Bradley Shuster on pre-IPO investing
From Schuster Sees `Pent Up' Demand for U.S. Technology IPOs · · Bloomberg Originals
“The popularity of investing in companies before their initial public offering, buying those shares in private markets, has increased definitely, especially year to date and last year, but investors, especially retail, should be very careful as there can be substantial downside risk once the company is trading publicly.”
On , Bradley Shuster, Executive Chairman at NMI HOLDINGS INC, spoke about pre-IPO investing during Schuster Sees `Pent Up' Demand for U.S. Technology IPOs on Bloomberg Originals.
About Bradley Shuster
In a 2012 interview, Bradley Shuster, founder of IPOX Schuster LLC, discussed the state of the U.S. initial public offering market. He described the year as "a pretty good year in terms of IPO performance," noting that IPOX strategies had outperformed for a third consecutive year, driven by companies such as Visa, Philip Morris, and Johnson & Johnson. Shuster stated that many technology IPOs, particularly social media companies, had been "priced really at the top of their potential market cap right out of the gate," leading to volatility and declines for firms like Pandora, Yandex, LinkedIn, and Groupon. Shuster expressed that there remained "a lot of pent up demand for the US dollar deal," especially for large brands, though he said the volatility in tech IPOs could affect the valuation of Facebook's upcoming offering. He advised that "investors and long-term investors especially should stay away from IPOs like Groupon," where the float is used to maximize initial market cap. Regarding pre-IPO investing, Shuster noted its increased popularity but cautioned that retail investors "should be very careful" due to substantial downside risk once companies begin public trading.