Lately, it seems that the only sure way to make lots of fast money on the stock market is to jump onto an initial public offering (IPO).
Fresh issues have been all the rage across the past few weeks — witness the monster first-day pops of Beyond Meat (NASDAQ:BYND), Fiverr International (NYSE:FVRR), and even the tradition-bucking direct IPO of Slack Technologies (NYSE:WORK). None of these companies is profitable, by the by, but this doesn’t matter. Regardless, we can expect plenty more IPOs in the coming weeks and months…
IPOs tend to come in waves, and not surprisingly they tend to come when the market is frothy. That’s a big reason we’ve seen so many lately.
Buying into a new stock on the exchange is always a leap of faith to some degree; people are being asked to put money into a company when a vast pool of investors hasn’t been able to fully determine its value. So it’s sensible to place a new stock onto a bull market pregnant with optimism.
Another effect of a long, upwardly mobile market is that it drives up prices for stocks that have long been investor favorites. For example, Costco Wholesale (NASDAQ:COST) keeps reaching new peaks, which is saying something for a company that’s been publicly traded since 1985.
So you’ve got a combination of happy optimism and a yearning for something new that hasn’t had a price run-up resembling a Himalayan slope. Enter the freshly minted IPO.
Compounding the matter, some of the higher-profile stocks that have arrived on the market lately are from companies that are either somewhat well-known already, have novelty value, or enjoy a combination of both. Good fundamentals and/or prospects help, too.
Beyond Meat is exciting because it’s the first true alt-food stock available, it’s hitting at a trendy time for such products, and the company’s signature Beyond line is quickly finding a niche. Fiverr is an unprofitable enterprise that operates on a dubious gig-economy business model. Yet Fiverr is quite a well-known brand, plus it has novelty value as a big, wide marketplace for inexpensive freelance work.
Finally, it’s enormously helpful if…
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