Airbnb Trading forecasts and signals

The market the day beforeThe session on May 23, the main American stock exchanges ended in the green zone. The S&P 500 rose 1.86% to 3,974 points, the Dow Jones gained 1.98%, and the Nasdaq increased 1.59%. All 11 sectors included in the S&P 500 closed in the black. The financial sector (+3.23%), the energy sector (+2.68%) and the IT sector (+2.37%) showed the best dynamics.Company newsBloomberg and WSJ reported that Broadcom Inc. (AVGO: -3.1%) is in preliminary talks to acquire VMware (VMW: +24.8%) in a deal that is expected to be funded by both cash and shares. It is noted that the discussion is ongoing, and there is no guarantee yet that it will end with an agreement.AirBNB (ABNB: +0.65%) withdraws from the mainland Chinese market.According to CNBC, the main potential buyers of Kohl's (KSS: -2.5%) suspended negotiations because they had difficulties obtaining financing for the transaction.We expectOn May 23, American stock indexes made another attempt to rebound, which, apparently, is due to the oversold nature of many securities. Last five days turned negative for the Dow Jones index for the eighth time in a row, which has not happened since 1929. The BofA Bull & Bear indicator fell sharply from 2.0 to 1.5, which signals an extreme level of bearish sentiment and a possible rebound. Yesterday, JPMorgan representatives said that the US economy remains fundamentally strong, despite the recently released ambiguous macro data. However, the risk of deterioration of the situation in the economy remains.Trading on May 24 on the sites of Southeast Asia ended in the red zone. China's CSI 300 fell by 2.34%, Hong Kong's Hang Seng adjusted by 1.87%, Japan's Nikkei 225 declined by 0.94%. EuroStoxx 50 has been losing 1.28% since the opening of the session.Brent crude futures are quoted at $112.6 per barrel. Gold is trading at $1858.7 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 3890-3980 points.MacrostatisticsThe indices of purchasing managers in manufacturing (forecast: 58, previous value: 59.2) and the services sector (forecast: 56, previous value: 55.6) from Markit will be published today.Adjusted annualized results of sales of new homes in April will also be released (forecast: 750 thousand, previous value: 763 thousand).Sentiment IndexThe sentiment index dropped by one point to 34.Technical pictureThe S&P 500 is moving in a downtrend starting in early April. The RSI indicator tends to the lower border of the channel, the MACD shows a hint of "bullish" divergence. The possibility of a short-term upward reversal is confirmed by the "hammer" figure formed by the Friday candle, and on May 23 we have already seen similar attempts. The benchmark may try to return to the range of 4060-4100 points, which will become a strong resistance ...

Airbnb, an online accommodation booking service, is withdrawing from China's domestic market. All ads in mainland China will be removed by the summer of this year.Airbnb entered the Chinese market in 2016 and faced growing competition from local players. The company was experiencing difficulties due to high costs, and the pandemic exacerbated these problems. Over the past few years, Airbnb's operations in China have generated about 1% of the company's total revenue.Airbnb plans to keep its office in Beijing with hundreds of employees and refocus on providing rental services to Chinese traveling abroad.Airbnb shares on the Nasdaq premarket on May 24 fall by 1.59% to $111.48 per ...

The market the day beforeTrading on April 29, the main American stock exchanges ended in a deep minus. The S&P 500 fell by 3.63% to 4132 points, the Dow Jones lost 2.77%, the Nasdaq dropped by 4.17%. All 11 sectors of the index closed in negative territory. The worst dynamics were demonstrated by the sectors of cyclical consumer goods (-5.08%) and real estate (-4.82%).Company newsAmazon (AMZN: -14.05%) recorded a quarterly net loss for the first time in the last seven years. The company is struggling with inflation and is looking for ways to resolve problems in supply chains that put pressure on the e-commerce segment. At the same time, the AWS segment continues to show strong performance.Intel's report (INTC: -6.94%) for the first quarter exceeded consensus, but the forecast for April-June did not meet market expectations. Management notes inflationary pressures and logistical disruptions.Apple (AAPL: -3.66%) warned that due to problems with the supply of components, its revenue for the third fiscal quarter will decrease by $8 billion. This message leveled the record results for the previous reporting period.We expectUS GDP data last week forced the investment community to reconsider its expectations for an active Fed rate hike. On the eve of the May FOMC meeting, the yield of treasuries is kept near the maximum levels for April. Market participants have almost no doubt that the rate will be raised by 50 bps. At the same time, the forecast of its level for the end of the year has been revised from 2.8% to 2.65%, compared with 2.8% a week earlier. Among the reasons for this revision are the expectation of reaching the peak of inflation, broader global tightening of monetary policy, negative corporate forecasts, geopolitical tensions and a zero tolerance policy for COVID-19 in China.The corporate reporting season also remains in the focus of the market. In the comments of the management, an increase in expenses is mainly noted, which is partially offset by high demand. In addition, the management of the companies expresses hope for overcoming problems with supply chains. A new pressure factor is a strong dollar. This week, the DXY index reached its highest since the beginning of 2002, which, along with the upcoming rate hike, has a serious impact on financial conditions. Thus, some issuers were forced to adjust the annual forecast based on the results of the first quarter, taking into account the currency revaluation.The exchanges of China and Hong Kong are closed on May 2 due to a national holiday. The Japanese NI fell by 0.11%. Euro Stoxx 50 has been losing 1.56% since the start of trading.Brent crude futures are quoted at $104.6 per barrel. Gold is declining to $1,879 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4100-4170 points.MacrostatisticsThere are no important macro statistics scheduled to be published today.Sentiment IndexThe sentiment index rose 1 point to 44.Technical pictureThe S&P 500 is trading near February lows and may find support around 4,100 points. If the level of 4,100 points is crossed downwards, the benchmark may continue its downward movement to the lower limit of the designated channel. The RSI and MACD values confirm the strength of the "bearish" trend.In sightAirbnb Inc. (ABNB) will publish quarterly reports on May 3. The consensus assumes revenue growth of 64% YoY and 73% to the level of 2019 - up to $1.45 billion, with the company's own forecast in the range of $1.41–1.48 billion. Also, market-wide expectations put earnings per share at $0.24 after a loss of $1.95 a year earlier. Despite the reduction in passenger air traffic, as well as a decrease in the number of car trips in March to a minimum from 2021 (-13% compared to 2019 according to the American Tourism Association) due to rising fuel prices, an increase in the number of nights booked on Airbnb is expected to be more than 20%. The total cost of bookings is projected to rise by more than 60% to the result for the same period in 2019. We expect neutral results from Airbnb for January-March and expect positive trends to develop in the current quarter, which begins the holiday season.Barrick Gold (GOLD) will report for the first quarter before the opening of the main session on May 4. After the landmark merger with Randgold in 2019, the leading Canadian gold miner increased its resource base, ranking third in the world in this indicator. The company's deposits are located mainly on the North American and South American continents. In recent years, the gold miner has diversified its business by increasing the volume of copper production. The consensus assumes a decrease in Barrick Gold EPS for the first quarter from last year's $)35 to $0.27. According to the results of the current and next year, the average market expectations are set at $1. Despite the projected reduction in production, revenue is not expected to decrease. It is most likely that due to gold reaching the levels of $1,900-2,100 per ounce at the beginning of the year with an average price level of $1,800 and $1,771 for 2020-2021, Barrick Gold's quarterly report will record an improvement in profitability. Favorable market conditions will allow the company to direct excess profits to repair equipment and research work.Fintech corporation Block Inc. (SQ), formerly known as Square, will present a report for the first quarter on May 5. The consensus forecast assumes an increase in revenue by 16.4% YoY, to $4.23 billion, with EPS falling by 70.7% YoY, to $0.12, due to high development costs and the recent takeover of Afterpay. We believe that the company can demonstrate an increase in commission income from servicing transactions with Bitcoin in the face of increased volatility of the cryptocurrency market at the beginning of the year. Previously, this segment generated more than 50% of revenue. Block is actively diversifying its business, developing a line of solutions for retailers and expanding its presence outside the United States. Thus, the recent acquisition of the Australian company Afterpay and the launch of a business lending platform in Canada lay additional growth drivers, allowing you to maintain your position in the face of increased competition in the industry. Nevertheless, at the moment the company is trading significantly more expensive than its competitors (the P/E multiplier is 329.25 x with an industry average of 52.9x), which reduces the attractiveness of Block shares in the face of tightening financial conditions, despite the long-term growth ...

The rental company Airbnb Inc announced the suspension of its activities in Russia and Belarus. Citizens of these countries will not be able to book accommodation and impressions in other countries through the platform. In addition, it will be impossible to make new bookings in Russia and Belarus. It is reported that all previously made reservations in Russia and Belarus, starting on April 4 and later, have been canceled.Previously, the company has already noted that it cannot process transactions related to certain financial institutions in Russia and Belarus due to the restrictions imposed.Airbnb shares on Nasdaq rose 2.28% on April 4, to $177.02 per ...

The market the day beforeThe trading session on February 17 ended with the fall of the main American stock indexes. The S&P 500 declined by 2.12% to 4,380 points, the Dow Jones lost 1.78%, the Nasdaq adjusted by 2.88%. Positive dynamics was observed only among manufacturers of non-cyclical consumer goods (+0.91%) and utility service providers (+0.06%). A noticeable decrease was shown by companies from the IT sector (-3.06%) and telecoms (-2.96%).Company newsDoorDash (DASH: +10.7%) reported revenue growth better than expected and presented strong guidance. The company plans to invest in expanding additional delivery categories and entering new markets.The quarterly report of Fastly (FSLY: -33.6%) exceeded the preliminary estimates of analysts, but management gave a weak forecast for the next period. Investments and costs associated with the transition to a new architecture will negatively affect marginality indicators.Taking into account record high lithium prices, investors expected stronger forecasts from Albermarle management (ALB: -19.9%).ExpectationsTensions related to the situation around Ukraine yesterday contributed to increased demand for treasury bonds. Today, the parties continue to make diplomatic efforts to prevent a war in Ukraine: US President Biden will hold a telephone conversation with the leaders of several European countries, the EU and NATO. US Secretary of State Anthony Blinken has invited Russian Foreign Minister Sergei Lavrov to hold a meeting next week. Earlier, US officials spoke about the inevitability of a Russian invasion. The focus is also on the potential imposition of sanctions against Russia in the event of an escalation of the conflict and their impact on the energy sector.Despite some aggravation of the Ukrainian conflict, the rhetoric and intentions of the Fed members remain key factors for the US stock market. The regulator generally emphasizes the need for a flexible approach to monetary policy, although the President of the St. Louis Federal Reserve, Bullard, on February 17, reiterated the need to take quick measures in connection with the acceleration of inflation and advocated raising the rate by 100 basis points (bp) until July 1. However, swaps now indicate that a 25bp increase at the March meeting is more likely than a 50bp increase.Stock markets in Southeast Asia have demonstrated multidirectional dynamics. The Nikkei index of the Tokyo Stock Exchange fell by 0.41%. China's CSI 300 rose by 0.48%, Hong Kong's Hang Seng lost 1.88%. EuroStoxx 50 has been growing by 0.06% since the opening of trading.Brent crude futures are trading at $92.97 per barrel. The price of gold is $1,900 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4370-4420 points.MacrostatisticsToday, data on home sales in the secondary market for January will be released. The forecast assumes a value of 6.1 million after 6.18 million in December.Sentiment IndexThe sentiment index dropped to 47 points amid increased geopolitical tensions.Technical pictureThe S&P 500 has once again fallen below the 200-day moving average. The RSI is declining to 40 points, signaling the equal forces of "bulls" and "bears". The transition of the MACD indicator to the red zone creates an additional risk for buyers. The nearest support is located at the level of 4290 ...

Airbnb, Inc. (ABNB) provided a fairly confident report for the fourth quarter of 2021: revenue increased by 78% QoQ, to $1.532 billion, and adjusted earnings per share amounted to $0.27, exceeding the consensus forecast by 1 cent. It is also worth noting that the volume of revenue has already exceeded the pre-pandemic level by 38%. Adjusted EBITDA and free cash flow for the year were also in positive territory.On average, the increase in ADR (average price per room/night) was 20% sq/sq. The trend to increase the tariff will continue as long as high inflation persists. Management expects ADR growth to be around 4% in the first quarter of 2022.The number of bookings increased to 73.4 million, which is 3% less compared to the level two years earlier. The company notes that the popularity of domestic suburban tourism has grown against the background of anti-smoking restrictions: the total number of nights booked in small settlements has increased by almost 45% compared to the fourth quarter of 2019. The improvement of placements in major US cities is still ongoing, and the pre-crisis level has not yet been reached. This generally corresponds to the industry-wide situation, as evidenced by the results of large hotel chains. Cross-border bookings continue to recover: in the reporting quarter, their share amounted to almost 35% of the total number of nights booked, compared with 20% in the first quarter of 2021.Geographically, the best picture, in addition to North America, is observed in Latin America, where the volume of bookings exceeded the result of the corresponding quarter of 2019 by 22%. Tourism on these two continents is recovering faster than in other regions.It is also worth noting the trend to increase the length of stay: in the fourth quarter of 2021, long-term stays lasting 28 days or more remained the fastest growing category compared to 2019. Long-term stays accounted for 22% of the total number of nights booked in the reporting period, compared with 16% in October-December 2019.Against the background of the growth of all key industry indicators, the total cost of booking (GBV) increased by 91% QoQ and by 32% compared to the fourth quarter of 2019, as a result of which revenue increased by 78% QoQ and 38% relative to the corresponding period of 2019. According to management expectations, in the first quarter of this year, revenue will be $1.41-1.48 billion.ABNB shares belong to "growth" securities. As a result, despite the easing or lifting of anti-money restrictions and the restoration of international tourism, partial profit-taking by investors is not excluded against the background of uncertainty associated with the trajectory of the Fed's monetary policy. The quotes can be supported by optimal indicators of the issuer's debt load: the LT Debt/Equity ratio is 42%, and LT Debt /Adj. EBITDA is at the level of 1.25x. Our ABNB paper target is ...

The market the day beforeThe trading session on February 16 ended with a slight change in the main American stock indices. The S&P 500 rose 0.09% to 4,475 points, the Dow Jones declined 0.16%, the Nasdaq adjusted 0.11%. The positive dynamics was demonstrated by energy (+0.76%), suppliers of raw materials (+0.65%) and the industrial sector (+0.52%). The decrease in quotations was noted in the communications sector (-0.20%) and IT (-0.17%).Company newsUpstart Holdings (UPST: +35.7%) exceeded expectations in terms of profit and revenue. The guidance for the current quarter and 2022 was better than the consensus forecast. Management also approved a $400 million buyback program.Airbnb (ABNB: +3.7%) reported record revenue for 2021 and presented an optimistic forecast for the current quarter. Management expects that the number of bookings may exceed the pre-pandemic level.ViacomCBS (VIAC: -17.8%) has announced a rebranding: Paramount Global will become the new name. The dynamics of the streaming direction exceeded expectations, and management raised the forecast for the number of subscribers to 100 million by 2024. Nevertheless, investors noted the expected increase in expenses and a decrease in cash flow this year.ExpectationsThe minutes of the January Fed meeting showed that, although FOMC members supported raising the base rate in the near future, they did not consider the option of a more significant increase by 50 basis points (bp). According to the CME FedWatch Tool, the probability of this event decreased from 60% to 36%. However, we note that the meeting preceded the publication of consumer inflation data for January. The FOMC also expects the beginning of the reduction of the balance sheet from the middle of the year and a faster pace compared to the previous QT cycle in 2017-2019. Since the Fed intends to increase the share of treasury securities in the portfolio, the sale of mortgage bonds with a long maturity will be considered. At the same time, some officials have expressed concern about the downside risks in financial markets in response to the rapid tightening of the PREP. It is once again emphasized that in conditions of economic uncertainty, a flexible policy is necessary, taking into account also changes in financial conditions.Meanwhile, retail sales in the United States showed a record growth of 3.8% m/m in January since March last year after a disappointing drop in December for investors. Such dynamics indicate a limited effect of the omicron strain on consumer activity and other macro indicators. Yesterday's Fed report also showed a strong growth in industrial production - by 1.4% mom in January, which exceeded expectations at 0.4%. Steady growth was observed in mechanical engineering, aerospace and food production. As the number of new cases of coronavirus infection has decreased to December levels, the establishment of supply chains and solving the problem of labor shortages will allow companies to increase production and sales this year. This will become a support factor for stock prices, but at the same time it is another argument of the Fed in favor of normalizing interest rates to slow down inflation.Indices of stock exchanges in Southeast Asia have demonstrated multidirectional dynamics. The Nikkei Tokyo Stock Exchange index fell by 0.83%. China's CSI 300 rose 0.24%, Hong Kong's Hang Seng added 0.04%. EuroStoxx 50 has been growing by 0.39% since the opening of trading.Brent crude futures are trading at $94.35 per barrel. The price of gold is $1,878 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4450-4500 points.MacrostatisticsData on the number of permits for the construction of houses in the United States for January will be published today. The indicator is expected to reach 1.75 million after 1.855 million in December. There will also be data on the number of new buildings: consensus assumes 1.685 million after 1.702 million in the previous month.Sentiment IndexThe sentiment index rose to 52 points on the background of positive macro data, as well as in connection with unfulfilled forecasts about the deterioration of the geopolitical situation.Technical pictureThe S&P 500 overcame the level of the 200-day moving average, but held sideways during the previous day of trading. The RSI remains below 50 points, indicating the parity of "bulls" and "bears". The smoothed trajectory of the MACD indicator does not signal a trend reversal. An improvement in investor sentiment will give a short-term positive impetus to the broad market index. Nevertheless, in the medium term, quotes are likely to continue moving in a downward trend ahead of the March Fed meeting.ReportsWalmart (WMT) will present its quarterly report today. The data of the offline retail leader will complement the market's understanding of problems in supply chains and assess trends in consumer spending. FactSet's consensus includes adjusted earnings per share of $1.50 on revenue of $151.51 billion. The forecast assumes a 6.1% increase in comparable sales in the United States. We expect the positive dynamics of Walmart's results to continue, given that in the third quarter its sales in the United States increased by 9.2%, and the volume of transactions increased by 5.7%. A number of advantages of the retailer will contribute to the implementation of optimistic forecasts, including more favorable access to ports, long-term container transportation agreements and the capacity of chartered ...

The market the day beforeAt the auction on January 20, the decline of the main indices on American stock exchanges continued. The S&P 500 dropped 1.10% to 4,483 points, the Nasdaq adjusted 1.30%, and the Dow Jones lost 0.89%. In the green zone, only utility providers were closed (+0.14%). Other sectors showed negative dynamics. The outsiders were producers of cyclical consumer goods (-1.94%), raw materials companies (-1.43%) and the IT sector (-1.33%).Company newsThe shareholders of Casper Sleep (CSPR: +9.8%) voted for the privatization of the company.Insurance company Travelers Cos. (TRV: +3.2%) presented a strong quarterly report with record profit. Management emphasized the high underwriting revenues.Peloton Interactive (PTON: -23.9%) ceases production of Connected Fitness products amid a significant reduction in demand.We expectThe day before, President Joe Biden announced the possibility of breaking the Build Back Better program with a total volume of about $1.7 trillion into its component parts. At the moment, the White House is considering alternatives after initial efforts to coordinate were thwarted by the opposition led by Senator Joe Manchin. A preliminary consensus was reached only on the climate part of the package (just over $500 million). At the same time, provisions on maternity leave may be excluded from the updated draft law, and the expansion of tax benefits for children may be limited.The number of initial applications for unemployment benefits for the week increased by 55 thousand, to 286 thousand, reaching a three-month high amid the active spread of the strain "omicron", negatively affecting the labor market. At the same time, due to problems with hiring, employers are taking measures to retain employees, so the observed surge in applications for benefits is likely to be short-term.The December index of manufacturing activity published by the Philadelphia Federal Reserve increased by 8 points compared to November, reaching 23.2 points, which indicates optimistic assessments of business prospects on the part of entrepreneurs, despite the next wave of COVID-19 and the persistence of labor shortages, as well as logistical problems.Stock markets in Southeast Asia showed mostly negative dynamics during the last trading session. The Tokyo Stock Exchange Nikkei index lost 0.90%, the Chinese CSI 300 fell by 0.92%, the Hong Kong Hang Seng rose by 0.05%. EuroStoxx 50 has been losing more than 1.1% since the opening of trading.Brent crude futures are trading at $88.38 per barrel. The price of gold is around $1842.5 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 4440-4490 points.MacrostatisticsNo significant macro statistics are expected to be published today.Technical pictureThe S&P 500 has broken down support in the area of 4,500 points and continues to move towards the lower border of the ascending channel. The RSI is in the oversold zone. The MACD indicator is still showing a downward trend, indicating the probability of a continuation of the correction. However, the passing reporting season can provide the broad market index with growth ...

IPO (Initial Public Offering) - the initial placement of securities on the market for sale to a wide range of investors. After the IPO procedure, the company acquires the public status. An investor's participation in an IPO is different from the usual way of buying shares on the stock exchange.Every year the number of IPOs increases, which is quite understandable from the point of view of the market. These are programs of global financial regulators to support companies in the post-crisis period (low lending rates, tax incentives, financing programs, etc.). These are also social support programs in the form of unemployment benefits. In some countries, the amount of benefits does not only cover vital needs. Sooner or later, all the liquidity released into the economy enters the stock market as a significant link in the entire world economy. Therefore, firstly, an increasing number of companies are reaching the level of possible entry into the initial placement. Secondly, knowing about the high purchasing power of investors, even "immature" businesses go to the IPO to attract even more finance for further growth.Access to the stock exchange can be realized by a classic IPO or by a "workaround" through a merger with SPAC companies. In 2019, 233 companies in the US market became public, in 2020 – 481, which is an absolute record since 2000. In 2020, the companies raised about $263 billion for an IPO, setting a new record. Now there are much more IPO transactions. And a huge number of investors want to take part in the IPO – to benefit from the successful entry of the company into the market as soon as possible. We will consider how to do this and what risks an investor faces in our article.In this article, we will consider:What is an IPO?Ways to participate in an IPO:Participation in the IPO through brokers.Participation in the IPO through the purchase of an ETF.Risks of investing in an IPO.The procedure for participating in an IPO.What is an IPO?IPO is a process that results in the acquisition of the "public" status by a non-public company. As a result, a variety of investors can become owners of its shares (shares) – from private to large institutional, including foreign funds ("Hedge funds - what is it in simple words"). But the main purpose of the issuer's entry into the stock market is to obtain financial resources that are directed for various purposes. Often, the issuing company entering the IPO, most often already has an efficient business, and the attracted capital gives it the opportunity to make a significant breakthrough in expanding production and conquering a wider market segment. Or capital is raised for a new investment project, which serves as the basis of the business and, in combination with the attracted substantial funds, allows the new company to become significant in the market.IPOs come out of different sizes and the history of the company's existence. For example, a successful, promising company with a large staff of employees, with many years of experience, decides to become public, that is, to significantly increase the list of its shareholders. To do this, the shares of this company are issued and transferred to the exchange. There is also a different situation when a newly created young company with a promising idea tries to raise funds for its quick start and development, and in this case also goes to public auction.When entering the stock exchange for the first time, the company undergoes a lot of detailed checks. The securities, having appeared on the market, are bought up by investors with the intention of reselling them to other investors later.Read more: Who are Market Makers and what are they doing on the market?The initial placement of shares is carried out by the issuing company itself through underwriters or market makers. We wrote in more detail about the IPO procedure, the stages of preparation for it and the stages of its implementation in our article "IPO of a company - a mechanism, examples, strategies". In the same article, we will focus on the issues of the value of an IPO for an investor.The investor's participation in the IPO procedure means the right of priority repurchase. Investors get the opportunity to buy shares at the starting price. Immediately after the initial placement, a part of the shares that were not purchased by investors enters free circulation on the market, and the value of the share acquires an objective assessment by the market – its price is subject to market volatility. Sometimes it can be a vertical increase in quotations (the investor makes a profit), and sometimes a drop in the exchange rate value (for the investor, this means a local loss). According to world statistics, most IPOs are successful for investors. But the risks for investors are high, including in the case of successful IPOs. We will tell you about this later.Read more: Volatility: types, how to track and how to useWays to participate in an IPOOnly a few investors can participate in an IPO independently, as an individual, since the threshold for participation in such transactions is very high. Such major stock market players with world fame as Warren Buffett or George Soros can independently buy out a pool of shares during an IPO. For other investors, there are other ways:Participation in the IPO through brokers.Participation in the IPO through the purchase of an ETF.Let's look at the selected methods in more detail, highlighting the pros and cons of each.Participation in the IPO through brokersA retail investor can participate in an IPO through a broker that consolidates the funds of many investors into a large amount and thus buys a significant package of initially placed shares. Then he distributes it among the participants-investors in proportion to their investments and receives a commission for this.Read more: Stock market Broker: how to choose it and how to work with itNot all brokers provide an IPO participation service.  Having a brokerage account with a specific broker, an investor can submit an order to participate in a specific IPO. Information about the proposed IPO with an indication of the date is published on the broker's page. At the same time, each broker independently determines the conditions under which its clients are allowed to participate in the initial placement of securities, including the amount of the commission.The terms of participation in the IPO are determined by each broker independently. Along with different basic conditions for working with a broker (the minimum amount, transaction fees, the cost of margin leverage), additional requirements are set for an IPO:Entrance fee.The minimum amount of participation.Exit fee.Advantages of participating in an IPO through brokers:There is one advantage here, but it is the key one. The participation threshold for an investor becomes significantly lower than that determined by the underwriter (the operator preparing and carrying out the initial placement), which allows a large number of participants to participate in the procedure. Otherwise, the purchase can be made either if there is a large capital, or after the placement, when part of the profit will already be worked out by the stock.Read more: Leverage on the stock marketDisadvantages :The presence of significant commissions, in addition to the standard broker's commission for the transaction: commissions for entering the IPO and for exiting it, some brokers take a commission for profit. Some brokers have a total commission of more than 7.5%.The presence of the IPO entry threshold, which, although lower than the threshold set by the underwriter, still remains relatively high and does not allow anyone to participate.The need to freeze a large amount to participate in the IPO, despite the fact that it will be only partially satisfied. By the way, the commission will also be calculated from the entire amount of the application, and not from the satisfied amount.If you, as an investor, do not meet the requirements of the broker, for example, you cannot ensure that the necessary amount is available on the account or do not have the status of a qualified investor, you can still participate in initial placements in the following two ways.Participation in an IPO through the purchase of an ETFDetailed information about ETFs, as well as the advantages and disadvantages of investing in them, is described in our article "ETF funds". Along with ETFs specializing in certain industries, there are special ETFs for IPOs, consisting of shares of companies that are going to conduct an initial public offering on the stock exchange, or have recently conducted it. The principle of selecting shares depends on the specific fund. Some ETFs invest in the early stages of an IPO, while others buy shares of companies a few days after the placement. At the time of writing, 8 ETFs are traded on the US market, which collect total assets of $2.67 billion under management.Advantages of participating in an IPO through an ETF:They open access to the IPO to anyone who has an amount of $25 or more.They are managed by professional investment companies.Disadvantages :Just like all ETFs, they do not leave the investor the opportunity to select shares. Together with good stocks, you buy bad ones and bear the cumulative risk on them. The expense of one fallen stock from the pool can cover all the income received from the rest. There are a number of methods for selecting ETFs, but none of them will reduce the risks of the instrument itself.Read more: How to invest in stocks and what you need to knowRisks of investing in an IPOIn fact, an IPO is an investor's bet that the company will grow in value. There are a lot of such stories among IPOs, there are also record holders for profit.One of the most anticipated and then successful IPOs of 2020 was the initial public offering of Airbnb Inc (NASDAQ: ABNB), which offers users a platform for short-term rental of apartments and houses. The company's shares were issued to the market at a price of $68 in December 2020. Within two weeks, the shares rose by 142.3% to the level of $168.25; then they fell to $140, which was still very profitable.Arbnb The total profit of the investor depends on the difference in the share price at the start and at the time of sale. Therefore, it is profitable for an investor to buy shares of the issuer's initial placement at the lowest price. For its part, the issuer, by placing shares, expects to attract maximum profit, that is, it hopes to sell shares at the maximum price. There is a direct conflict of interests.Read more: About NASDAQ Stock ExchangeIf a new, previously unknown company enters the market, its chances of selling shares at a high price are low. In order to improve the situation, the underwriters conduct a so-called road-show, a presentation tour to familiarize potential investors with the state, personnel, product and prospects of the company. This is done to attract maximum attention, so in the process of such a show, all the advertising and marketing techniques available today are used. It happens that the share price overheats during the road-show, and subsequently, immediately after the placement, the shares "fly" down in price.Read more: Bulls and bears, as well as other animals on the stock exchangeAnother reason for the fall in shares is the underwriter's choice of the time of the initial placement. For example, a company from a certain sector may enter the market at a time when the number of competitors is low and the overall investment interest in the industry is high. As a result, the output will be made at a high price. But if the company does not meet the expectations of investors related to its product, service, market segment, then the shares also risk seriously falling in price in a short period after the placement.There have been failures in the history of IPOs related to technical failures on the exchange itself, or due to unsuccessful actions of underwriters. An example of an extremely unsuccessful IPO due to an error by the underwriters is the history of Facebook shares in May 2012. Immediately before the placement of shares, it was decided to increase the issue of shares by 25% and increase the starting price to the maximum value of $ 38 per share. These two actions led to the fact that after the start, stock prices fell by more than 20%.Facebook Another striking risk parameter for an IPO is allocation. The term allocation means the percentage of satisfaction of the application for the purchase of shares at the initial placement. It is usually quite small, since often the demand for shares of a particular issuer exceeds the supply. One of the criteria for stable earnings in the IPO market is a high percentage of allocation, that is, the percentage of the amount invested in the IPO by which you will be approved for the purchase of shares of the company. The higher it is, the greater your profit when the company's shares grow in price.Example: You want to buy shares of the company BLI in the amount of $10,000 at the IPO. We have submitted an application to the broker for this amount. After the start of trading, you had only $500 worth of shares in your portfolio. So, the allocation for you is equal to 5%. The balance of $9500 will be returned to your deposit, and you will be able to use it again.The significance of this risk was demonstrated during the initial public offering of Airbnb shares. The allocation for some investors was 0%; moreover, the participation threshold for many of them was an impressive amount of about $10,000. During the placement process, according to the participants, first information came about an increase in the starting price from $68 to $73 per share and the need for willing participants to re-submit applications with a new price. But even after that, the shares did not come. Those investors who really wanted to buy these shares were forced to buy them after entering the open market at a price above $110 per share. Such manipulation created the conditions for a rise in the share price, but, of course, had a negative impact on the final profit of the participants.Read more: Briefly about SPAC and what is it?IPO participation ProcedureThe initial placement of shares of American issuers takes place in dollars, Russian – in rubles. An investor who wants to participate in an IPO can register on the platform of the selected broker, transfer rubles to a brokerage account, convert them into dollars if necessary and start investing.You can start investing in an IPO with the threshold amount set by the broker, but, in practice, an application for participation in an IPO is very rarely 100% satisfied, even if you have a capital of $1 million. The reason is the presence of an allocation, which we wrote about above in the paragraph on investment risks. This factor is one of the main problems of the IPO. This means that even with an input capital of $100,000, which will be frozen in your account from the moment of the application for participation, you may be issued securities for only 5-7 thousand, and the remaining amount will not be satisfied, that is, invested. It will remain on your account and will be unfrozen. But at the same time, the commission for entering and exiting will be deducted from the entire declared amount.The investor cannot immediately sell shares purchased during the IPO process. This is a fee for exclusive conditions for entering the promotion. The Lock Up period is a period of time during which an investor who has received shares in the IPO format cannot sell securities to the market. It usually has a duration of 3 to 6 months, the specific duration is set by the broker. The task of the blocking period is to avoid the volatility of the share price on the market and the possibility of a sharp drop in quotations if some shareholders start selling securities en masse in the first days after the issue. This situation is quite possible if large holders (funds, banks) start doing this, not individual private investors. During the Lock-Up period, the price of shares changes, as the remaining shares (not sold out by large players) enter the free market and begin to become more expensive or cheaper, being subjected, like all shares, to the laws of the market. The date before which you cannot sell shares will be indicated in your personal account in the line related to a specific promotion.Among IPOs, there are so-called "forward contracts", when an investor is offered to sell shares earlier, but at a price lower than the level that the shares have reached by this time. The investor needs to decide for himself whether he is satisfied with the yield received by this moment and is ready to sell, or wants to keep the shares. In the second case, it will be necessary to hold the shares now until the end of the Lock Up period.ConclusionThe process of participating in an IPO is a very risky type of investment. The risk of acquiring shares is even higher, because it was bought by a friend or recommended by an unknown person in an article published on the network. This is why there is a restriction in the admission of unqualified investors to the IPO. The selection of shares for acquisition should be carried out independently, based on a comprehensive analysis of the issuing company. To get a good income in investments, an investor needs to follow one main rule – to be financially educated. This is the basic guarantee of success and insurance against losing ...