Re:What Happens to Stocks and Cryptocurrencies When the Fed ...
by chii on Sunday May 09, 2021 @03:57AM
(#27094130)
> wait for these 50+ billion dollar IPOs. Would love to invest earlier
the reason these early institutional investors of pre-IPO stock gets massive gains is because there are few of them compared to retail. A startup that needs the capital is in a less commanding position, and thus, the institutional investors can demand a better price.
If a lot of retail investors invest in pre-IPO like you describe, it would push the price higher earlier, and thus, there will not be a price pop _at_ IPO, and the gains that make pre-IPO allocation so attractive to retail investors will not happen.
the reason these early institutional investors of pre-IPO stock gets massive gains is because there are few of them compared to retail. A startup that needs the capital is in a less commanding position, and thus, the institutional investors can demand a better price.
If a lot of retail investors invest in pre-IPO like you describe, it would push the price higher earlier, and thus, there will not be a price pop _at_ IPO, and the gains that make pre-IPO allocation so attractive to retail investors will not happen.