Financial Services (Pty) Ltd ataupun undangan untuk melabur dengan JME Financial Services (Pty) Ltd. Penganalisis penyelidikan juga memperakui bahawa tiada sebahagian daripada pampasannya, adalah, atau akan, secara langsung atau tidak langsung, berkaitan dengan cadangan atau pandangan tertentu yang dinyatakan dalam laporan ini.

Sehingga tarikh laporan diterbitkan, penganalisis penyelidikan dan pasangannya dan/atau saudara-mara yang bergantung kepada penganalisis penyelidikan, tidak memegang kepentingan dalam sekuriti yang dicadangkan dalam laporan ini (“kepentingan” termasuk pemilikan langsung atau tidak langsung terhadap sekuriti).

Penganalisis penyelidikan tersebut bukanlah di bawah JME Financial Services (Pty) Ltd. Anda digalakkan mendapatkan nasihat daripada penasihat kewangan bebas mengenai kesesuaian pelaburan, di bawah penglibatan berasingan, seperti yang anda anggap sesuai dengan objektif pelaburan tertentu anda, keadaan kewangan atau keperluan kewangan tertentu sebelum membuat komitmen untuk melabur.

Undang-undang Republik Afrika Selatan akan mengawal sebarang tuntutan yang berkaitan dengan atau yang timbul daripada kandungan maklumat/ penyelidikan yang disediakan.