Hi Guys.
Welcome to Think Practical. This is Prasad Anguluri Here I want to talk about an important topic Do you really want to risk your money on IPO Stocks? I really want you to think ten times before you buy any IPO stocks So, Today is April 19th 2019 And there were two IPO stocks came yesterday Zoom, Pinterest. Zoom was valued almost 9 Billion initially. If we take a look at it. As you can see here, The stock went all the way as of Apr 18,2019. It went to 62$ each share. And then the valuation is 16 Billion Dollars. And then the valuation is 16 Billion Dollars As of good friday. There is no tradings happening today. Apr 19,2019 is today. In my opinion the valuation is quiet high. For a zoom video conferencing, the other services and all. Ofcourse they are great in the conferencing. but is this valuation is reasonable? Before we go deeper into zoom, I want to share something that has happened with twitter 5 Years before. Let’s have a look at it. On Nov 7, 2013 It’s been more than 5 years. Twitter went public. The initial public offering on twitter was 26$ . Then it went all the way to 45$ on the day1. Which is 74% UP. Zoom was valued 31B. Do you know the price of twitter today? Let me step back. In 2013, that is 5 years ago, Twitter stock was 45$ each with a 31B dollar valuation. Twitter stock was 45$ each with a 31B dollar valuation. Now lets look at twitter. Today, Apr 19, 2019 Stock price is 35$ , Valuation is 26B Dollars. We all know twitter is a great company. And it is a competitor to facebook. But the question is, It went all the way to 45$ Then After 5 years We are looking it still at 34$ The initial IPO of twitter was only 26$. The initial IPO of twitter was only 26$. But it jumped immediately to 45$ In 2 years, that is by August 2015, It fell below the IPO price after 2 years. If we see the twitter chart.. Here i’m just giving you the history of IPO. Twitter stock went to even 60$, In december,2013. In a month it went to 60$ each share. That’s a higher valuation. The valuation was almost 45Billion Dollars. Now if we keep looking at it, It’s keep going down. You can see that in the past three years. For example Nov, 2016. Which is 3 years after the IPO release. So, the stock price is 18$ or something like that. It went all the way to 14-15$, And then it started picking up slowly. In 2018 it went to 45$, Again it came down in last few months. So,the point is it takes time for all these new companies to stabilize. I think the twitter stock right now is a probably decent price to go in. as it is like 20 or 30$. But, if you have already bought twitter stock 5years ago, Your money is still same if you didn’t sell the stocks. But lot of people get panick, and sell it when it is 14,15$. Then their half of the money is under water. If you bought for 60$ In December, 2013. Your 60$ is 15$ Which is 25% of your money,if you have sold it in 2016. i definitely recommand not to just simply buy, and listen to the hype what ever you here. We are looking at zoom right now. Zoom’s initial price was like 36 $ And then it opened. They tried to open wall street at 65 $ They tried their best to keep it at 72% UP. 36 is the IPO price here. Only if you have a big financial advisors they will try to give you. Even at 36 $ , The valuation of zoom is 9 Billion. Now it is 62 So the valuation increased to 16 Billion. So, i strongly advice Do not invest at this moment. Unless you want to sell it tomorrow. Tomorrow means, You buy it on monday and sell it in couple of days. But if you want to keep it for couple of weeks and months, it could be another twitter, or it could be a Go pro. This came in 2014. Go Pro makes really nice cameras. I don’t think they have a real exact competitor. Stock right now is 6$, if you see it went all the way to 4$ in 52 weeks range. In October, 2014 it went to 85$. then its keeping going down. If i pick 1 year, it went all the way down to 4$. What happens if you would have pickedup the stock on IPO? What would you be doing with it? Even after 4 years, it is still struggling. This is a good price for now to buy it. if you are a long term investor. i’m not gonna say it might go for 8$ dollars tomorrow. I think it’s a decent price based on the financials i looked at it. Let’s look at the snap. Let’s look at the snap. it started publicly trading in march, 2017. Almost for couple of years, They started at around 25 or whatever. then it started going down. And after 2 years, March 6th was the public offering. After 2 years,it is 11$. i definitely knew that this was highly valued. It was valued like 30 billion dollar. twitter was not even a 30 Billion dollar company when this company was released. If you look at financials, Snap revenue is less than twitter. I have no clue why they valued 30B Dollars in wall street. Even 15B Dollars is may be good but I probably wish we could buy it at 5$ or 6 $. if it ever comes back,may be you could pick at that time. Now,Let’s look at LYFT. Just a month ago, it started trading On March 20th it released the IPO,that is just a month back. And then it started going down. LYFT is a pretty good company. I looked at the financials but i still want to see for few more years atleast 3 more years to see if their revenue will stabilize. Now we are talking about UBER with 100Billion $ valuation. These are good companies to be honest. Compared to ZOOM, i would probably pick LYFT if i had to invest. Pinterest also came into market, and the IPO went to 30% UP. Which is 12 Billion dollars of current valuation. I don’t know how many of us use pinterest. there is not much data on financials here. They are saying it is not even half of the twitter revenue. They are saying it is not even half of the twitter revenue. if it not even half of the twitter gross revenue, how could it be 13 Billion Dollar valuation? how could it be 13 Billion Dollar valuation? Anyways, i didn’t do much analysys on pinterest. i will try to share more information. All the links i’m looking at it, most of them are yahoo finance.but i will try to share it in the video. Please go ahead and go through it. i would stay away from these IPOs Wall street is managed by big boys. Right? They have billions. We don;t have billion.right? They can control in what ever the way they want. If they want to increase the stock,they can if they want to decrease a stock, they can. i think i would stay away. it could even go up. That’s how the drama goes.. when they have buckets of billions of dollars and they can keep pouring it. And once they start Taking their money out that’s when.. you see the true picture of any stock. Also if you look at ZOOM Revenue. In fescal 2017, Revenue was 60M dollars and in 150M in 2018 and 330M in 2019 Zoom posted a net income of 7.4M dollars for fiscal 2019. Fiscal year means, not an exactly calender year. they can choose a 12months period. it must have ended in around march 2019. so,that’s why they were able to post these results publicly. Of course,they are releasing their IPO to make sure they have a good revenue i guess. But 330Million is not that huge. For example if you take twitter, Twitter gross revenue right now is 2 Billion. I don’t think valuation of 16Billion or 10Billion for ZOOM justifies based on the revenues what they have here. So, i would say Please stay away from these IPO stocks. I don’t think this is our game, to be part of. unless you really want to gambel. you might be ok, you might make some money but you may loose lot of money. That’s what i personally think. Thankyou very much guys. If you find this video helpful, Please do share it with others. so that they can benefit. Probably your friends will appreciate later, when they see the real picture of How the stocks will shape.


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