Getting it on an IPO (Initial Public Offering) may seem to be the game of the richest. But that is not the case. The IPO market seems to be a little slow now. Even during the outbreak of the Covid pandemic, an array of long awaited IPOs that includes big names like Snowflake, Airbnb, and Doordash have hit the financial market with great fanfare. And 2021 is the most trending IPO year ever recorded. Now you may be wondering how to buy IPOS shares online? In this article, we will be discussing the ways in which you can buy IPO and start investing.
How Does An IPO Work?
Before knowing how to buy IPO on various buying platforms, you will first need to understand the process in which this works. When an entity goes public and they issue stocks, it wants to bring in more capital and make shares accessible for the public to purchase. The IPO is approved by broker dealers, investment banks, or a group of broker dealers. They buy the shares from the company and then sell or distribute the shares at the IPO to the investors. Until the IPO takes place, the company stays private.
The aim of an IPO in the initial phase is to raise a particular amount of capital for the entity to carry on its business, so selling a million shares to one particular institutional investor is much more easy and efficient rather than finding 1,000 individuals to buy the same amount.
But even the big entities often do not receive as much of the action as they would prefer, as the IPO (Initial Public Offering) sells limited shares.
Who Can Buy IPO Stocks?
For most of the individual investors, the dream of getting in on the action of IPO will never be identified. Instead only the big institutional investors get the access. Institutions that get the opportunity to participate in the IPOs generally do a lot of business by offering a lot of deals to the dealer dealing with those particular shares. According to an investment expert,
The reality is the brokers think individual investors to be poor. So in place of that, employees, management, families, and friends of the entity that is going public may be given the chance to buy the shares at the price of the IPO along with the investment banks, institutions, and hedge funds.
If you have a good relationship with the broker that brought the company public and happen to reside most of your broad fortune with that broker, then you can beg to get yourself that hot IPO. According to portfolio analysts,
How Long Before You Can Sell Your IPO Stocks?
One of the main reasons to buy IPO stock is its chance to gain huge profit, often in just one day. When the LinkedIn shares were first offered they increased by 109% from $45 to $94.25 on the same day. In general, it is likely that your Initial Public Offering stocks are held with a brokerage account and you can sell them anytime either online or by just a phone call. However, the profits that you receive from holding the shares for one year or less than one year are considered ordinary income which is generally higher than the rate for long term capital gain
Buy IPO Stocks
Once the stock is trading in the market, a big time professional or a small fry investor both have chances to buy the shares. In fact, waiting for the actual debut of a stock can be the best strategy made by any small investor. As soon as the bank that is offering the shares sets the price, and it starts to trade on the exchange, people can initiate to buy IPO stocks.
There are several platforms that allow you to buy IPO stocks. Let us see how you can buy IPO stocks from those platforms.
How to buy IPO in Zerodha?
Here are the steps by which you can apply IPO through Zerodha:
- Login to the Zerodha Kite website.
- Go to Console >> Portfolio >> IPO.
- Select the IPO you want to buy for from the list.
- Enter your UPI ID and enter bid details like quantity, price, etc.
- Recheck the details and select Submit.
How to buy IPO in Upstox?
How to buy IPO in The HDFC Securities app?
To buy IPO from the HDFC Security app,
- Login to the HDFC Securities trading website.
- Click on IPO to see the list of Current IPOs/FDs available.
- Select APPLY of the IPO you wish to apply for.
- On the Place Order page choose investor status
- Enter all order information
- Click Proceed
How to buy IPO in ICICI Direct?
To buy IPO from the ICICI Direct do the following:
- Login to ICICIdirect.com.
- Go to ‘Trade & Invest’ then select ‘IPO’.
- Then click ‘Go’ of the IPO you wish to apply for.
- Complete filling the price and quantity and select ‘Submit’.
- Confirm the application by accepting all the terms & conditions.
To buy IPO stocks you will require a lot of homework and they can also be risky. All investments are subject to market risk. Even for those who go for the first released IPOs, they are also not a sure bet. So when you are considering new companies, do them carefully and wisely.