More and more on this forum I am seeing pointless replies in regards to IPO's that blanketly state that because the business is not making a profit (or even forecast to) then the IPO will not do well. I decided to do a quick analysis of all IPO's going back to October 2018 (not including listed investment funds or RTO's). Be advised, by including IPO's up to October last year i have most likely including one of the worst periods in the last few years for IPO listings! So I am not trying to massage the figures to prove my point. By looking at the below if you invested 10k in every IPO in last 7 months where the business was making a loss (as per the prospectus), you would have made a 16% return day 1 if you sold. I only track day 1 performance so it is likely looking at some of the ones below if you held for say 5 days the return may have been greater (eg. EOF, AMS, EMV). I certainly missed some of the better ones (SPT, A1G) but i also avoided some of the worst ones (FIJ, NVU). I did get caught out on TYM though.
So lets look at the flip side and now and take a look at all the IPO's in the last 7 months that listed while EBITDA positive. Now take a look at the total return if you invested 10k in each IPO..... do I really need to say any more!
I want to finish this off by saying, in no way would I simply invest in IPO because of a single factor. I consider many factors including (but not an exhaustive list) EV, growth, cash burn, management, sector and lead manager.
