I see an exciting investment opportunity that I want all of my clients to know about.
When a stock first starts trading on an exchange its called an IPO – this stands for Initial Public Offering.
This can be an awesome time to invest in a young company. The goal is to buy early and then hold shares for years as the company continues to grow – delivering huge gains to early investors.
This pattern has repeated itself thousands of times in the stock market. Let me share an example.
Netflix (NASDAQ: NFLX) had an Initial Public Offering (IPO) in September of 2002. Anyone buying shares early in the game had the potential to grab some ridiculous gains.
Since going public, Netflix share price has increased 68,000%.
That means investing $1,000 in the IPO 18 years ago would now be worth $680,000. Investing $10,000 would be worth $6.8 million.
Take a look at this amazing chart below.
Now keep in mind, Netflix is one of the best IPOs ever. Not all stock IPOs are this successful or successful at all.
However – today I see an exciting stock IPO with solid long-term potential that I want all of my clients to know about. I see tremendous growth potential here and this is a stock I want to buy for a lot of my clients.
Lemonade (NYSE: LMND) is a hot, young startup headquartered in New York that is shaking up the insurance industry.
The concept is simple but innovative – lets make it easy for younger consumers to buy insurance by offering insurance policies and claim settlement online using artificial intelligence.
This is a well tested and highly effective business model – take a legacy industry with an outdated business model and bring it into the 21st century by offering services online and through mobile apps.
Here is some good analysis on Lemonade if you want to learn more about the company.
Here’s my quick analysis on this IPO.
I really like Lemonade the company. Very innovative and tons of growth potential.
Shares are a little pricey – investors have already priced a lot of growth into this stock.
However in the long run I don’t see that optimism as a major problem. I think Lemonade will register huge sales growth and move into profitability in the next few years.
Shares began trading on the New York Stock Exchange on Friday.
Shares were supposed to begin trading at $28 but demand was so high that first trades went off at $50 before finishing the day at $69. For investors looking to buy shares at $28, seeing shares start trading at $50 was scary and that made this a very difficult IPO to buy on the first day.
Take a look at the first day of trading in the chart below.