Lesson 6 of 7 · 4 min read
Common IPO investing mistakes
The traps that catch first-time IPO investors, and how to avoid them.
- Applying because of GMP or tips: these reflect sentiment, not the business.
- Skipping the offer document: the risk factors section exists for a reason.
- Ignoring the offer-for-sale share: a large OFS means much of the money goes to sellers, not the company.
- Assuming listing gains: many IPOs list below their price, and many that list above later fall.
- Borrowing to apply: losses are magnified and interest adds up.
- Putting too much into one IPO: diversification limits the damage of any single mistake.
- Forgetting lock-in expiries: large blocks of shares becoming sellable can pressure prices.
Key takeaways
- Do your own reading; don't outsource the decision to tips.
- Understand who gets the IPO money.
- Only invest what you can afford to lose.
Terms in this lesson
Educational content only. Not investment advice.