IPO - enjoy with (extreme) caution

Another interesting comparison: talk of $ 6 Billion valuation, revenues £151.3 Million (2016). Profits? Don't ask.
http://uk.businessinsider.com/farfetch-2016-accounts-revenue-up-70-losses-up-2017-11

Blue Apron's VC backers have made gobs of money — while regular investors have taken a bath (APRN)

Ordinary Investors - lambs led to the slaughter by insiders, market professionals and intermediaries. All the world's regulation is useless! Leave IPO's to the Pros
Blue Apron's VC backers have made gobs of money — while regular investors have taken a bath (APRN)

IPO: Canada Goose exploded on its first day of trading

With a broken IPO system the sky is the limit! Would anyone really 'invest' at such valuations if they had to keep the shares for three years?
Canada Goose exploded on its first day of trading (GOOS)

Traders are paying 'extortionate fees' to short Snapchat (SNAP)

Even more amazing that irresponsible Index providers want to herd unsuspecting investors into unproven bubble stocks. It shows that 'passive' investing slavishly hugging indices is no panacea!
Traders are paying 'extortionate fees' to short Snapchat (SNAP)

More Air than Value? Airbnb Raises $1B At $31B Valuation

Remember, the rulebooks that the Regulators publish get longer and longer but none of the rules cover the real important challenges investors face, like buying and selling at the right price
Airbnb Raises $1B At $31B Valuation, Likely Delaying IPO Plans Further

IPO offerings - Buyer beware!

Looking at the valuation of the Purplebrick online property agent one has to ask if investing in publicly offered shares is really a suitable investment option for the broader public. It does not take a mathematical genius to figure out that there is one certainty: the selling promoters and insiders make a hefty packet while the investors coming in at a later stage buy into a lot of hope.  I am all for 'free' markets but one has to wonder whether the regulatory and tax framework does not need a healthy dose of adjustment. Listings such as these may only be backed by 'skilled' (?) professional intermediaries, but they are ultimately investing the savings of Joe Sixpack, not their own money. The London Stock Exchange has been converted into a profit-seeking business which is a shame as it should really be in the forefront of guarding the end investor's interests above all other objectives. Talk of shareholder 'engagement' is really so much hot air if that is not the case. That one of the backers of this issue has reaped a double digit bonus in the recent past adds to the discomfort of the interested observer
 (20 December 2015)

Gymania?

News that Pure Gym will give investors (or shall I say punters?) the opportunity to value it at anything close to £500 Mio must raise an eyebrow or two. Looking at the Gym Group which has already publicly traded shares it should be clear who the main beneficiaries of any going public would be if the valuation would be on a similarly elevated basis: These are the Gym Group metrics: Market Cap £287 Mio, 12 month revenues a grand total of just over £52 Mio and if that is not enough of a yellow light - tangible book value is £27.6 Mio vs long-term debt of £78 Mio. You may want to keep an eye on your financial adviser when he submits your next account statement. As a matter of principle, PBA advises against taking part in New Issues unless there is a very clear valuation argument in favour of the Buyer.

Media complicit in IPO hypes

Time and again one reads headlines such as this one: 'Burger chain gears up for $568 Mio. float'. This one is from CityAM and refers to the planned IPO of another Burger Chain. Apart from the question of how many such chains the world really needs - and the question of the benefit of eating too much meat, especially red meat - one has to wonder why the reporters do not take the trouble to look more closely at the purported 'valuation' that is implied by such a headline.
It is quite understandable that the lucky few among the original promoters behind the business and their (well-paid 'advisers') would put such a 'valuation' into circulation. This is known as 'anchoring' and is a well-known trick used by any wily negotiator. But by repeating this number without any proper analysis of its merits the commentariat is making itself complicit in giving this 'valuation' the appearance of correctness.
Looking behind the scenes in this particular case should give any experienced investor who is not just a momentum player or index hugger pause for thought.
Shake Shack had total revenues of just $ 82 Mio in the nine months to September 2014 (up from 58 Mio in the year ago). Net income was a grand total of $3.5 Mio (4.9 Mio) and Net Equity was a less-than-impressive $14 Mio. All that from 53 shacks (33 a year ago).
Now there have been some hefty valuations in the fast-food business during the recent past and Chipotle Mexican Grill (ticker CMG) continues to trade at vertigo-inducing levels. This may or may not be the correct 'valuation' for a fast food chain. History will sort this out.
But it would be only good journalism if news items about new share issues would be treated as more than just re-hashed publicity items. Much emphasis is being put by policy wonks on the importance of fostering wider share ownership as part-solution for the evolving retirement crisis many baby boomers and succeeding generations will face. Giving them 'access' to new issues trading at stratospheric levels will only benefit the (early?) retirement of the 1% - or even only the 0.01%.

IPO - don't play the sucker's game

New Share Issues and IPO's are usually coming to the market when it is advantageous for the Sellers and not for the Buyers. On top of it the allocation process is less than transparent in most cases - the 'good' clients are favoured by the issuing houses, and I don't even want to imagine what 'inducements' are sometimes given behind the scenes. All this in an age where computerised auction systems could easily be created to ensure that there is a fair process to strike an issuing price that is acceptable to buyer and seller and gives every investor - big and small - a fair shot to get the paper they wish to subscribe for.

Beware Insiders offering IPO's

Naturally the controlling shareholders want to cash out for the highest possible price when they graciously offer shares to the great unwashed public (and their often not-so-smart professional advisers and money managers). When one prospective IPO candidate refers to the London property market as 'super-hot' alarm bells should start to ring and any potential subscriber should have a really good look before signing on the dotted line.

Have no illusion about investing in IPO's

Investors often think that IPO's allow them to invest in the company at the start. But the reality is that they are at the very end of the food chain, after founders, venture-capitalists and investment bankers have cashed in by buying their stakes at much lower prices early on in the history of the company.

IPO for 'Shell' Companies

If you think that these companies have anything to do with the collection or selling of shells you are mistaken. This particular type of company is making occasional appearances in the UK stock market. The name refers to the fact that the company has no or only very marginal real business activities and is in the main designed to allow new management or controlling shareholders to raise money for a new venture or use an existing (usually languishing) listed business as a quick way to gain control over a company whose shares can be used as acquisition currency. Unfortunately in most cases the new promoters behind the shell company are able to create an air of excitement and even hype and any new investors that subscribe to shares in the IPO or subsequent secondary share issues are required to pay a hefty premium for the privilege to be on board for the ride. As in any IPO investors should be careful not to fall for a good 'story' and only invest on the basis of value and solid fundamentals.

IPO's - Facebook illustrates risks

The odds in Inititial Public Offerings (IPO's) are all too often stacked against the buyers. Insiders and the promoters of the IPO are interested in obtaining a high price and have a heavy propaganda machine on their side - despite efforts by the regulators to curtail one-sided advertising. There is insufficient protection against the insiders selling too early and investors are advised to favor IPO's where the majority - ideally all - of the funds raised goes to the company. The sale of a large stake by an early investor in Facebook illustrates (CNBC) the controversy surrounding IPO's.

Facebook Share Issue: Where are global regulators?

One amazing aspect of the Facebook deal that is promoted by Goldman Sachs is the fact that global regulators seem to be completely absent - despite the fact that possible questions by the SEC in the United States stopped the placement to US domestic investors. Given the noise made by politicians in all civilised financial markets all over the world about the need for more protection of investors and savers this silence is really DEAFENING and shows how much regulators are behind the curve.

A Slap in the Face - Goldman's Facebook Farce

Don't get too excited when shown the next 'hot' IPO has always been the advice by Private Banking Advisory. Usually the insiders and their commissioned sales agents (aka 'Investment Banks') know more about the business than the great unwashed public (aka 'clients'). Now that potential US investors have learned that they will not be among the 'chosen few' who will be allowed to buy Facebook shares it just added another twist to the sorry tale of problems associated with the handling of Initial Public Offerings.. What may be another sign that the Web 2.0 hype has reached its zenith - or at the very least is close to it - becomes a showpiece of how not to treat your customers. What is also surprising are the fees that Goldman Sachs proposed to charge Facebook investors: It has been reported that Goldman would levy a 4 percent placement fee on clients, plus a half percent “expense reserve” fee. It would also charge a performance-related fee by requiring investors to surrender 5 percent of any profits, known as “carried interest,” according to a Goldman Sachs document. As usual, we could not find any indication about the willingness of the advisor to share in any losses the investors might make.

Beware of trial balloons in IPO valuations

All-too-often promoters of IPO's use a gullible financial press to spread valuations for their planned initial public offerings that have little bearing to reality. High levels are used to soften up the institutions and retail investors and 'anchor' their price expectations. Once these levels are widely disseminated in the media they become a self-fulfilling reality from which 'concessions' can be offered during the proper offering period. The media usually do little but report the headline number - without questioning how it is derived and whether it can be justified in the first place. While the ultimate investors behind the institutional shareholders have little influence over the actions of their 'fiduciaries', individual investors are well advised to monitor the participation of their fund managers very closely.