If you’ve ever sleept on a Casper (CSPR) mattress you would agree that the online retailer not only revolutionized sleep, but also the mattress purchasing experience. So, it would make sense that when the company went public earlier this year, devotees jumped at the chance to own the shares, right?
Wrong.
In fact, after offering shares to the public at $12 on Feb. 5, the price has declined by about -56.14% to $6.74 on Sep. 25. Early investors – luminaries like Leonardo DiCaprio, Adam Levine and Tobey Maguire – jumped in before the company went public and had the opportunity to sell their shares at the IPO price. But whether they did or not is not the point. By the time the average investor had the opportunity to buy the shares, a great deal of profit had already been made.
Still, for every CSPR there is a Snowflake (SNOW). SNOW came public on Sept. 15 at $120 and the stock reached $228.90 on Sep.25. If you were an early investor you made money. If you were lucky enough to buy in at the IPO, you’ve made money. But the undeniable fact is that companies are staying private longer and the lion’s share of the easy money is made by insiders and early investors.
What’s a retail investor to do? Enter pre-IPO investment platforms like SharesPost and EquityZen.
Early investing
Pre-IPO investment platforms have revolutionized and democratized the process. No longer just in the purview of celebrities or large mutual fund companies, individuals can now buy shares in companies before the initial pubic offering on their own (or with the help of their financial advisor).
I recently had the opportunity to speak with Phil Haslett, Chief Revenue Officer of EquityZen.The platform works alongside private companies to match insider sellers with buyers. This can take some time, but all trades are approved by the private company to avoid insider selling conflict.
Investors must register on the EquityZen platform and be accredited, but rather than requiring a $100,000 or even a $1,000,000 investment, Haslett states that the minimum investment is an attainable $10,000.
It may just be that these pre-IPO investment platforms are on to something – that is: Earlier is better as companies stay private for longer.
Still, investing in private companies carries a higher level of potential risk than investing in established blue-chip companies, though the rewards can be great.
You will need to assess your risk tolerance and determine if any of the pre-IPO companies available on various platforms fit your diversification needs. Early stage investing is not for everyone. Resist the siren song of easy money expectations.
Make sure you are putting a modest amount of your investable assets into a pre-IPO investment. Dip your toe in, don’t dive. Start with the minimum and do your research.
Understand you are in this investment for the long-term.
Don’t gamble. Remember, a reasonable investing time horizon is three-to five-years. For pre-IPO companies it may be even longer.
2020 is shaping up to be a hot IPO market. It may be that a pre-IPO investment will give your portfolio some juice. But do your research. That will serve you better than a Casper mattress to sleep soundly.
Nancy Tengler is chief investment officer at Laffer Tengler Investments and the author of “The Women’s Guide to Successful Investing.”
The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
