Shares before company floats on the stock
Discussion
I have bought shares in one of my clients companies which is going to float on the stock exchange in the U.S. When I originally bought the shares it was just a punt as I was investing in him rather than just his product which has a Global paten. After doing my do diligence on the investment firm which is taking them to market I bought my shares in the family and friends round of funding before they float and got them at $0.15 a share. The max that could be invested was a 100k, but with that investment came strict guidelines that prohibited me selling shares when they become available to the public which is a safe guard to protect the value of shares.
The tech-
The device pulls data from external and internal household sources and performs automated functions to reduce energy consumption connecting to household appliances, heating/cooling systems and some other cool stuff.
This product has now caught the attention of one the world largest tech firms who would like to do a technical review on it and may look to acquire a big share.
As good as it all sounds I don't expect it to happen as it would be life changing and that sh't never happens to me! I was originally told before all this interest came about that I should expect the share price to hit around a $1 after it floats which is like a 650% increase!!
How likely is the above estimation and has anyone ever been in a similar position where they have bought shares before the company goes public?
The tech-
The device pulls data from external and internal household sources and performs automated functions to reduce energy consumption connecting to household appliances, heating/cooling systems and some other cool stuff.
This product has now caught the attention of one the world largest tech firms who would like to do a technical review on it and may look to acquire a big share.
As good as it all sounds I don't expect it to happen as it would be life changing and that sh't never happens to me! I was originally told before all this interest came about that I should expect the share price to hit around a $1 after it floats which is like a 650% increase!!
How likely is the above estimation and has anyone ever been in a similar position where they have bought shares before the company goes public?
You can make a lot of money or it can a damp squib.
I would think the lock out period will be for a limited period after the initial float so check your agreement and see when you can sell and then take advice as to how to sell in the most effective manner.
eg Dump at first opportunity, hold for X years or sell in tranches.
Good luck!
I would think the lock out period will be for a limited period after the initial float so check your agreement and see when you can sell and then take advice as to how to sell in the most effective manner.
eg Dump at first opportunity, hold for X years or sell in tranches.
Good luck!
desolate said:
You can make a lot of money or it can a damp squib.
I would think the lock out period will be for a limited period after the initial float so check your agreement and see when you can sell and then take advice as to how to sell in the most effective manner.
eg Dump at first opportunity, hold for X years or sell in tranches.
Good luck!
Yes the lock out period is for a set period of time. I have decided that if the shares reach X figure I will cash out, I also understand that stocks and shares can be a bit of a con, so knowing the CEO should keep me in good stead. I would think the lock out period will be for a limited period after the initial float so check your agreement and see when you can sell and then take advice as to how to sell in the most effective manner.
eg Dump at first opportunity, hold for X years or sell in tranches.
Good luck!
I am just a little nervous as I lost a lot of money when a family member invested some money in stocks and shares, I guess I am looking for some reassurance!
Have you ever bought shares before they float?
I was at a place pre-IPO and got options at $6 strike price. They floated at $12, finished the first day at $105 and, after due course, split and maxed out at (an equivalent of) $3134. I miss the dotcom bubble 
Not that I saw any of that, of course ... I bought and sold up my options and paid off a credit card. Right thing to do at the time; hindsight is a b
d though.
Not that I saw any of that, of course ... I bought and sold up my options and paid off a credit card. Right thing to do at the time; hindsight is a bd though.Doofus said:
Will you be free to sell them on the open market, or is there some kind of Put and Call? I have one of those, and I'm stuck with being fictitiously wealthy..
I am assuming I can sell on the open market once they go public.bigandclever said:
I was at a place pre-IPO and got options at $6 strike price. They floated at $12, finished the first day at $105 and, after due course, split and maxed out at (an equivalent of) $3134. I miss the dotcom bubble Not that I saw any of that, of course ... I bought and sold up my options and paid off a credit card. Right thing to do at the time; hindsight is a bd though.
As you said hindsight really is a b Not that I saw any of that, of course ... I bought and sold up my options and paid off a credit card. Right thing to do at the time; hindsight is a bd though.h. Edited by juggers on Monday 27th March 20:24
If it's floating and you want to lock in a price, could you do something on a spread bet platform?
Seems to me that if you've got shares you can't sell, but want to get the value of them, you must be able to take a contrary position somehow that would lock in a price.
E.g. if you take a bet to short the shares over your 'lock in period', and do your maths right, you should be able to risk free get near the IPO price. Of course, if you do this, and the value of shares go up, you'd lose that upside
just a thought.
Seems to me that if you've got shares you can't sell, but want to get the value of them, you must be able to take a contrary position somehow that would lock in a price.
E.g. if you take a bet to short the shares over your 'lock in period', and do your maths right, you should be able to risk free get near the IPO price. Of course, if you do this, and the value of shares go up, you'd lose that upside
just a thought.
Its really a question as to whether you can afford to lose. I have had pre IPO stock grants at various times, more often good than bad.
- You should know exactly when you can sell the stock.
- check out any ratings on the stock from the investment community
-dont be greedy. If you think you have made enough money and are getting nervous, sell out , or at least half, so you spread your bets.
-
- You should know exactly when you can sell the stock.
- check out any ratings on the stock from the investment community
-dont be greedy. If you think you have made enough money and are getting nervous, sell out , or at least half, so you spread your bets.
-
bigandclever said:
I was at a place pre-IPO and got options at $6 strike price. They floated at $12, finished the first day at $105 and, after due course, split and maxed out at (an equivalent of) $3134. I miss the dotcom bubble Not that I saw any of that, of course ... I bought and sold up my options and paid off a credit card. Right thing to do at the time; hindsight is a bd though.
Change your username.... Not that I saw any of that, of course ... I bought and sold up my options and paid off a credit card. Right thing to do at the time; hindsight is a bd though.
stuthe said:
said: If it's floating and you want to lock in a price, could you do something on a spread bet platform?
Seems to me that if you've got shares you can't sell, but want to get the value of them, you must be able to take a contrary position somehow that would lock in a price.
E.g. if you take a bet to short the shares over your 'lock in period', and do your maths right, you should be able to risk free get near the IPO price. Of course, if you do this, and the value of shares go up, you'd lose that upside
just a thought.
A few issues:Seems to me that if you've got shares you can't sell, but want to get the value of them, you must be able to take a contrary position somehow that would lock in a price.
E.g. if you take a bet to short the shares over your 'lock in period', and do your maths right, you should be able to risk free get near the IPO price. Of course, if you do this, and the value of shares go up, you'd lose that upside
just a thought.
There won't be any lend so no shorting.
An OTC operator like a SB firm wouldn't offer shorts without being able to hedge.
The firm will almost certainly be far too small to write a CFD against anyway.
Chances are it isn't listing on a recognised exchange but the pink sheets.
Your lock-in will prohibit hedging.
The norm is that second round investors (friends and family) will be locked in while the price is pumped to allow the first round investors (the advisors and agents who took lines of stock as part of fees) to sell out. Once they are out then the price stops being supported at about the same time as the actual cash investors are released from their contract. If you're lucky it's not a pump and dump and additional brokers will have been contracted to source buyers and keep the price up.
johnfm said:
bigandclever said:
I was at a place pre-IPO and got options at $6 strike price. They floated at $12, finished the first day at $105 and, after due course, split and maxed out at (an equivalent of) $3134. I miss the dotcom bubble Not that I saw any of that, of course ... I bought and sold up my options and paid off a credit card. Right thing to do at the time; hindsight is a bd though.
Change your username.... Not that I saw any of that, of course ... I bought and sold up my options and paid off a credit card. Right thing to do at the time; hindsight is a bd though. Still, it got him as an answer on a Trivial Pursuit card for "In the history of the world, who has lost the most wealth in a single day?" or something, so swings and roundabouts. Gassing Station | Business | Top of Page | What's New | My Stuff