IPO on the Stock Market: A Guide for Beginners

Introduction: Why IPOs Matter More Than You Think

The Story of Apple: From Garage to Billions

In 1980, a little-known company called Apple underwent its Initial Public Offering (IPO). Investors who bought shares on the first day for $22 had no idea they were holding a ticket to the future. Today, one share of Apple is worth over $220—a tenfold increase over a decade. These are not just numbers; they are the stories of people who invested a few thousand dollars and made millions.

However, Apple is by no means a guaranteed success. A more important statistic is this: 10% of all IPOs in the last 20 years have fallen 50% or more within the first year. Investors who believed in these companies and committed funds lost half of their capital almost immediately.

Three Key Questions

What is an IPO, and why can this event create millionaires or bankrupt unsuspecting investors? Why do companies choose to share their ownership with millions of strangers instead of just borrowing money from a bank? And how can a novice protect themselves in this high-stakes financial game, where the interests of all parties involved (investment banks, CEOs, early investors) often work against their own?

This article will provide you with a thorough understanding of the IPO mechanism, from the moment a company decides to go public to when its shares begin trading on the market. You will learn about the psychology behind first-day trading speculation, hidden conflicts of interest that may work against you, and how a newcomer can invest successfully in IPOs without making major mistakes.

Part 1: Fundamental Concepts of IPOs

What is an IPO and Why Is It a Historic Event?

An IPO, or Initial Public Offering, is when a company that was previously privately owned offers its shares to the public for the first time. It’s akin to a small restaurant owner deciding to offer shares in the business to the community instead of keeping full control.

But an IPO is much more than just selling shares; it is a transformative threshold. After an IPO, a company must disclose its financial performance every quarter, open itself up to regulatory scrutiny, and allow investors to vote at annual shareholder meetings. Where the company was once a kingdom controlled by its owner, it becomes a democracy where shareholders have a voice.

For a company, an IPO signifies that it has matured to the next stage of development. When Facebook went public in 2012, it raised $16 billion. This capital funds expansion, acquisitions of competitors (like Instagram), and investment in new technologies. The company acquires currency (investor funds) that allows it to grow faster than it ever could with just bank loans.

IPO vs. Bank Loan: Why Companies Choose Equity Over Debt

When a company needs funds, it has a choice. The first option is to borrow money from a bank. The bank will extend a loan at a specified interest rate, and the company must repay the loan regardless of whether it is profitable or has gone bankrupt. The bank is not concerned with the company's success; it only wants its interest payments. If the company fails to repay, the bank can seize its assets.

The second option is attracting venture capital. An investor provides funds in exchange for an equity stake in the company. If the company becomes a billion-dollar venture, the investor stands to make millions. However, venture capitalists typically demand substantial influence over company decisions, appointing their own people to the board and overseeing expenditures.

The third option is to conduct an IPO. The company offers shares to the public. Investors buy not because they demand control, but because they believe in the company’s potential. The company receives funds but is not obliged to repay them. Importantly, the company can issue additional shares in the future and raise more capital.

From Private Company to Public Company: The Life Cycle

A company’s life typically goes through several stages. At the initial stage, it is merely an idea—a group of friends writes an app in a garage (as was the case with Apple and Google). Funds come from friends, family, or the founders' personal savings. At this stage, the company has little proof of its value and is highly risky.

At the second stage, venture capital arrives. Investors see potential and believe in the market. For instance, Uber raised $200,000 from a venture fund in 2009. At this stage, the company grows, hires staff, occupies an office, yet remains unprofitable, burning investors’ money on expansion and competing in the marketplace.

At the third stage, the company becomes profitable (or close to it). It has a solid customer base, a proven business model, and a competitive advantage. At this point, the company can proceed with an IPO. Investors now believe not just in potential, but in reality; the company has demonstrated its ability to make money and survive in a competitive market.

After the IPO, the company enters the fourth stage: maturity. It is no longer a startup with an innovative mindset. It has responsibilities to millions of shareholders, quarterly reports, and annual meetings with investors. Once revolutionary ideas turn into bureaucratic processes. The company either becomes a long-term player (like Microsoft, which went public in 1986 and is still thriving) or starts to decline as it loses agility and innovation.

Stock: A Unit of Ownership

When a company conducts an IPO, it is not merely selling abstract "shares." It is creating stocks—special securities that represent a portion of ownership in the company. If a company executes an IPO and issues 100 million shares and you purchase 1,000 shares, you own 0.001% of the company. This is not just a number on a screen; it is a real ownership right.

This has tangible consequences. If the company goes bankrupt and its assets are liquidated, you will receive your share of any remaining funds (if there is anything left after debts are paid). If the company issues dividends (a portion of the profits), you will receive your share of those dividends. And if there is an annual shareholder meeting, you will have a vote—one share, one vote. You can even demand the CEO's resignation if their salary seems excessive.

However, a stock is also a speculative tool. The stock price depends not only on how much money the company makes but also on what other investors believe about its future. If everyone thinks the company will grow by 30% per year, the price goes up. If everyone believes the company is on a downward trajectory, the price drops. This creates opportunities for profit (if you bought low and sold high) and risks of losses (if you bought high and had to sell low).

Part 2: Participants and Roles in an IPO

The Issuing Company: Who Conducts the IPO and Why

The issuing company is the one that issues shares and conducts the IPO. Typically, this decision comes from the board of directors, believing the company is ready for the next stage of evolution. The CEO and CFO spend months preparing, meeting investors, preparing financial statements, and convincing regulators that the company deserves this step.

For the company, an IPO is akin to graduation from school. There is an opportunity to gain a massive capital influx, but with it comes responsibility to shareholders and uncertainty about how the market will perceive the company. The company knows that post-IPO, it cannot shut itself off from public scrutiny. Each quarter it will have to either disappoint or delight investors with new figures. Every error will be discussed on financial websites. Any rumor of a sale will disturb shareholders and impact the stock price.

Yet the company wants to go public because it signifies financial freedom. It will have funds available for expansion without needing to justify expenses to a bank. It will have shares that it can use as currency for acquiring other companies. And it can pay employees in shares instead of cash—this is cheaper in the short term but creates a strong incentive for hard work.

Underwriters Syndicate: Investment Banks and Their Conflicts of Interest

An investment bank is an organization that assists a company in executing its IPO. Major investment banks like Goldman Sachs, Morgan Stanley, and JPMorgan Chase have vast experience in this area. They know all the SEC regulations, all regulatory requirements, and all the plays in the financial market.

However, this is where the conflict of interest that works against newcomers begins. Investment banks earn money through fees—usually 3-7% of the total raised in the IPO. If a company raises $1 billion, the investment bank receives $30-70 million. This is a sum the investment bank wants to maximize in any way possible.

How to maximize fees? One simple way is to convince the company to set an as high price for the IPO as possible. If the price is high, the fee is also high. So, investment banks push companies to overvalue themselves, even if this evaluation does not align with fundamental value. But what is good for the investment bank can be detrimental to new investors who buy shares at inflated prices and lose money within 6-12 months.

Moreover, the investment bank often acts as the primary buyer of the IPO shares. It buys a large portion of the shares and then resells them to retail investors. If the IPO is not popular, the investment bank may end up stuck with a lot of shares it cannot sell. This poses a risk for the investment bank but also creates an opportunity for market manipulation, generating an illusion of demand to attract more buyers.

Regulators: SEC, Central Bank, and Investor Protection

In the United States, the regulatory authority is the SEC (Securities and Exchange Commission). The SEC requires companies to disclose all material information about their operations before the IPO. This includes financial statements from the past several years, potential risks, conflicts of interest, biographies of executives, and any lawsuits involving the company.

All this information is compiled into a document known as the S-1 form (in the U.S.) or a prospectus (in other countries). This document can be 200-400 pages thick. The SEC reviews it thoroughly, asks questions of the company, requires clarifications, and justifications. The process can take several months and includes various rounds of correspondence between the company and the regulator.

The SEC's goal is not to prevent IPOs (it cannot stop a company from going public if it meets the requirements). The goal is to ensure that investors have enough information to make an informed decision. If a company conceals or misrepresents information, the truth will eventually come out (through financial reports, competitors, or the media), investors will lose money, and legal actions will follow.

In Russia, a similar role is played by the Central Bank and FCSM (Federal Commission for the Securities Market). In Europe, this is the ESMA (European Securities and Markets Authority). All these agencies share a common goal: investor protection through transparency and information disclosure requirement.

Investors: Retail vs. Institutional

Investors fall into two categories: retail (ordinary people who buy a few shares through a broker) and institutional (pension funds, insurance companies, mutual funds that manage billions of dollars).

In practice, during IPOs, institutional investors purchase the majority of shares. They can buy millions of shares at once because they have the funds and buy on behalf of their clients. Retail investors are left with the remaining shares—if any remain. Sometimes retail investors are entirely shut out of the IPO during the initial offering. The investment bank may first offer shares to institutional investors, and only after that, if any are left, to retail investors.

This is part of a system that works against newcomers. If you are a small investor with $10,000 in your account, you will not get the same opportunity as Vanguard (a large mutual fund managing $7 trillion). Vanguard will obtain the necessary number of shares at the offering price, whereas you will be left with scraps or nothing, as the IPO will sell out too quickly.

Part 3: Preparation Process and Stages of IPO

Pre-IPO: Financial Audit and Regulatory Approval

The IPO process begins long before the first trading day. Months before the announcement, the company hires an investment bank (referred to as the lead underwriter), which becomes its sponsor and partner. The investment bank starts preparing documents, organizing the financial statements, and getting the company ready for life as a public corporation.

The first step is a financial audit. An independent auditing firm (such as one of the Big Four: Deloitte, PwC, EY, KPMG) reviews the company’s financial records over the past few years. The auditor ensures the company isn't hiding significant debts, that all revenues are real rather than fictitious, and that reserves are correctly established. If the auditor finds issues, the company must address them, which can entail reclassifying revenues or recognizing hidden liabilities—everything becomes public.

The second step is preparing the prospectus (S-1 form in the U.S.). This document discloses everything investors need to know about the company: its development history, business model, key competitors, potential risks and opportunities, financial results from the last 3-5 years, future plans, executive compensation, material contracts, and litigations.

The third step is meeting with the SEC (or its equivalents in other countries). The company submits a preliminary version of the S-1. The SEC reviews it, asks questions, and requires clarifications or additional information. This back-and-forth correspondence can last several months. The SEC might ask, "Why didn't you disclose this contract with a competitor?" or "How did you arrive at this acquisition’s fair value?" The company must respond in detail, and the SEC may pose more questions.

Roadshow: Presenting to Investors

Once SEC approval is secured, the roadshow commences—one of the most intense phases of the IPO preparation. The company’s CEO and CFO fly around the country (or the world), meeting with investors and presenting the company. The roadshow can last 2-4 weeks of intensive effort, with meetings in each city with 15-20 mutual funds, pension funds, insurance companies, and hedge funds.

The CEO discusses the company’s vision for the next 5-10 years. The CFO presents the numbers: revenue, profit, growth rates, and margins. Investors raise difficult questions: "How do you know the market will grow by 20% as you forecast if the economy is slowing down?" or "Who is your main competitor and why do you think you can outpace them?" The answers influence whether investors want to buy IPO shares in large quantities.

The roadshow is also an opportunity for the investment bank to gauge market demand. After each meeting, the investment bank receives feedback: "No, the price is too high; we’re not interested," or "We’re very interested, let me buy 5 million shares." Based on this feedback, the investment bank determines what price will attract enough interest from major investors.

IPO Day: Pricing and Subscription

After the roadshow concludes, the investment bank and the company set a price range based on the gathered information. For instance, they decide that the price should be between $20 and $25 per share because that range attracts maximum interest. By the end of the day, once the roadshow wraps up, the investment bank looks at demand and establishes the final price. If demand is enormous (everyone wants to buy), the price moves toward the higher end of the range ($25). If demand is weak, the price goes to the lower end ($20).

Once the price is set, the subscription phase begins—a short period (usually 1-2 hours in the evening) when investors can place orders to buy shares. An investor says, "I want 100,000 shares at $22." The investment bank collects all orders. If total demand is for 10 million shares, but the company only offers 5 million, it results in a twofold oversubscription. The investment bank decides who gets shares, usually favoring its long-term clients and large funds.

Investors who placed orders at the offering price are known as book runners. They are guaranteed a certain number of shares. For them, the IPO typically results in a profit as prices often rise on the first trading day, allowing them to sell shares at a gain.

Listing and Beginning of Public Trading

On the following morning, the company's shares begin trading on the exchange—either on the NYSE (New York Stock Exchange) or NASDAQ (where technology companies are traded). The CEO may make a call to the exchange and hear the company's ticker symbol announced to the world and broadcast across all news channels. For example, "Apple Computer, Inc., AAPL." This is the moment the company dreamed of since its founding and long journey to the IPO.

On the first trading day, everything usually happens at warp speed. Investors who did not obtain shares in the IPO (the majority being retail investors) now want to buy them at all costs. Demand is enormous, but supply is limited. The price jumps from the offering price (e.g., $22) to say $30 within the first hours of trading. This can mean an immediate profit of 36% for those who bought during the IPO.

But this also means the company may be overvalued in an instant. If the company was priced at $22 on IPO day (based on the best understanding of fair value by investment banks and analysts), a valuation of $30 on the first trading day could indicate a speculative bubble. Investors buying shares on the first trading day at $30 are risking losses if the price drops to $18 the following week.

Part 4: Risks and Investor Protection

The Lock-up Period: Why Prices Drop After It Ends

One of the most mysterious and profitable phenomena in IPOs is the price drop following the end of the lock-up period. What is a lock-up period? It is a phase, usually lasting 180 days (6 months), during which the company’s insiders (founders, board members, management, early investors who held shares before the IPO) cannot sell their shares on the open market.

Why is such a restriction in place? The logic is simple and clear: without it, insiders could immediately sell their shares on the first trading day, when prices might have soared by 50% or 100% from the offer price. If a founder who bought shares for $5 (during early funding) sees a price of $25 on the first trading day, they can sell all their shares and secure a massive profit in hundreds of times. However, that would flood the market with a huge number of shares, causing prices to plummet due to oversupply, new investors to lose money, and the company could face scandal.

The lock-up period protects new investors by preventing insiders from selling their shares during the critical first 6 months. But when the lock-up period ends (after 6 months), insiders can finally sell. And they often do, usually en masse. A significant number of shares flood the market in the week following the end of the lock-up period. Demand struggles to keep up with supply. Prices can drop by 30-50%.

This phenomenon occurs almost with every IPO. For example, Facebook conducted its IPO in 2012 at $38. On the first day, the price climbed to $40. However, after the lock-up period ended, the price fell below $20 within a few months. Investors who bought at $40 on the first trading day lost 50% within a year.

Information Asymmetry: Insiders Know More

All financial markets suffer from a fundamental inequality: information asymmetry. Insiders (those working at the company) know more than new investors. The CEO knows that sales have dropped in the last month. The CFO knows that a major client (who contributes 30% of revenues) is considering switching to competitors. Yet this information is not disclosed in the prospectus because it is not necessarily considered "material" information according to the regulator's definition.

This information gap creates significant risks for new investors. They see appealing figures in the prospectus, a growing trajectory of revenue over the past three years, and conclude that the company is an excellent long-term investment. However, insiders may know that this trajectory is unsustainable.

A classic example is the IPO of Theranos in 2015 (although technically it was not a traditional IPO through an exchange, the principle remains similar). CEO Elizabeth Holmes claimed that the company developed a revolutionary medical device that could conduct thousands of blood tests from a single drop. Investors believed and poured in billions, with the company valued at $9 billion. But it later turned out that the technology simply didn’t work, and the results had been fabricated. Investors lost nearly everything.

Conflicts of Interest: Whose Interests Align?

Many conflicts of interest exist during an IPO that often remain invisible to novice investors. The investment bank is keen on a high price (because its commission is higher—7% of $100 billion is more than 3% of $50 billion). The CEO is interested in a high price (because their options become more valuable, and they might earn a bigger salary). Early investors (venture funds) also stand to gain from a high price (as they’ll receive more money upon exit and can boast to their investors).

However, these interests can work against the interests of new investors. A new investor wants a fair price—not too high and not too low, a price that reflects the company's true potential. When all other players in the IPO are aiming for a high price, the new investor finds themselves on the opposing side of the transaction.

This does not necessarily imply explicit fraud or criminal activities. All parties could be acting within legal bounds, not disclosing hidden information or submitting false reports. But their interests simply do not align. The IPO structure is such that the advantage lies with insiders rather than new investors.

Red Flags: How to Identify a Risky IPO

There are several signs that should prompt a newcomer to exercise caution when analyzing an IPO and deciding whether to invest. An excessively high valuation is the first and most critical danger sign. If a company’s IPO is valued at 50 times its annual earnings (P/E ratio = 50), while its competitors are valued at 20 times earnings, that could be a red flag. It suggests that investors are expecting unusually high growth in the future, and if that growth fails to materialize, the price could plummet by 50-70%.

The second red flag is a loss-making company with vague promises. If a company is still losing money during its IPO, and the investment bank claims it will become profitable "within a few years" or "when it achieves scale," be extremely cautious. "A few years" can often become "never" or "much longer than expected." Examples abound, from Uber (which remains unprofitable even today, many years after its IPO) to Lyft, Slack, and other "unicorns."

The third flag is poor management and lack of experience. If the CEO is young (in their 20s or 30s), inexperienced in business, and this is their first position as the CEO of a large company, that is a risk. If they are young and highly persuasive but lack any evidence that they can deliver on their promises long-term, that is a significant risk. Examples include Elizabeth Holmes (Theranos), who was young, appealing, convincing, and had famous people in her board but failed to create the promised product.

The fourth flag is unusually high fees from the investment bank. If an investment bank charges a 7% fee (instead of the usual 3-4%), it might indicate that it is struggling to sell the IPO and must be more aggressive in marketing. This suggests that demand may be weaker than stated in public communications.

The fifth flag involves using unique metrics instead of standard financial indicators. If a company uses its own metrics to measure success ("active users," "cost ratio," "EBITDA before discounts," etc.), be cautious. The company might manipulate these metrics to make itself more appealing. Examples include social media companies that report "active users" instead of real monetization and profitability or cloud companies that use their own "cost ratio" instead of standard GAAP profit.

Part 5: Practical Guide for Beginners

How to Buy Your First IPO: Step-by-Step Instructions

If you have decided to try investing in an IPO, here is a step-by-step guide that is applicable in most developed markets and can be utilized by beginners.

Step 1: Choose a Broker

Not all brokers provide access to IPOs for retail investors. Large brokers like Charles Schwab, Fidelity, E*TRADE, and TD Ameritrade typically offer such access. Check with your broker to see if they provide IPO access for clients of your size. Keep in mind that retail investors often receive less popular IPO shares; the hottest and most sought-after IPOs tend to go to large pension funds and investment firms.

Step 2: Raise Funds

The minimum investment for purchasing IPOs is usually a few hundred dollars, but it's better to have several thousand for diversification. Remember, you won't be able to access this money for several months (as it will be frozen in the pre-IPO order), so use funds that you do not need immediately for current expenses.

Step 3: Place an Order

When an IPO you are interested in arises, you submit an order through your broker. You state how many shares you wish to buy and at what price (or you accept the price set by the investment bank based on the collected demand).

Step 4: Wait

After placing your order, you will wait a few days. The investment bank gathers all orders from all brokers, determines the total demand, and sets the final IPO price. If you are "selected" for participation in the IPO, your broker will freeze the funds from your account.

Step 5: First Day of Trading

On the following morning, shares start trading on the exchange as usual. You see the opening price (which can be significantly higher than the offering price). Now you can sell shares if the price is high and you want to realize a quick profit or hold onto them if you believe in the long-term potential.

Investment Strategies: Long-term or Speculative

There are two primary strategies for investing in IPOs: long-term investment and short-term speculation. Speculation involves buying on the first trading day anticipating swift profits. You may buy at $25, wait 30 minutes, see the price at $35, sell, and pocket a 40% profit. This practice is called flipping. It works when the IPO is overpriced on the first day, and demand is enormous. But it can also end in losses if the price drops quickly or fails to rise at all.

Long-term investing entails buying an IPO because you believe in the company over a span of 5-10 years. You are unconcerned about the price on the first trading day; your focus is on the price and profitability of the company in 5 years. This is a more conservative strategy but has historically performed better over the decades.

For beginners, long-term investing is usually recommended. Speculation requires skill, experience, a willingness to potentially lose money quickly, and emotional resilience. If you are a novice, focus on understanding the company, assessing its fair value, buying at a fair price, and holding the shares. While this may not be the most thrilling approach in the short term, it works and builds long-term wealth.

Part 6: Real-Life Examples and Lessons

Top IPOs: Success Stories That Inspire

Microsoft (1986): From Software to Global Dominance

Microsoft conducted its IPO in 1986 at $21 per share. The company was young (founded in 1975), but it had a clear strategy—to become the primary software supplier for the personal computers beginning to fill offices and homes. Founder Bill Gates was young, but his vision was clear and long-term.

Today, one share of Microsoft costs about $400 (depending on the timing). Investors who bought in 1986 and held for 35+ years have seen returns exceeding 19,000%. Yet remember, in 1986 it was impossible to predict that Microsoft would dominate for over 30 years and remain one of the most profitable companies in the world.

Amazon (1997): A Loss-Making Company That Became an Empire

Amazon conducted its IPO in 1997 at $18. The company was unprofitable, and it was unclear if it would ever be. Founder Jeff Bezos dismissed investors and analysts calling for profitability, arguing that long-term growth and market capture were more important than short-term profits. Many skeptics deemed it madness.

Today, one share of Amazon costs about $3000 (also depending on timing). The return exceeds 16,000% over 25+ years. This is one of the best examples of how long-term vision and the readiness to endure losses triumph over short-term skeptics and analysts. Amazon has evolved from merely an online store into a cloud services provider and one of the world’s most influential companies.

Google (2004): An "Overvalued" Company That Met Expectations

Google went public in 2004 at $85. The company was profitable at the time of its IPO (which is rare), yet people and analysts claimed the price was too high. Many financial experts publicly stated that Google was overvalued and that the price would fall, advising to "sell."

Today, one share of Google costs around $2600+. The return exceeds 3000% over 20 years. Google has shown that even if an initial price seems high at the time of IPO, a good company dominating its market and providing unique value can easily justify and even exceed the most ambitious expectations.

Worst IPOs: Lessons from Failures

Uber (2019): Miracle Expectations, Reality of Losses

Uber conducted its IPO in 2019 at $45. The company was incredibly popular in culture, and everyone thought it would be the next Amazon or Google, the next great success in stock market history. Investors were full of optimism and FOMO. Yet on the first day, the price fell below the offering price and continued to drop over the months and years.

The main reason: Uber burned through cash quickly, losing money every quarter. Investors began to call for profitability, which the company could not achieve despite numerous promises. Today, Uber trades around $70-80 (a return of only 55-78% in 5 years), far below what people anticipated in 2019. This illustrates that popularity and hype do not guarantee a successful IPO or profitability.

WeWork (2019): An IPO That Never Happened

WeWork was preparing to conduct its IPO in 2019 and become the next unicorn, valued at billions. But at the last moment, it was pulled—the company withdrew its application. The reasons were numerous: the level of losses was incredibly high (the company was losing money on every space rented), CEO Adam Neumann had too many conflicts of interest (he owned buildings that WeWork leased, creating a significant conflict), and the business model was questionable (it essentially involved renting office space, lacking any revolutionary or innovative service).

Had this IPO occurred, investors would have lost substantial amounts. This demonstrates that even at the last moment, an IPO can be canceled if risks and problems are too evident.

Pets.com (2000): A Classic Example of the Internet Bubble

Pets.com conducted its IPO in 2000 during the internet bubble at $11 per share. The company sold pet products online. On the first day, the price rose to $14 due to FOMO (fear of missing out on investing in the internet). However, the company burned through cash swiftly and had no path to profitability; customer spending was low while delivery costs were high.

Within a few years, the company went bankrupt entirely. Investors who bought at $11-14 lost 100% of their money. This is a classic example of how speculative bubbles and collective hype lead to collapse and total capital loss.

Conclusion: How to Begin Investing in IPOs Wisely

IPOs are a powerful tool that enables companies to grow rapidly, hire top talent, invest in innovation, and allow investors to accumulate wealth through participation in growing companies. However, they can also mislead newcomers who do not understand the hidden risks and conflicts of interest.

If you want to invest in IPOs, do so slowly, with small amounts (that you can afford to lose), and only in companies you genuinely understand and believe in for the long term (5-10 years). Do not follow the herd and avoid FOMO. Conduct your research. Read the prospectus from start to finish, analyze financial statements over the years, assess competitors and their metrics, and determine fair value. Remember: the best investments are often those that no one expects and that the market undervalues. Microsoft in 1986 was not an obvious choice for investors. Amazon in 1997 seemed like madness to conservative investors. Google in 2004 was deemed overvalued by analysts. Yet all of them justified and exceeded the expectations of investors who believed in long-term potential and had the patience to hold shares for decades.

An IPO is not a game of chance when approached intelligently. It is an opportunity to become a shareholder in a growing company at an early stage in its development as a public corporation. Use that opportunity wisely, analyze, think long-term, and you can create significant wealth.