Tips For Choosing IPO Stocks for Beginner Investors Let Cuan! Tips for Choosing IPO Stocks for Beginner Investors Let Cuan!, Stock investing has recently emerged as one of the most appealing financial hobbies for the younger generation.

Not unexpectedly, the number of new investors is increasing, as is the number of firms doing IPOs (Initial Public Offerings) on the IDX (Indonesian Stock Exchange).

However, it turns out that in order to obtain the most money, you must first understand the recommendations for selecting the best IPO stocks.

Tips For Choosing IPO Stocks for Beginner Investors Let Cuan!

It is not without reason that rookie investors must understand how to pick IPO shares, because today’s novice investors are overly enthusiastic and fail to consider the prospective profit and loss in IPO shares. Many are overly eager and fail to examine the basics of the issuer.

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Of all, you don’t want the anticipation of a large profit from the stock market to result in a loss, do you? It’s a good idea to read the following IPO stock selection advice.

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Included is a quick assessment of the IPO shares, which proved to be relatively numerous on the IDX in 2021. This demonstrates that the country’s capital market has been highly turbulent and is poised to recover from the impact of the Covid-19 outbreak.

Knowledge Of IPO Shares

An IPO, as the name implies, is a circumstance in which a firm sells shares to the public for the first time. When a business conducts

Following an IPO, they are formally listed on the IDX and given the status of Tbk (public company). When this IPO occurs, the public as investors will be able to acquire the company’s shares, while the issuer will receive extra cash, resulting in a win-win situation for all sides.

Prior to opting to go public, the firm was still privately held and had a number of important stockholders, the bulk of whom were the company’s founders.

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The big tobacco manufacturer Djarum, for example, is controlled by the richest persons in Indonesia, brothers Bambang and Rudi Hartono. Where Djarum’s stockholders are still family, friends, and closest colleagues.

However, when a private firm ultimately goes public via the IPO process, they generally have a large aim in mind, such as

when the firm expands and requires money To be able to undertake an IPO, there must be guarantors such as investment banks, brokers or brokers acting as middlemen, and, of course, investors. Because IPOs are used to raise cash, the pricing of shares in IPOs are often low.

This is what makes the IPO period so appealing to investors looking to expand their stock holdings. However, not all investors are looking for IPO shares.

There are even seasoned senior investors who are not interested in purchasing IPO shares for a variety of reasons. Issuers are frequently present as well, limiting the sale of shares, which affects the offering price on the IDX.

Don’t Worry, Here Are Some Suggestions For Picking IPO Shares To Make Money

According to Cermati, the chance for investors to benefit from purchasing IPO shares might range from 10% to 30% on the first day of trade.

Assume you acquire 50 lots of an issuer’s IPO shares at Rp. 150 per share for a total of Rp. 750 thousand. Then, if the stock’s value rises by 20%, you will make a profit of IDR 150 thousand in the early hours of trading.

1. Valuation of the Issuer

The first guideline for selecting an IPO stock is to understand the issuer’s value. Indeed, some individuals advocate purchasing IPO shares.

Can be done more’relaxedly’ by employing instinct or patterns, but understanding the company’s valuation reduces the danger of loss. This is also something Nizar, Vice President of Investment Banking at Valbury Sekuritas Indonesia, believes.

Indeed, PER (Price to Earning Ratio) and PBV (Price to Book Value) are the two key indications for determining the issuer’s valuation, according to him.

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This technique will tell you whether the price suggested is too high or too low. To calculate the PER and PBV, you must first know the profits per share, including last year’s profit, from the firm prior to the IPO.

2. Business Prospects of the Issuer

After learning enough about the company’s value, consider the issuer’s future business prospects when selecting the next IPO stock. After all, investors prefer to put their money into firms with a lot of promise.

To understand the sustainability of the issuer’s business, you must first understand future business trends as well as the company’s objectives and tutorials strategies.

3. Monitor Market Trends

As previously said, understanding market patterns is critical before selecting to purchase IPO shares. And this market trend will generally indicate the stocks in the industry you are interested in.

So that if an IPO stock becomes available, you do not select the incorrect one For instance, under the current situation, the trajectory of stocks in the sector.

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Author: Irdansyah
I'm a regular contributor to IRDANSYAH commander, and in my business blog, my team and I share tales on the experience of starting a business from zero, how it feels to build a startup, and how to scale-up.