Wall Street’s "IPO Conspiracy" Revealed

By Matthew Milner, on Wednesday, April 10, 2019

Wall Street is playing a dangerous game right now…

And if you don’t know the rules, you could lose a fortune.

You see, Wall Street just kicked off 2019’s “IPO season.”  This year’s offerings include Uber, Pinterest, and Palantir — some of the most exciting tech companies in the world.

These IPOs are expected to raise about $50 billion in capital. And if you believe the banks, these IPOs could mean billions in profits for investors like you.

But as you’ll soon see, IPOs are one of Wall Street’s dirtiest conspiracies. They’re a way to take billions of dollars out of your pocket and put it into their own.

Today, I’ll show you the secret to stopping them — and then I’ll reveal the simple trick to ensure that you’re the one collecting the profits.

IPOs: A Path to Losses

As I explained in my essay last week, IPO investing used to be a surefire way to earn big profits.

But not anymore.

For example, two weeks ago, the ride-sharing startup Lyft (LYFT) raised over $2.3 billion in its IPO, valuing the company at close to $20 billion.

Lyft’s investment banks raked in an estimated $150 million in fees…

But investors like you who bought shares on IPO day are down 25%.

In less than two weeks, over $575 million of your money has been erased.

Big Banks Treat You Like a “Human ATM Machine”

This isn’t an isolated incident. Wall Street has been running this scheme for years.

Here’s how some other “highly anticipated” public offerings performed:

  • Snap, Inc.– This messaging app (NYSE: SNAP) recently IPO’d at a valuation of about $20 billion. Today, its market cap is about $15 billion — down 25%.

  • Groupon— This daily-deals startup (Nasdaq: GPRN) went public at a valuation of about $12 billion. But now it’s worth just $2 billion — an 85% loss.

  • Blue Apron— This meals kit company (NYSE: APRN) recently IPO’d at $10 per share. But today, shares trade at about $1 — that’s a 90% loss.

This hasn’t always been the case.

For example, according to Professor Jay Ritter at the University of Florida, in 1999, IPOs handed investors an average first-day profit of 71.2%...

But by 2015, according to Renaissance Capital, the average IPO provided a negative return on its first day, falling 3.5%.

What’s going on here?

This Trend is Killing IPO Profits

Simply put, IPO profits have disappeared because startups are staying private longer.

And the longer a company stays private, the more time it has to build its business and increase its value.

For example, Uber is 10 years old and valued at ~$120 billion. And it still hasn’t IPO’d.

By the time it IPOs, there will be little room — or no room at all — for its shares to rise.

The IPO Conspiracy

But now we get to the conspiracy part of this story…

You see, unless these companies are acquired, eventually they have to go public — because, at some point, their early investors want to take their profits.

And the banks are happy to help — even though they know there’s nowhere for these stocks to go but down.

After all, this is how Wall Street bankers make their multi-million-dollar bonuses: they sell IPO shares to unsuspecting investors like you.

But perhaps surprisingly, another group of people can make a fortune from IPOs, too…

The Lion’s Share of IPO Profits Goes To…

In fact, while investors like you have been suffering losses, this small group of people has been pocketing millions. What’s their secret?

Simple: instead of buying at the IPO, these savvy investors are selling!

You see, they invested in these companies when they were still privately-held startups.

And because they got in at the “ground floor,” they got their shares at extremely low prices.

So low, in fact, that they can make a fortune on an IPO — no matter how well or how poorly the stock performs.

Let me show you what I mean…

The Trick to Capturing IPO Profits

As mentioned earlier, investors who bought Lyft shares on IPO day have lost 25% so far.

But those who invested when it was a private startup made an estimated 3,833x their money.

That’s enough to turn a $1,000 investment into nearly $4 million!

Like The New York Times reported: “Lyft’s I.P.O. was a huge success, just not for investors who bought on Friday.”

It’s the same story for all of the other IPOs I showed you today. Time and again, because private investors secured their shares at ground floor prices, they made a fortune.

Bottom line: you need to avoid Wall Street’s “IPO Conspiracy.”

Instead of buying at the IPO, you should be selling!

Doing so is easier than you think. You simply need to know where to look. To make this easy for you, we feature new private-market investment opportunities each week…

You can see a full listing of these opportunities on our website »

Or look for our Weekly Digest email every Monday morning at 11am EST.

Happy Investing!

Best Regards,
Matthew Milner

Founder
Crowdability.com

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