An IPO is very important for a company. IPO is when a company tends to sell their shares for the first time in public. Investors tend to apply for IPOs for companies that will make bigger profits. But will every IPO give big returns? Not every IPO can be successful. To help you make the best investment, here are the biggest mistakes that you should avoid when applying for an IPO. We will also help you understand how to check your IPO allotment status and IPO subscription status without any hassle.
Top mistakes that you should avoid
1. Not learning about the business
Every time a company is trending or popular. It doesn’t mean that it is good for investment. One of the most common mistakes that investors make is to invest in a business only while reading about it on social media or newspapers. You should know about the business well. It is important that you always research the company, how it will earn money and what it plans to do with the money from the IPO.
2. Skipping the IPO subscription status
The IPO subscription status is important as it will guide you about how many people are applying for the IPO. If the subscription status says that it is highly subscribed, this means that more people want the shares, and you will get few shares or no shares at all. This helps you understand whether the IPO is in demand or not. Always check the status regularly.
3. Apply without a plan
Sometimes investors apply for all the IPOs without even planning and thinking. Investors usually hope that they will be lucky; they will get good returns on the money that they have invested. This is not always the story.
4. Trusting grey market premium (GMP) way too much
GMP is usually circulated in the market, creating false expectations among investors. Always remember GMP is not always accurate. It can change quickly, so never invest based only on GMP.
5. Not crosschecking if the price is fair
Sometimes companies launch their shares at a high price. Even if the company is big and popular, it is possible that the price is not justified. Always check the price with the other companies in the same industry and see if it really deserves that value.
6. Forget to check the IPO allotment status
Once you apply, the work is not over. You will have to regularly check if you have got the shares or not. This is known as the IPO allotment status. Always check the status as it is available, because if you did not get the shares, your money will be refunded.
7. Expectations of sure profits on listing day
Many investors think that they will earn profit on the listing day. But that’s not always possible, as some IPOs get listed at a price lower than what you expect. The best approach is not to invest only for listing day profit. Aim for long-term profits and credibility.
8. Ignoring lock-in periods for big investments
Retail investors can sell shares right after the lock-in period, and the sale of their shares affects the price. You should always be aware of when the lock-in period will end, so you are ready for any price change.
If you are investing in an IPO, it is a very smart move, but you should be aware of what you are investing in. You should do your research well. Always avoid investing based on hype. Always keep an eye on the IPO subscription status and don’t forget to check your IPO allotment status after you apply.
Make a smart and well-researched decision that will eventually help you grow your money in the long run.
Please make sure you read all investing-related documents carefully and consult a financial investor whenever required, as investing in the stock market can be very risky.
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