What are the major risks associated with investing in IPO?

New Delhi, Business Desk. One of the best times to invest in the market is to invest in the IPO of a company. Any company brings its IPO when it has to raise funds through the stock market for the first time. IPO means Initial Public Offering. At present, many IPOs are coming into the Indian stock market.

Let us tell you that based on bringing IPO into the stock markets around the world, the Indian stock market is in fourth place. In such a situation, investing in an IPO can give you good returns in the coming times. But there are many risks regarding investing in an IPO. As seen with the IPO of Paytm and LIC. In such a situation, let us know what are the risks before investing in an IPO.

What are the major risks associated with investing in IPO?
What are the major risks associated with investing in IPO?

Overvalued Stock

The biggest challenge of the upcoming IPOs in today’s time is that they are overvalued. Many times it has been seen that the company incurs losses in its annual report and when the IPO comes, that company is listed in the stock market at a higher price than its value. In such a situation, investors should avoid investing in IPOs of overvalued companies.

There can be huge fluctuations in the market on the day of listing

Heavy volatility is often seen on the day of IPO listing. This happens because of the sentiment of the market, as well as many times these ups and downs are seen due to the listing of new shares.

Incomplete information about the company

This risk is the biggest regarding investment in IPO. Often investors do not have complete information about the IPO, due to which they put money into the IPO of the wrong company.

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