Honestly, over my experience with IPOs, I find that it's more of a faith call.
The safest way to invest in IPOs is to skip the first day. IPOs tend to either be really successful on the first day, or will fluke extremely badly. And it doesn't really matter what reputation the company has; it can just happen.
Certain companies generally have a really high chance of a successful IPO, such as GoPro and Twitter, but some can really baffle investors when they flop, like Facebook.
Facebook's IPO failed, which caused many people who tried to invest into FB back then to lose a lot of money. And Facebook is "worth a lot" in public opinion.
Generally, people are more pleased with cheaper IPO prices than expensive ones. Expensive IPO prices give companies this "asking for more than what they deserve" vibe to them.
Generally speaking, the best IPOs to invest in are inherently the really famous companies you hear about all over the web. Some of the ones you see or read in the news can be good too, but generally don't pack as much hype.
Hype is important for an IPO, as it will determine whether it'll increase to 30~100% beyond the IPO's opening price within the first few months.
Usually, after stocks hit this hyped peak, they slowly decrease and return to the true value of the stock.
There is no equation for the value of an IPO. The value is what you think the company will be worth after they use the money from the IPO to expand.
There is no formula. If a service company that has few assets makes a million a year in profit worth more than a company with tons of equipment that make a million a year? Are they the same? Wealth in an IPO is subjective.
Depends what sort of company it is. Either net asset value or on an earnings multiple. Find the p/e for similar listed company and use this multiple on the new company's earnings to find a 'fair' price. It is not foolproof!!
The only way IPO (Initial Public Offer)
When it comes to investing in IPOs how do you determine the "real" companies value? Im looking for some type of mathematical equation if any thanks.
