Going public isn't just an important step for founders and CEOs. Or for the investment bankers who helped their companies file paperwork and price stock in an initial public offering (IPO). Here’s what companies selling stock to the public for the first time could mean for you.
If you’re looking for a hot investment...you might get lucky by buying recently issued stock. But be careful. Before going public, these companies were, um, private. Meaning they weren’t required to share financial and other types of info that can help investors decide if a stock is likely to make them money. (While no one has a Magic 8-Ball when it comes to stocks, historical data can be helpful.) So you could win big. Or you could lose big. Ask early Snap investors. Then proceed at your own risk.
Related: theSkimm on Investing
If you’re a fan of the brand...stay tuned. Selling stock can help companies raise a LOT of money. Money they might use to make their products better and users happier. On the flip side, public companies have to answer to the gov and shareholders. That can translate to a lot more pressure to make money. TBD if that means more ads or different pricing for users.
If you don’t think you have any skin in this game…you still do. Some experts think that when a lot of companies go public, it points to a strong economy. And in case you missed it, there have been a LOT of companies planning to do that in 2019 — from Slack and Lyft to Airbnb and Peloton. A healthy economy means we all win.
theSkimm: Companies going public can be exciting. If you’re tempted to get in on the fun with some of your own money, make sure it fits into your larger investing strategy. And that you’ll be OK financially (and emotionally) if the investment doesn’t pay off.
Related: The Best Investment Account for Every Money Goal