Post-IPO – How can Accendo markets help?

1. If you are disappointed with your IPO allocation (not enough/none at all) and still see potential for a share price rise you could buy shares. To save on costs and capital outlay CFDs are an alternative trading option with no stamp duty and only a 10% deposit required.

Do you see growth in the company warranting a long position? Or do you simply see demand from investors who missed out pushing the price higher? Will its inclusion in a major index (e.g. UK 100 or ) be a driver? Will the implied dividend yield attract or will growth lead to improved cash conversion and pay-out?

1. If you missed out on a quick profit and believe the hype surrounding an IPO is too much and the shares to be overvalued fundamentally, you could use CFDs to short-sell the shares allowing you to profit cost effectively from a decline in the share price.

A handful of high profile IPOs had a great start but soon faltered. Facebook (FB), LinkedIn (LNKD), although US, are good examples of too much hype with volatility and losses from the off. Wizz Air (WIZZ), DFS (DFS), Aldermore (ALD) and AutoTrader (AUTO), however, have done rather better since their 2015 listings. How will the next IPO fare?

Risks: As always IPOs come with risks such as deteriorating economic conditions which could impact business levels with a knock on to both financial (revenues, profits) and share price performance. Extreme events as well as failure to execute strategy successfully may also reduce growth potential. Note also that past IPO performance is no guarantee of future performance and both pre and post IPO trading could differ extensively to that of recent market admissions.

Pricing

IPO pricing tends to start in a range which is then revised up/down depending on demand from institutions and then narrowed towards the upper/lower end of the range as time goes on. This provides an approximate indication of market value for the company.

Retail investors often have access to a portion of shares but often not quite as much as they might like, with the majority tending to be allocated to long-term institutions such as pension funds, insurers and hedge funds.

Part of the service at Accendo Markets is to deliver breaking news on any changes and amendments to the company’s IPO plans (pricing, dates, size etc.) as soon as the market becomes aware.

IPO Timetable

Shares listing in the UK tend to start trading conditionally from Fri through to Tues after which they gain full market listing and trade unconditionally from Weds (normal schedule; subject to change). US IPOs tend to be quick affairs with a roadshow followed by pricing within a week before trading begins.

IPO Parameters

Newly IPOd shares tend to require CFD margins of 10-20%. Short positions are not possible during conditional trading on account of shares being unborrowable but usually become available for short selling when trading goes unconditional after a few days. Guaranteed stops are usually unavailable until trading becomes unconditional.