My #1 Secret To IPO Profits

By Matthew Milner, on Wednesday, January 18, 2017

2017 is shaping up to be a big year for technology IPOs.

You may have heard about potential IPOs for Snapchat, Spotify and Uber, and now dozens of other start-ups have become IPO contenders, too.

It might be tempting to invest in these IPOs, but should you?

You might not realize this, but for investors like you, these IPOs can often lead to losses instead of profits.

So today I’ll show you my #1 secret to making money on IPOs…

Regardless of how well—or how poorly—they perform when they go public.

Negative Returns

Last year, several tech companies went public, including Nutanix, Coupa and Line.

Let’s see how they’ve performed:

Nutanix (NASDAQ: NTNX) went public at $37 and now trades at $30.

Coupa (NASDAQ: COUP) went public at about $30 and now trades at $25.

And Line (ADR, NYSE: LN) IPO’d at about $40 and now trades at about $36.

So now you know: Investing in IPOs might seem exciting, but you sure can’t count on it as a path to profits.

The thing is, some investors know how to make a windfall from these IPOs—regardless of how the stocks perform afterward.

And now I’ll show you what their secret is.

Getting In Early

You see, some investors invest in these start-ups way before their IPOs.

As one example, look at Facebook:

Facebook’s IPO was a flop, and for months, it just kept flopping. In fact, within three months, its value had dropped by 50%.

But despite its dismal post-IPO performance, investors who got in while it was still an early-stage private start-up made out like bandits:

One early investor, Peter Thiel, earned $1 billion.

In fact, Thiel owned his stock at such a low price that Facebook shares could have fallen by another 50%—and he still would have made a fortune.

Some insiders are expecting a similar situation with Uber’s IPO:

Given that it’s already valued at $66 billion, it might drop like a ton of bricks once it goes public and turn into a real money-loser for its IPO investors.

But for investors who got in during Uber’s “Series A” funding a few years ago, back when the company was valued at just $60 million, it’ll be a much different story:

Even if Uber shares drop 10% on IPO day, those early investors could still make 1,000x their money. That’s enough to turn $1,000 into $10 million.

And lucky investors who got in even earlier will do even better…

Crowdfunding investors like you invested when Uber was valued at just $4 million!

Clear Path To Big IPO Returns

So, for a clear path to big IPO returns, the answer is clear:

You need to get in early, when a company is still private and its stock price is still low.

To explore early-stage private deals, check out our Deals page »

If you’d prefer to invest in companies that are closer to a potential IPO, you could invest in a “mutual fund” for later-stage start-ups. (The share prices for these companies will be higher than those for early-stage start-ups, but they’ll still be relatively low.)

SharesPost, for example, is a fund that invests in late-stage, private companies. Its investments include Spotify. You can learn more about it here »

GSV Capital (NASDAQ: GSVC) is another option. It’s publicly traded like a stock, and it enables you to own a small piece of many pre-IPO companies including Spotify, Palantir, and Dropbox. Learn more here »

Happy Investing.

Please note: Crowdability has no relationship with SharesPost, GSVC, or with any of the companies or platforms we write about. Crowdability is an independent provider of education, information and research on start-ups and alternative investments.

Best Regards,
Matthew Milner
Matthew Milner


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Tags: GSVC SharesPost 100 Fund

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