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| By Chris Graebe |
This is a very exciting time to be an early investor in tomorrow’s hottest companies for three reasons:
1. Because it always is. Startup investing offers some of the largest potential returns you’ll ever see …
2. With the government back open, the SEC can get back to work putting its final stamp of approval for many pending IPOs before the end of the year.
3. I will participate in a special “$705 Billion Private Deal Briefing” on Tuesday, Nov. 25, at 2 p.m. Eastern. More on that in a moment.
It’s the second of these I want to focus on right now.
An IPO is something a lot of companies dream about.
But most don’t make it to the stage where they go from being privately held to publicly held.
In fact, some 90% of companies fail long before that.
But for the startups that do go public, it’s a watershed event.
As of this writing, some 262 stocks have debuted on the U.S. stock market in 2025.
Whether you’ve invested in a pre-IPO company and/or you’re thinking about what to do (e.g., hold, sell or buy more) when a company starts trading on the NYSE or Nasdaq, congratulations!
Not only has the funeral bell not tolled for your investment …
But that company now gets to ring the opening or closing bell on the stock exchange where it’s set to debut!
When a company IPOs, you, as an investor, have some big decisions ahead.
So, my team and I wanted to lay out the …
The 5 Stages of the IPO Process
This process typically starts when the startup selects its underwriter(s) for the deal.
Typically, a single investment bank, such as Goldman Sachs or JPMorgan, will serve as lead underwriter. A syndicate of other Wall Street banks may also want a piece of the pie.
Underwriters work with the startup’s management to determine a reasonable valuation for the company.
After this due diligence, they will arrive at a price for the shares to debut at.
Underwriters also help stage events for large banks and brokerages about the value of the upcoming IPO.
If this process goes smoothly, the IPO offering price — the first price shares will trade at — may be raised gradually over time.
IPOs are often priced in the $10-$50 per share range. This can make shares accessible for everyday investors.
Keep in mind, though, that IPOs may be priced at one level based on the company’s valuation.
But then they might debut at another price — higher or lower — based on investor interest and demand.
That watershed IPO milestone comes and goes. But the work continues for the underwriters.
Now that shares are trading on a public stock exchange, the underwriter(s) may need to help stabilize the market.
That might mean buying and/or selling shares to help with supply and demand.
After a few days of trading, the underwriter may be allocated more shares. This earns them additional commissions on top of their fees.
The underwriter stays on through the transition — that is, the SEC-mandated “quiet” period after the IPO.
During that time, about 25-40 days, all parties are forbidden from releasing material information in spoken or written form.
The idea is to keep data “quiet” that could provide some parties an advantage … and, more to the point, disadvantage some others.
This is the roadmap for a company to IPO.
But as an investor, you need to ask yourself many questions throughout this process …
Here is a quick checklist to help you with your decision-making:
- Is the IPO a flash in the pan? Or can this company keep up investor interest and, with it, keep share prices trending higher?
- What does the company’s first earnings report look like as a publicly traded company? Is this better than the market expected, or worse? Beyond earnings …
- What do revenues, bookings, customers or other industry-specific metrics look like? Do you see growth or growth potential? Or did the startup and underwriters get too far ahead of themselves?
- What updates has the company provided since going public? The IPO process allows a company to raise capital quickly. Once the quiet period is over and everyone can communicate freely, do you feel like your hard-earned capital will be invested wisely?
- What is the extent of insider holdings — and how much selling pressure can shareholders like you expect from insiders once the lockup period ends?
- Are there better pre-IPO opportunities with a higher profit potential that you could roll (at least some of your IPO profits into?
These are the questions investors — especially the investors who owned shares before an IPO — need to keep asking themselves during the whole process.
If you haven’t ever participated in pre-IPO investing, they can still help you determine whether to buy a freshly minted public company or not.
But if you want to learn more about getting in even before a company rings that closing bell for the first time, I can help.
As I noted above, you’ll want to mark Tuesday, Nov. 25, at 2 p.m. Eastern on your calendar.
That’s the date I’ll let you in on a little-known company that is about to disrupt one of the most lucrative industries on earth.
And it’s not yet public.
You can join me if you grab your free ticket here …
Happy hunting,
Chris Graebe
