Meta Platforms Trading forecasts and signals

The social network Instagram (owned by Meta Platforms) was fined 405 million euros for publishing the email addresses and phone numbers of children who used the app to share photos.The Irish data watchdog fined the California technology business for violating EU data laws governing online privacy. It's the second-highest fine ever levied for a rule violation. Until the summer of 2021, Instagram services automatically made public the email addresses and phone numbers of people under 18 who managed business accounts and "creative" accounts, which meant adults could contact them directly. The number of children affected has not been disclosed, but it is thought to be in the millions, given the nature of the EU-wide breach.The app changed the default privacy settings for children's accounts last July after the Irish Data Protection Commission (DPC) opened an investigation in 2020.Meta was previously fined €17 million by the DPC after its Facebook subsidiary failed to prevent 12 data breaches in 2018.Meta Platforms shares on NASDAQ were down 3.05% to $160.32 per share in trading on Sept. 2, and are up 0.6% momentarily to $161.28 in premarket trading on Sept. ...

Australia's regulator has sent letters to Meta Platforms, Apple and Microsoft demanding they share their strategies for eradicating child abuse material on their platforms or face fines.The Electronic Security Commissioner, a body created to protect Internet users, said it is relying on laws that went into effect in January to force the tech giants to disclose the steps they are taking to detect and remove abusive material within 28 days. If they fail to do so, each company faces a fine of A$555,000 ($383,000) per day.The threat underscores Australia's tough approach to regulating big tech companies since 2021, which so far has included laws requiring them to pay the media to show their content and laws requiring them to turn over data from anonymous accounts that publish defamatory ...

YouTube (owned by Alphabet) plans to launch a marketplace for streaming video, The Wall Street Journal reports, citing sources. Probably, the new platform, which has been working on for at least 18 months, may become available this fall.YouTube currently allows subscribers of YouTube TV, its $64.99-a-month online cable package, to add a subscription to HBO Max. The new marketplace will allow consumers to choose different streaming services in the menu of the main YouTube application.YouTube will join companies such as Amazon.com Inc., Roku Inc. and Apple Inc., each of which has its own centers for the sale of video streaming services. Now that a lot of apps are available, these tech giants are trying to position themselves as a place where consumers can access all their favorite movies and shows. Selling multiple services through a single app can make life easier for consumers.As a rule, companies with streaming hubs receive a share of purchases on their trading platforms. YouTube is discussing splitting subscription revenue with streaming partners, although conditions may vary greatly for each partner, according to people familiar with the situation.Alphabet Class C shares on NASDAQ ended trading on August 12 at $122.65 (+2.36%), and on the premarket on August 15 they are down 0.72% to $121.77 per ...

Technology corporation Meta Platforms expects that the second half of the year will become more difficult, as the company faces macroeconomic pressures and problems with data privacy in the advertising segment. The company's management believes that in difficult times, Meta should prioritize more ruthlessly and work flawlessly in conditions of slower growth, when you should not expect a large influx of budget funds and new engineers.The fact that Meta expects growth to slow down is not surprising. The corporation earns mainly from advertising, and due to the crisis and rising inflation in the world, many commercial organizations are reducing advertising costs, which means that the income of social networks, including Meta, will grow more slowly. However, in this case, questions are raised by the fact that it was this year that Meta rebranded and is trying to transform from a social network into a "metaverse", which means that it remains an intrigue how appropriate it was for the corporation to carry out such transformations this year. Meta stock quotes on the premarket are falling by 0.4% today.In addition, Meta Platforms has lowered its target for recruiting engineers this year to 6000-7000, compared to the original plan of 10 thousand new engineers. CEO Mark Zuckerberg has warned employees to prepare for a deep economic downturn."If I had to bet, I'd say it could be one of the worst downturns we've seen in recent history," Zuckerberg told workers at a weekly Q&A ...

The market the day beforeThe session on June 30, the main American stock exchanges ended in the red zone. The S&P 500 lost 0.88%, closing at 3,785 points. Nasdaq and Dow Jones fell by 1.33% and 0.82%, respectively. Eight of the 11 sectors in the S&P 500 ended the day in negative territory. Real estate companies (+0.33%) and utilities (+1.10%), as well as representatives of industry (+0.28%) looked better than the market.Company newsMeta Platforms (META: -1.6%) reported a likely decrease in the growth rate of financial indicators in the second half of the year due to the deterioration of the macroeconomic situation and data privacy issues.Apple Inc (AAPL: -1.8%) has raised the cost of the iPhone in Japan by almost 20%, thereby trying to offset the effect of changes in the exchange rate and rising inflation in the country.We expectThe growth of consumer prices in the eurozone in June, according to Eurostat, accelerated from 8.1% to 8.6% with a consensus of 8.4%. This dynamic is mainly due to record levels of energy prices, although food and services are also noticeably more expensive. Thus, the cost of fuel rose by 41.9%, and the cost of food increased by 11.1%. Inflation excluding the prices of these two categories of goods accelerated from 4.4% in May to 4.6%, which is still more than twice the ECB's target of 2%. However, the indicator excluding alcohol and tobacco dropped by 3.7% from 3.8%. The European regulator continues to keep the key rate at a minimum, although other central banks launched monetary policy tightening programs a few months ago. The ECB plans to start a rate hike cycle in July (according to preliminary data, by 25 bps). At the same time, statistics for June, indicating a continued acceleration of inflation, serves as a reason to raise the rate by 50 bps in September.In Germany, an increase in the number of unemployed was recorded by 133 thousand, to 2.4 million, although analysts expected a decrease in this indicator by 5 thousand. In turn, in the United States, the number of initial applications for unemployment benefits for the week ended June 25 decreased by 2 thousand, to 231 thousand, with a consensus of 234 thousand. In our opinion, employment growth in the States has almost stopped, so in the coming weeks statistics will reflect the deterioration in this segment. However, unemployment remains low.The yield of two- and ten-year treasuries decreased by 14 and 12 bps - to 2.93% and 2.97%, respectively.Trading on July 1 at most sites in Southeast Asia ended in the red zone. China's CSI 300 lost 0.41%, Japan's Nikkei 225 dropped 1.73%, although Hong Kong's Hang Seng remained unchanged.Brent crude futures are quoted at $108 per barrel. Gold is trading at $1,794 per troy ounce.In our opinion, the S&P 500 will hold the upcoming session in the range of 3750-3800 points.MacrostatisticsThere are no plans to publish important statistics today.Sentiment IndexThe sentiment index remained unchanged.Technical pictureSince the beginning of the year, the S&P 500 has adjusted down by 26%, including 19% for the second quarter. This was one of the worst results in the history of this statistics. However, in the coming weeks, the market may begin to play rebalancing in stocks by portfolio managers. The nearest support for the broad market index is in the range of 3600-3660 ...

The head of the Federal Communications Commission, Brendan Carr, has asked technology companies Apple and Alphabet (Google's parent company) to remove TikTok from their app stores due to data security concerns. The popular application for watching short videos belongs to the Chinese company ByteDance, which became the object of close attention from the United States under former President Donald Trump.Brendan Carr shared on his Twitter account a letter to Apple CEO Tim Cook and Alphabet CEO Sundar Pichai. The letter pointed out that TikTok does not comply with the policies of the two companies' app stores. Carr states that TikTok functions as a sophisticated surveillance tool that collects a large amount of personal and confidential user data.Apple and Alphabet must remove the application for viewing short videos from their stores or provide statements by July 8 that TikTok does not contradict any of the policies of the app store and does not transfer confidential user data to the United States by persons located in Beijing.The Chinese service claims that it directs all traffic of American users to Oracle Cloud Infrastructure and transfers private data of American users from its own data centers in the USA and Singapore to Oracle cloud servers in the USA.Whether or not the data of American users could be accessed by Chinese intelligence services through the popular TikTok social network is a very confusing question, to which, apparently, the answer will not appear very soon, and maybe never. Whether the US Federal Communications Commission is really worried about the reliability of the protection of the personal data of American TikTok users, or is this a new attempt by the US to establish control over the American branch of the Chinese ByteDance (owner of the TikTok brand) is also an open question. Today, Apple's stock prices are rising by 0.21% on the premarket, and Alphabet's stock prices are almost unchanged, which probably means that investors in the shares of technology giants did not notice this news or did not consider it ...

The largest technology companies Meta, Microsoft, Epic Games and others have formed a group to standardize metaverse technologies. The so-called Metaverse Standards Forum is designed to strengthen open, interoperable standards for augmented and virtual reality systems and 3D technologies.Among the members of the group are many of the largest companies working in this field: from chip manufacturers to gaming companies, as well as reputable organizations that set standards, such as the World Wide Web Consortium (W3C).At the moment, it is difficult to imagine how the worlds of the metaverses can be combined with each other, but if companies succeed, they will receive additional investment volumes, which means that the shares of companies will receive a new driver for growth. However, such giants and pioneers as Roblox, The Sandbox, Decentraland, and Apple were absent from this forum, so at the moment we are skeptical about the formation of the ...

Meta Platforms Technology Corporation, Inc. announced that its Class A ordinary shares will begin trading on NASDAQ under the ticker symbol META on June 9. The new ticker will replace the current FB, which has been used since the company's initial public offering on the stock exchange in 2012.This decision is part of the rebranding of the company, which began at the end of October last year. Then it was reported that the corporation would change its stock ticker to MVRS, but the process was postponed until the 1st quarter of 2022. The META ticker used to belong to Roundhill Investments, which used it for its Roundhill Ball Metaverse ETF fund. The ticker has obviously been released for Meta Platforms.Mark Zuckerberg decided to turn his most popular social network in the world into a "metaverse", expanding his ambitions far beyond social networks. That is, the rebranding of the former Facebook is, in fact, much more than just a change of name and corporate identity – it is already an expansion into other areas of activity, which means that shareholders are increasing risks if not all of the corporation's projects can be successfully implemented. However, these concerns have long been played back by the market, and the change of the stock ticker will not have an impact on stock quotes.No action on the part of the company's shareholders in connection with the change of the ticker symbol is required. The company's ordinary shares of Class A the company's ordinary shares will continue to be listed on NASDAQ, and their CUSIP number will remain ...

Apple CEO Tim Cook said that the word "meta-universe" is still misunderstood by the vast majority of people in the world. That's why Apple is trying to avoid the term. The company has mentioned it once. But Meta (recognized as an extremist organization) has used the word "meta-universe" 36 times in its reports this year.And before, Apple was not afraid to set trends and create demand where there was none. Apparently, Meta, which is not afraid to use new words, will now be in charge. Moreover, metaworld is not just an abstract term, but quite specific tasks and solutions (VR-helmets, 3D-graphics, software and so on), on which many companies work.Roblox Metawell (NYSE: RBLX)This is a publicly traded company whose meta-villain is already built and popular today, while others have it only as plans for the future. A share of the company is worth $38 -- nearly five times cheaper than it was at the peak of market hype (November 2021). Last year we underestimated the enthusiasm of the market by half - the price soared to $141. Accordingly, this value over a 3-5 year horizon reflects the potential value of the stock. Analysts emphasize the opportunity offered to users: they can build their own games and applications with the help of an internal constructor. Anyone can work with the platform thanks to a simple interface and flexible functionality.Investing in meta-universes through Unity Software (NYSE: U)Developer of a 3D video game engine. The company's stock is now worth $36.6 - six times cheaper than its peak value (also reached in November 2021), and even cheaper than the low end of its IPO range ($44). At the same time, the company's revenues are twice as high as the 2019 IPO it reported.Microsoft Metasites (NASDAQ: MSFT)Last year generated $198 billion in revenue and $72 billion in profit. With a capitalization of $1.8 trillion, it is the largest and most resilient maker of software, hardware game software and games. As this company's history shows, if it doesn't manage to become a leading player in its target market right away, it still takes a significant share of it over time.Investing in Meta (NASDAQ: META)Zuckerberg is serious and plans to create his own meta universe using all available resources. He's got the makings for it: 3 billion monthly active social media users, ownership of Oculus, the company that makes VR helmets, and enough cash flow to service it all. But so far, the reality lab division (those meta universes) has spent $10 billion on revenues of only $2.3 ...

SaaS is a cloud technology that allows you to use software online without installing it on a computer. The abbreviation SaaS stands for Software as a Service.SaaS resembles rental housing. You rent an apartment with furniture, appliances and even dishes for any period. You live there, and its owner is engaged in maintenance and repair.Most SaaS platforms, along with access to software, provide data storage services (projects, information, letters). But there are services where projects are not saved. In them, the work is organized according to the principle: worked — downloaded — left.ContentSoftware by subscriptionSaaS examplesAdvantages and disadvantages of SaaSA key factor in the development of SaaSWhat is a cloud service and why is it so calledData security in cloud servicesWill SaaS be able to completely replace local softwareSoftware by subscriptionSaaS services provide subscription services. Usually, such companies offer different tariffs, the cost of which increases along with the number of available tools and the size of the cloud storage.On many platforms, you can collect your tariff as in the constructor and pay only for the services that you use. Other services offer several formed tariffs for different tasks and requests.It is convenient that you can not pay for all the features of the service at once. Needs have changed — change the tariff.In addition, almost all services have a trial period or a demo tariff with reduced features for getting acquainted with the product.SaaS examplesSaaS products have been known for a long time. The first representatives of this model are considered to be mail services.Today, according to the SaaS model, they work:Text, image and video editors (GoogleDocs, Figma, Canva, Adobe);Social networks (Facebook, Linkledin, Twitter).Video and audio hosting services (YouTube, SoundCloud).CRM systems (Bitrix24, Salesforce).E-commerce systems (BigCommerce, Shopify).Site builders (WiX, Setup, uCoz).Enterprise Management Systems (1C: ERP, SAP Business One).The Unisender mailing service is also a SaaS service that provides tools for email marketers by subscription.There are whole complexes of SaaS services. For example, Google and Yandex is the postal service, document editors, video applications, tools, online marketing, drives to store information.Advantages and disadvantages of SaaSCloud technologies are convenient to use, and this is not the only advantage of such services.Advantages of SaaS:Low price. A software subscription costs much less than the purchase of a license.The ability to work together. In many services, several performers can work on one project at the same time.Low probability of data loss due to technical problems. It is not terrible if the computer freezes during operation, the lights are turned off or you forget to save. In SaaS, data is saved immediately as it is introduced.Account availability from different devices. You can start doing something in the office, and then go to a meeting by taxi and continue working from the phone.Regular updates. Cloud services are constantly updated by a team of specialists without any effort on the part of users.Reducing the load on the user's gadgets and equipment. You do not need to use memory to install many different programs — a browser is enough. There is also no need to buy expensive powerful equipment — the entire load falls on the servers of the service provider.But even such a popular model has some disadvantages:High price in the long run. Using a paid service for a long time may be more expensive than paying for licensed software once.The risk of information loss. All data is stored with the provider. If the servers stop working or are hacked, you may lose valuable information.Low operating speed at high loads. The capabilities of the service provider's equipment are not unlimited, if a large number of users are connected to the cloud at the same time, the speed of work decreases.A key factor in the development of SaaSRemember how we installed software before the advent of SaaS — we searched for hacked programs from friends or downloaded keygen on the Internet. Those who could afford it paid for the license.Today, we are already taking full advantage of the capabilities of cloud services, without even thinking about how much they have made our lives easier. Now we can close the laptop, come to work, enter the username and password to log in to the account on the computer and continue working from the same place.Since SaaS is based on the principle of providing services via the Internet, the development of cloud technologies is directly related to the history of the world Wide Web.The abbreviation SaaS appeared in 2001. Since that time, the popularity of cloud technologies has been growing along with the speed of the Internet.The emergence of high-speed networks, wi-fi and the constant improvement of mobile communication standards invariably entails new upgrades in the field of SaaS. The throughput of services, the speed of information processing, the volume of storage are increasing, the tools are becoming more complex and expanding.What is a cloud service and why is it so calledSaaS is a cloud service, the highest form of cloud technologies, which have their own hierarchy:IaaS is an infrastructure as a service, for example, a virtual data center or a virtual server.PaaS is a platform as a service, or a cloud development environment.SaaS - software as a service, or a ready-made application for work, which is located in the cloud.All together, it is called XaaS — "everything as a service", where X is considered as an unknown variable, instead of which you can substitute the desired letter.Cloud computing is called computing that is performed simultaneously on several servers connected by a network. In this scenario, data processing and storage takes place in a place that is difficult to imagine as something concrete — it is ephemeral and elusive, like a cloud.  The user cannot touch it or see what is hidden inside.A less popular name for cloud technologies is cluster technologies. Cluster translates as a swarm (of bees), a cluster, a brush (of grapes). This word is used in Internet technologies to refer to a group of computers connected together through a network.Data security in cloud servicesWe actively use SaaS services for work and personal tasks. Photos and correspondence are stored in mailers and messengers, projects are stored in application repositories, and information about costs and cost is stored in the enterprise management system. All this is our data, which is unique and highly valued.An important principle of cloud work is that the user's information belongs only to him. Self-respecting SaaS services provide customers with the ability to export data and leave the platform at any time. But not everyone does this. Therefore, before settling on a cloud service, it is necessary to study this issue.SaaS services are constantly working on the security of customer data, introducing new means of protection. But the professional community has not yet come to a consensus on the reliability of SaaS. Despite all the efforts of providers, the risks remain. Moreover, even large companies are not immune from them.The threats to which customer information is exposed in the cloud can be divided into three categories.Physical data lossUsers from the 2000s have repeatedly found themselves in situations where a broken hard drive or a washed USB flash drive entailed a lot of problems associated with the loss of information.In cloud storage, such situations are practically excluded. Several servers are used for calculations at once, data is stored in different places, there are backups. Therefore, a technical malfunction of one or more servers does not lead to data loss.If the server is damaged, the technical team of the service will work in emergency mode until the problem is fixed.Hacker attacksHackers break into cloud servers for various reasons: to collect information about user behavior, to damage large businesses, to steal unique data, assets, money. An attack on the cloud is sometimes organized by competitors who want to undermine the reputation of the service.In 2014, there was a major scandal related to the leakage of Apple user data. A specialized iCloud storage was hacked, and personal information was available to everyone. After this incident, Apple seriously took up the security issue and installed several additional shields: password verification, two-factor authentication, data encryption.There are many such examples in the history of SaaS, and each incident entails the emergence of new ways of protection. Today, a user's account is an impregnable fortress, but black programmers continue to look for ways to get inside.Illegal actions of the owners or employees of the SaaS serviceOne of the fears of SaaS users is what if my data is sold by the service itself?The second level of legal protection is an agreement between the service provider and the client. To use the service, we sign a public offer agreement (check the box without reading it). It is here that it is stated in which cases the service provider company has the right to use your data. This is usually a standard document. However, owners can leave loopholes for themselves to study user behavior.But even such a serious protection does not exclude unpleasant situations. In 2018, the data of 87 million Facebook users were transferred without their knowledge to an analytical firm that used the information to promote Trump's election campaign and the PR campaign for the referendum on Britain's exit from the European Union. It is believed that all this happened with the tacit consent of the Facebook management. The company lost about $ 60 billion in a few days due to a drop in shares, the "Delete Facebook" campaign swept through Twitter, the social network experienced a serious reputational crisis. In 2019, a US federal court ordered Facebook to pay a 5 billion fine and review the terms of protecting the privacy of its users.Such incidents cause serious damage to cloud service providers, so they are trying their best to protect user data. But, as they say, God protects the safe.How to secure your data:Try not to store information in cloud services, the theft of which will cause serious problems, or encrypt it additionally. You can use both ordinary archives with passwords, and special software for encrypting data.Store information on several services at once or duplicate it on physical media.Use all the opportunities to improve security: do not be lazy to come up with strong passwords that are different for all sites; use two-factor authentication; put passwords on gadgets and computers.Carefully read the contract, before signing it, study all the information and reviews about the provider with whom you plan to cooperate.Install a good antivirus and antispyware.Will SaaS be able to completely replace local softwareSaaS services have made our life easier. There are even devices on the market where only browsers are installed, and all the rest of the software is available from the cloud (for example, a Chromebook laptop).It is not surprising that cloud technologies have been experiencing an unprecedented boom in recent years. In 2019, the profit from the sale of services for this model worldwide increased by 26% compared to 2018.In 2020, the development of SaaS was affected by the coronavirus pandemic and the transition of many companies to remote work. Key cloud giants have doubled their revenues during the year, and by 2025, the value of the entire cloud technology market is projected to double.SaaS services have seriously reformatted our lives. The creation of virtual offices made it possible to introduce a remote mode of operation. The State of Remote Work global survey in 2018 showed that before the quarantine, employees of 16% of companies around the world worked completely remotely, 40% of employers offered a choice. For comparison — in 1995, the number of organizations with the option of remote work was only 9%.After the quarantine began, entire industries moved to the cloud — IT, design, journalism, marketing and other areas for which the constant presence of an employee in the office is not necessary. The trend of 2021 is the rejection of offices, announced by a number of IT companies.But not everyone can afford to completely switch to SaaS technologies. For example, professional work with sound and video is still carried out on local software — a sufficiently powerful cloud service has not yet been created for this purpose. Adds a fly in the ointment and the fear of data loss when an account is hacked.Therefore, experts predict that in the foreseeable future, SaaS platforms and physical media will work in tandem, and we will be able to choose when it is more convenient to use local software, and when it is more convenient to use subscription ...

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 ...