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The Share Centre warns investors not to rush into newly floated companies
As the hype builds around the Facebook IPO, the most anticipated floatation in the technology sector since Google, Sheridan Admans, investment research manager at The Share Centre, warns investors of the risks of investing in a newly floated company.
“As of 30 December 2011, 59% of all US IPOs that launched in 2011 had suffered a decline in share price. With a high level of volatility in the markets it is difficult to anticipate how the stocks will fair and what the future holds for the newly floated companies. It is important to look at the reasons for floating and the company’s future plans for growth.
“We believe it is beneficial to the investor to wait until the stock has been in the public focus for some time and monitor share price activity, as hype tends to detract from valuation. It is often too early to make a judgement on the initial activity of a stock and there are normally other plays within the sectors with a proven track record.
”However, some investors may look to LinkedIn, as a comparison of a recently floated social network. LinkedIn floated at 45 per share in May 2011 and at close of market yesterday the share price was 72.37 per share – an increase of over 60%.
“Those investors still wanting to take the plunge should do so with caution and be aware of the risks of investing in the unknown and the exchange rate risks when investing overseas.”
THIS DATA IS PROVIDED BY THE SHARE CENTRE. THIS IS NOT INTENDED TO CONSTITUTE AN OFFER OR AGREEMENT TO BUY OR SELL INVESTMENTS.
Risk Warnings:
Investing in general, and the products and services mentioned above may not be suitable for all: if in doubt, individuals should seek independent financial advice. The value of investments and the income from them can go down as well as up and investors may not get back their original investment. Past performance is not a reliable indicator of future performance.
The bases and levels of taxation relating to ISAs, CTFs and SIPPs are subject to change and the value of these tax allowances may depend upon the circumstances of the individual.
Moneyextra.com recommends you take independent financial advice before acting on any article
Back2012-02-02 15:28:17 © Moneyextra.com