As Monzo edges closer to a possible Liquidity event (IPO, secondaries, buyout, etc…) in the not too distant future, I’m creating an area for people to discuss what that means for Crowdfunding Investors.
Conscious this shouldn’t include actual advice due to everyone’s situation being different, but more to share information that will help people to make informed choices.
Madness! I remember the first round… clicked invest and the wave of people trying to invest crashed Crowdcube, no idea the investment was successful until a few hours later when it was confirmed by email
How much would that £5K be worth at today’s valuation?
Should crowd investors expect to see the same sort of returns as VCs? Or not much more than just getting your money back?
IPOs usually tank right out the gate, especially if it’s on the London stock exchange. So I’m half expecting the crowd investors to come out of this worse than they went in. But I’m just not too familiar with it. I steer clear.
If Monzo float on NSYE I’ll invest then. Once the inflated stock price of the IPO has dropped and stabilised of course.
Every single IPO I’ve bought on day one has wound up losing more than 50% over the years that followed and it never recovers.
It’s far worse for UK IPOs.
THG IPOd at £6.25. For the first few months it climbed 30-ish%. And they were an outlier, not the rule, in doing that from my prior experience in buying at IPO. Then then they sunk down to £5.80. It began to climb again briefly (which is when I dumped all of mine at £6.16, a 9p loss per share) after that before dropping off a cliff to £2 a share. And slowly declining ever since to now 76p.
For a US example, there’s Lucid Motors. Now they didn’t IPO, but floated via a SPAC. Upon the news breaking, that SPAC quickly climbed to $30 a share, before settling in the $20 ballpark. Now I was lucky and got in prior to that when it was steady at around $9. Upon the merger completing it shot up to over $50. And began a nose dive pretty much straight after and has been declining ever since. It’s now $4 a share. I sold half of mine when it hit about $45 and kept the rest. So I actually made something out of this one, but that was pure luck.
For a fintech comparison there’s RobinHood. Was $34 at IPO. It’s now $8 following the exact same pattern as the other two examples. Though its initial climb was far shorter lived.
Squarespace went the same way too.
Deliveroo was a fairly recent U.K. one, same story there.
ARM is very early days yet but that one just dropped right out the gate.
Now maybe I’m just following the wrong IPOs but would be curious to know who actually isn’t following the trajectories I’ve seen with these examples here.
That tech crunch article is also 6 years old, and so probably isn’t that relevant anymore. A lot has happened since then that has certainly left their mark on the stock market as a whole.
Ok, so they go up for so some period, that’s agreed.
I don’t think that you can blanket say that the majority go down in the mid-term though without evidence. It would be easy enough to prove one way or the other; stock market data is a matter of public record. But it would take a fair bit of time and I don’t have enough spare to settle this debate! You got unlucky on some of those investments, but remember that the plural of anecdote is not data. I think we also need to exclude the SPAC frenzy, which I think anyone could see from a mile away (I certainly did!) was simply some regulatory arbitrage in a very heated market, and that the majority of those companies weren’t going to be good investments in the long-run.
I mean, those companies were all very much talked about in the media and rather hot companies - which probably contributed that that slump (IPO happens and then the fever pitch of media interest slumps over a few months, leading to reduced buying pressure and thus a lower price). But there are also a load of rather boring companies doing things like supplying sanitary supplies or engineering equipment and so on that also floated. And in aggregate I really doubt that they all tanked. But you’d need to pull all the data and process it to know for sure!
The article was just the first reputable source I found with a quick web search to show that “IPO pop” is a real term. Its age doesn’t really matter as M&A bankers are still dynamically pricing IPOs now as they were then in order to achieve that pop and thus garner positive media attention.