Seems like the IPO market is hotting up. I've seen a lot of people asking whether to subscribe to the IPO and how many lots to bid. Personally, I hate to bid for IPO. Why?
1. IPO stands for It's Probably Overpriced. Mw told me this before, I agree.
2. You do not know how many lots you are going to get, hence people will usually bid more lots than they really want. It's a catch-22 situation - if you get it, it means that people do not want it. If you don't get it, it means that the IPO is hot.
3. Money will get tied up for some time while the ballot is taking place. Unsuccessful bids will have your money refunded after another period of time. Of course, there will be a placement fee which is not refunded. I don't like getting my money tied up like this.
4. Based on experiences, the price will fall after the first day of trading. Hey, if you can think that you're going to make a profit by selling on the first day of its trading, so will others.
It's the last point that I'll be looking into with more details. I want to find out if my experiences is grounded in reality, or I'm just suffering from schadenfreude. Let's take a look at some of the IPOs listed in the last two years:
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