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How Can I Invest in an IPO?

Question: How can an average person invest in a company’s initial public offering?

– Harparkash Singh, Tracy, Calif.

Answer: Got friends in the business? That’s generally the only way most investors can acquire shares of a newly public company at offering price. Available IPO shares, priced by the investment bank handling the deal, are generally sold to large institutional clients and ultrawealthy investors who have relationships with brokers working the deal, says Jim Krapfel, an equities analyst at Morning-star. Your best bet, say experts, is to wait at least a few weeks after an IPO to see if the share price loses any of its coming-out froth; if you think the company is poised for growth, take the leap. Investors who bought $500 of Apple stock even a year after its IPO, for instance, would have about $90,000 today with dividends.

VIDEO: Experts Explain: What is an IPO?

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