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Non-Tech : Alternative energy
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To: Doren who wrote (16939)3/21/2019 12:31:33 AM
From: Doren  Read Replies (1) of 16955
 
One more thing on IPOs, which is when stock is first offered to the general public.

By the time an IPO happens EVERYONE knows about it... so on the day a company IPOs its very dangerous. Sometimes the stock flies VERY high then profit takers jump out and the price falls. Sometimes prices do continue to climb. Often companies aren't even making money yet.

You can tell if they aren't making money yet by their P/E ratio, but not until well after the IPO. A "normal" P/E is around 16. If they have no P/E they are still loosing money. If they have a high P/E like 400 they are barely making money but investors are betting they'll make huge amounts in the future. That's not always bad but its dangerous. Amazon lost money for years because it reinvested all its profits to grow really fast. If you invested in Amazon at their IPO you'd be a rich person now.

Theranos became an 8 billion dollar company overnight... its worth ZERO dollars currently. It never made money but a lot of smart people thought it would.
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