First, off you might ask yourself what exactly is an IPO? IPO stands for initial public offering and it is when a private company first starts letting the public buy and sell shares of the company on the stock market. An initial price along with number of shares is established in an underwriting process that puts a valuation on the company. The IPO process involves companies meeting requirements set by the exchanges and the Securities and Exchange Commission (SEC). An IPO is often a great time to buy into a company before the stock prices surge. So, what are some good recent IPOs to keep an eye on?
The dating app Bumble (BMBL) issued their IPO a month ago in February and it has already caused a lot of buzz. On February 11th, before it dropped its IPO, it’s shares were priced at $43 apiece, above its target range of $37 to $39. It immediately began selling almost 77% above that for a price of $76. Bumble’s stock price has fluctuated over the past month of trading and it is currently trading around $69.76 per share. Overall, I think there is a lot of demand in this market and a lot of room for growth. Their CEO has talked about plans to monetize their friendship side of the app, Bumble BFF, next year in 2022.
The online gaming platform Roblox (RBLX) issued their IPO this past Wednesday, 3/10/21, with a suggested price point of $45. Wednesday, on its first day of trading, Roblox stock prices went up more than 54%, closing at $69.50. The stock climbed another 6.3% on Thursday, closing at $73.90. The Roblox IPO is a little different because it is a direct listing or direct public offering, meaning no new shares of the company were created. Instead only existing, outstanding shares are sold, which means the shares aren’t diluted by creating additional shares for the public.
Another IPO I’m keeping my eye on is Coupang (CPNG), which has been called the Amazon of South Korea. It just had it’s IPO release today, 3/11/21, with a suggested price of $35. When trading began this morning it opened with shares selling at $63.50, but the excitement calmed throughout the day and the price closed at $49.25. But in after hours trading it’s been on the rise and is priced around $52.35. There is definitely a lot of potential in this company, especially being an early investor.
IPOs can be great opportunities to buy in early, but as always the price could also drop. What do you think about Bumble (BMBL), Roblox (RBLX), and Coupang (CPNG)? Leave me a comment and let me know if you think these are good investments or a waste of money.
It’s been a rough week and an even rougher month for a lot of companies on the stock market. Like I discussed in my previous blog, “Are We About to Have a New Crash in the Stock Market?“, fears about rising interest rates and inflation have caused a lot of volatility on the stock exchange. These fears have been further complicated with rising interest rates in the bonds market and 10-year yields topping 1.54%. This is the highest level since the Covid-19 pandemic began.
Once again, Federal Reserve Chairman Jerome Powell addressed these concerns. At the Wall Street Journal Jobs Summit, he acknowledged that he expects the economic reopening to cause some temporary inflation but that it would not be enough to make the central bank raise interest rates. While Mr. Powell continues to try and ease investors minds, investors are having a “crisis of confidence” with Powell and the Federal Reserve. Investors fear that the Fed is misjudging the speed at which the economy is moving and they are underestimating the level of inflation and the impact that it will cause.
These uncertainties in the financial world have caused a lot of volatility on the stock exchange, with the tech sector being the hardest hit. For example, Tesla stock prices went from highs around $875 just a month or two ago to dropping below $600 as of recently. Apple’s stock price went from a high of $144 about a month ago down to around $120 today, which in another example of the tech sector’s drop. Many argue that the tech sector experienced excessive rapid growth over the past 4 months and this is the market correcting itself. What are your thoughts? Leave me a comment on whether you think this is the start of a market crash, especially in the tech sector OR is this just a great opportunity to buy the dip?
Just a few years ago, you would have never found these two words in the same sentence let alone be the topic of conversation amongst investors, but a lot has changed ever since Colorado and Washington went rogue and legalized cannabis at the end of 2012. Since then, the total number of states that have legalized the plant for adult recreational use has jumped up to 15 states plus three territories including Washington D.C. This week the governor of Virginia is expected to sign the bill to legalize adult recreational use in his state and will make it the 16th state to do so. Twelve other states currently have recreational legalization measure on the table also. Beyond that, it is legal in 36 US states for medical purposes.
Our neighbor to the north, Canada, legalized cannabis in 2018 and many in the US think that the federal government is currently not far behind them, especially considering the number of states that have already legalized it. With the legalization of cannabis, the opportunities for companies to grow in this industry has exploded. Another major milestone happened in 2018, the cannabis company Cronos Group became the first in the industry to receive SEC approval and be traded on the US stock exchange. Since then, many new companies have emerged onto the market and this is proving to be a highly competitive industry.
News that is fueling this fire is that last month, the Senate Majority Leader Chuck Schumer pledged that he, Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) would release a draft bill to end federal marijuana prohibition “in the early part of this year.” More recently, this past Friday Senate Majority Leader Chuck Schumer sent out a fundraising email to supporters where he discussed Democrat’s agenda for change this year, where he reiterated the fact, “It’s time to decriminalize marijuana nationally.” All this talk of federal legalization has the industry waiting in anticipation. Although companies are already being traded on the stock market, full federal legalization would not only open the flood gates of potential customers but it would also give everyone the green light to go 100% in building operations across the country.
Some of the companies leading the way in the new legal cannabis market are Canopy Growth, Tilray, and Aurora Cannabis. These are three of the biggest names in the industry but like I mentioned earlier, this is a blossoming industry with a lot of competition vying for space. Leave me a comment on what are your thoughts on investing in cannabis? Is it a good idea to invest now or wait until full legalization? Will it be too late to invest then?
Monday, 2/22/21, was a rough day for the stock market. Almost every company in every industry on the tickers were red, from tech to automotive to retail, red EVERYWHERE. An example of the huge changes was Tesla starting Monday’s trading around $771 per share but by the end of the day it would drop to around $650. Many companies, especially in the tech sector, have had a rough week. Throughout the week, the market has started to somewhat settle, but if you look over the past 1-3 months, many companies are on a downward slope coming off record high prices. What is causing this huge downturn in the market?
The post Covid-19 boom is getting people excited about the possibility of being able to live life normally again. This excitement along with the increased availability of the Covid-19 vaccine has made people optimistic about companies being able to open up and operate like normal. This has caused people to invest back into recently forgotten industries such as retailers, airlines, cruise lines, hotels, and casinos which may have driven the market up prematurely. Since most of those industries are still not operating at full potential due to Covid-19 restrictions, this has led to large sell offs.
Another big factor potentially causing the downturn is fears of inflation and rising interest rates. When interest rates rise, people usually spend less and save more. The fact that the government has been giving away multiple stimulus packages and has plans to continue doing so has raised concerns about inflation because so much money has been created and pumped into the system. Raising interest rates is usually how the federal government would keep inflation low, by essentially encouraging saving instead of spending. This fear has caused the Federal Reserve Chairman, Jerome Powell, to come out on Wednesday and tell Congress that the central bank will not raise interest rates until they believe they have reached their goals on maximum employment and inflation.
When Federal Reserve Chairman, Jerome Powell, said they will not raise interest rates, this caused a sigh of relief on the stock market and trading and prices have started to go back up over the past couple days. The question now is how long will interest rates stay low and is it better to buy stocks now during higher volumes of trading or wait for prices to drop when interest rates do actually rise? Let me know your thoughts and leave a comment, are you investing now or waiting?
In this corner! We have Gabe Plotkin, from Melvin Capital (hedge fund that majorly shorted GameStop stocks), Vlad Tenev, CEO of Robinhood (brokerage app) and Ken Griffin, the CEO of Citadel (hedge fund involved with both companies). In the other corner, we have the House Financial Services Committee, with Congresswoman Maxine Waters and Alexandria Ocasio-Cortez, Congressman Patrick McHenry, Reddit’s CEO Steve Huffman, and Keith Gill, known as Deep F***** Value on Reddit (he’s a longtime advocate of GameStop and one of the original people to encourage others to buy their stock). The congressional hearing was addressing last months unprecedented skyrocketing and plummeting of GameStop stocks within one week.
One side of the argument is that Reddit and user Keith Gill had manipulated the stock price by generating excitement around GameStop stock. The argument is that this excitement led to driving the price to a peak of around $483. Reddit CEO Steve Huffman stated that there was an internal investigation and there was no evidence of unscrupulous activities or any signs of artificially generating excitement about GameStop or any other companies mentioned on WallStreetBets.
On the other side of the argument is the thoughts and accusations that the hedge funds, Melvin Capital and Citadel, worked directly with Robinhood to force down the price of the GameStop stocks. A little backstory, Melvin Capital is the hedge fund that engaged in majorly short-selling the GameStop stock. The hedge fund Citadel came to the rescue for Melvin Capital and made a large cash investment, reportedly around $3 billion, to essentially bail Melvin Capital out of this predicament. The problem with this is that Citadel operates and makes money by executing trades on behalf of Robinhood, along with some other retail brokers. The connection has made many people suspicious and has led to theories that Citadel pulled strings to make money on both sides of the fight.
During the height of the GameStop stock price, Robinhood disabled only the “Buy” button, but not the “Sell” button, which is argued to have caused the price of the stock to crash. This action is at the heart of the argument. Suspicions and theories about why purchases were suspended started flying around the internet, including one where Citadel and Melvin Capital pulled strings at Robinhood to disable the “Buy” button. Robinhood CEO Vlad Tenev claimed that was not the case, and that it was necessary to disable the “Buy” button due to liquidity concerns because the clearinghouses (responsible for making sure money is correctly exchanged between buyers and sellers) demanded billions of dollars in collateral from Robinhood to ensure the trades would be settled. This caused Robinhood to suspend purchases while they scrambled to gather capital for the clearinghouses.
In the end, the hearing showed that the suspicions and theories lacked substance. There was no proof of collusion between the hedge funds and Robinhood but this situation has put a spot light on brokerage apps like Robinhood and their relationships with institutional investors. Leave a comment and let me know if you think this was just business as normal or was there some unethical behavior here that needs to be further addressed.