SNAP-CHAT "HOT" IPO : SHOULD YOU BUY ? EVERYONE IS BUYING THIS..IPO stands for initial public offering
but it also stands for: it's probably overpriced
:Imaginary Profits
:Insiders Private Opportunity
: Idiotic, Preposterous, and Outrageous
Buying IPO is a bad idea because it flagrantly violated one of the most fundamental rules: No matter how badly other people want to buy a stock, you should only buy if it's undervalued.
In the example above, IPO VA Linux's shares were valued at a total of $12.7 billion while company total worth was only $44 million. That IPO fell from $293 to $1.19 Per share.
Before Buying snap chat stock please do your analysis, look at their financial statements, their debt, earning etc. Do not jump in because it's a "hot" issue and everyone else in jumping. If your analysis shows that snap chat stock is undervalued then only buy it.
While there was a chance to become a billionaire by buying IPO's of a couple of companies like Microsoft, Apple, Coke there's was also a huge chance to get broke by buying IPO of thousands of companies like VA Linux.
References:
"The intelligent investor" by Benjamin Graham (book)
“Security Analysis” by Benjamin Graham (book)
