Investing in businesses that go public for the first time can be insanely profitable if you know what to look for… And what to avoid.
Just take a look at what Beyond Meat Inc. (NASDAQ: BYND) did last year…
After opening to the public at $46 on its IPO date last May, the stock soared 420% to an all-time high of $239 per share just 85 days later.
But another popular tech giant, Uber Technologies Inc. (NYSE: UBER), didn’t fare so well…
After selling for $45 per share on its IPO just one week after Beyond Meat went public, Uber shares dropped like a rock.
At one point, shares were down 69.5% – to $13.71. And it's never traded higher than $47.08 in its public existence.
You see, without the financial statements, calculating the values of private companies is nearly impossible.
It’s easy to estimate future cash flows, discount them back to the present, and calculate the intrinsic value of a company like Coca-Cola Co. (NYSE: KO), who’s been trading on the New York Stock Exchange since 1920.
But you need different ways to value private businesses before they go public…
So today, I’m going to show you exactly what I look for when determining whether or not to buy a new stock when it debuts on the open market.
I’ll even show you two companies I’m eyeing right now… And one stock I’ll definitely be sidestepping.
Let’s get the one you should avoid out of the way first…
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