Do you get fascinated with headlines like, “A new frog jumping in the wall street debut” or “The spider finally steps out of its cobweb to shake hands with public.”
Does such catchy outlines instigate you to bid for an IPO? There are times when you try but don’t make it to Share Allotment.
The recent trending buzz, SNAP THE MOMENT ! made the investors woo worldwide. Snap Inc. went public on 03rd March, 2017. It was the biggest Tech IPO debut after Facebook with an offer price of $17 per share for public.
Snap managed to capitalize $3.4 billion, inspite of suffering a loss of $515 M in the previous year.
The entire IPO was 12 times Over-subscribed. That means the company received 12 times more subscription offers than there were shares to offer to the public. This leads to disappointment for the investor. Few investors just managed to capture 2.1% of what they applied for.
If you were one of those investors who did not get their hands on the exclusive snap or managed, but yet couldn’t. Don’t be disheartened. Even you can have a Lion’s share next time.
You need to play Strong ! play Smart !!
Before you dip your hands in the IPO rat race be very sure. Fundamentally analyse the valuation of the issue, the company and weigh the pros and cons of bidding for the same.
Make sure you fill the basic IPO application form correctly. Many times in the haste of filling it the first you might make mistakes. The same gets canned in the technical screening.
Choosing the right bid from the entire price band is the most tricky part. If you bid below the actual pricing, your applications will be rejected.
Track the issue minutely, check what kind of response it is receiving. If it’s all hyped and the track records seems positive it’s always better to bid for the higher cap.
Retail Investors can take it easy by opting for the cut off price. That is they can nominate themselves to accept any price between the price band.
A retail investor can invest in multiples of minimum bid lot upto a max of Rs. 2,00,000.
A smart way to crack this is, instead of bidding big individually; try to involve your kith and kins.
In case the lot is oversubscribed, the probability of getting lucky in draw of lots is more. 4 Applications with a minimum bid lot, at the higher cap, has more chances over a single application with a high bid lot.
The smart play will surely give you a lean leap over the others to join hands with eminent Frogs and the Spiders.