Hi everyone. I'm Tim Melvin, and welcome back to A Better Way to Wealth.
There are a lot of folks out there who get really excited about and follow the initial public offering (IPO) market closely.
Most of the time, you and I never get shares in these IPOs because we're not the big players with the right connections.
But a lot of folks love to trade these things in the aftermarket once they start trading, and you can get some wild swings.
Now, if it's a hot offering that's been going up, the stock tends to get overvalued very quickly, and there's something out there that can make these stocks absolutely toxic to your portfolio.
What we need to be aware of is the share unlock date. When an IPO is done, most insiders and large shareholders are legally restricted from selling their shares for a specified period of time.
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The insiders aren't going to sell all of their stock, but they will sell some, as it's their first chance to monetize their personal holdings of the company they built.
This becomes a liquidity issue for the market to deal with, and the chances for the stock to move lower are pretty high most of the time.
With that in mind, I want to look at two stock stocks today with share unlocks on the horizon that we need to be aware of.
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Friday, November 12, 2021
Why These Two Hot IPO Stocks are at Risk of Turning Toxic
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