By Matt McCallSep 16, 2020
If you didn’t know it before today, the headlines should have tipped you off…
Snowflake more than doubles in debut (CNBC)
JFrog shares jump 62% in Nasdaq debut (Reuters)
Initial public offerings are hot again.
In fact, it’s the biggest week for IPOs since May of 2019, which is when Uber Technologies (UBER) went public. Snowflake (SNOW) is the headliner as the biggest software IPO in U.S. history.
So, let me ask you… have you ever invested in an IPO?
If you can answer yes to that, you are a rare investor. Most of us can’t get near them.
But I have good news. Thanks to the next-generation way of going public, we can now get in on the action…
Investors have long been enamored with IPOs. There’s a certain mystique about them, and they are viewed as some of the most promising financial opportunities on the planet.
IPOs can indeed make you rich. Amazon (AMZN) has gained a stunning 159,696% from its 1997 IPO. That kind of gain turns every $10,000 invested into almost $16 million.
More recently, Zoom Video Communications (ZM) priced at $36 per share before its debut on March 22, 2019. At current prices over $400, it’s already up more than 1,000% in 18 months.
But here’s the thing: Most of us never get a shot at buying into a true IPO.
Almost all the initial shares at the IPO price go to company insiders and the brokerage firms helping the company go public. Institutions usually get about 90% of what’s left. And there’s not much else after all that. The small number of remaining shares are distributed to brokerage firms to make available to their clients.
Guess who gets those…
The already rich. Your account has to “qualify” to be able to buy IPO shares.
Well, I have good news… consider yourself qualified!
This is thanks to the improved way companies are going public… which also happens to be the hottest type of investment in the market right now.
I focus on this in my just-released Early Stage Investor issue… and I have a new recommendation right in the middle of the excitement. But it’s such a big deal I wanted to make sure you know about it as well.
You’ve probably come across the “SPAC” acronym. It has become one of the biggest buzzwords in the market and the business world. SPACS are surging in popularity. They are a cheaper, better, and less risky way for companies to go public… and I see them transforming the IPO process.
Here’s a quick explanation of how they work: A Special Purpose Acquisition Corporation is formed for the sole purpose of acquiring an existing private company. Their whole mission is to raise money and buy another company.
Ironically, much of the capital is raised through an IPO for the SPAC itself. SPACs are often referred to as “blank check companies” because investors buy shares and fund the company on the belief that management will make a smart deal that returns a handsome profit.
When a deal is completed, the previously private company is folded into the SPAC… and presto! The private company “goes public.”
It’s smart. It’s efficient. And it’s another tool in our toolbox for investing early in hypergrowth opportunities. That’s our goal in Early Stage Investor: To invest in the world’s biggest “hypergrowth” trends… new, world-changing industries set to grow five-, 10-, even 50-fold in size.
If SPACs weren’t in the middle of these trends, I’d forget about them. But they are.
One example is the massive disruption coming in transportation, like electric vehicles (EVs), autonomous vehicles (AVs), and more. Here in 2020, two of the hottest trends have been SPACs and EVs.
I’ve been bullish on EVs for a long time… and we are still in the very early stages of growth. Through July, EVs accounted for just 3% of 2020 global vehicle sales. You don’t have to be a math genius to see the huge potential.
Here’s where SPACs and EVs come together. At least 10 EV-related companies have gone public via SPACs or announced the intention to merge. The first big name was Nikola (NKLA), the manufacturer of EVs and hydrogen-powered trucks. The stock was up a crazy 900% after the merger was announced before coming back to reality.
Since then, there have been EV manufacturers, battery companies, and even a mining company that goes after minerals for batteries for EVs.
There are more to come… and I just recommended one of them.
The SPAC I recommend in the brand new Early Stage Investor issue has already announced the company it is acquiring, and the deal is supposed to be finalized in the fourth quarter. At that point, a company with big potential will begin trading on the Nasdaq. That’s what we’re buying into.
This is a fascinating company started by a young genius – who’s about to become a billionaire – and already partners with seven of the top 10 global auto manufacturers. It has a unique approach to a technology that is essential to the future of vehicles, and the projected growth is practically off the charts.
If you were to bet on the Kentucky Derby, would you bet on the horse or the jockey? The answer is usually about 50/50.
But my answer? Both! The best bet is a great horse with an even better jockey. That’s the case here.
And thanks to SPACs, we can invest now… before the company goes public.
P.S. I have all the details in the just-released Early Stage Investor issue. It was posted to the website moments ago, so you can still be among the first to discover this unique opportunity and how to get in on it. Click here to learn how you can get immediate access to my exciting new recommendation.
Click here to listen to Matt McCall’s MoneyLine podcast! This week, Matt sets the record straight as many investors have been panicking for all the wrong reasons as tech stocks pull back. There’s a lot going on right now, including Apple’s latest product announcement, Tesla and Apple splitting their stock, and Nvidia buying Arm for $40 billion. And what should smart investors be doing? Matt has some ideas…
You can subscribe to this podcast on iTunes, Stitcher, Spotify, or wherever you listen to podcasts.
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