An exciting milestone was crossed last week:
2016’s first tech IPO of the year.
This is a big deal. It sets the tone for the IPO market for the remainder of the year.
A “hot” IPO means a conga line of other companies will try to IPO, too…
And a “dud” means all those companies will put their IPO plans on hold.
Today we’ll look at what happened—and we’ll show you a simple secret for making money when companies go public…
Regardless of how well, or how poorly, they perform at the IPO.
Hot Sector + Hot Company = Hot IPO?
The company that went public is SecureWorks (Nasdaq: SCWX).
SecureWorks is a cyber security company. It helps large enterprises protect their computers and networks from cyber attacks.
Cyber security is one of the fastest-growing markets in the tech industry today. Since 2011, investment activity in this sector has more than tripled—rising from $1.1 billion in 2011 to $3.8 billion in 2015.
And SecureWorks has been growing its business right alongside the sector...
Last year, it generated revenues of nearly $340 million. That’s up from $260 million the year before, for 30% year-over-year growth.
To be clear, this is a hot company in a hot sector...
But that’s not always a recipe for a hot IPO.
The Results Are In
SecureWorks priced its IPO shares at $14.00.
The stock briefly rose to $14.50…
But then sank to about $13.68 where it continues to trade today.
If you bought shares at the IPO, you’d be sitting on a loss right now.
Meanwhile, another group of SecureWorks investors is currently sitting on a 20% profit.
You might be asking yourself how that could happen…
The stock has only been trading for a day, so how did one group profit while the other lost money?
The answer is that the second group of investors got into SecureWorks before the company went public—they got in while it was still private and “cheap.”
You see, if you invest in a company early enough, you can make money when it IPOs—even if the IPO is a dud.
We saw another example of this with Facebook’s IPO:
Right after Facebook went public, its stock price plummeted by more than 50%.
But despite its awful public market debut, Facebook’s first private investor was able to cash out for a 200,000% gain...
Why? Because he’d bought in when the company was still private and cheap.
The Icing on the Cake
As the first tech IPO of the year, SecureWorks just set the tone for other start-ups looking to go public.
But as it turns out, its dismal performance is good news for you:
Start-ups now consider the public markets “unfriendly” to tech IPOs, so they’ll delay their own public offerings and stay private longer.
The thing is, the longer they stay private, the more opportunities investors like you will have to “invest early” when they’re still cheap—and then profit later.
It’s a New World
In the past, this opportunity wouldn’t impact you at all.
For the past 83 years, only the wealthiest, most well-connected investors were able to get into private companies at their early stages.
But it’s a new world now:
On May 16th, just a few weeks from now, the final portion of The JOBS Act goes into effect.
At that point, you’ll finally be able to invest in private companies.
And with more high-growth tech companies staying private longer, you’ll have more opportunities to invest in them before they go public…
That’ll put you in the best possible position to cash out at a profit when they do IPO—even if the IPO is a dud.
So get ready, because this year could mark the start of one of the greatest wealth-building opportunities of your life.
Happy investing.
Best Regards,
Founder
Crowdability.com
