Advertisement
Canada markets close in 4 hours 19 minutes
  • S&P/TSX

    22,000.87
    +128.91 (+0.59%)
     
  • S&P 500

    5,063.17
    +52.57 (+1.05%)
     
  • DOW

    38,442.98
    +203.00 (+0.53%)
     
  • CAD/USD

    0.7314
    +0.0013 (+0.18%)
     
  • CRUDE OIL

    82.70
    +0.80 (+0.98%)
     
  • Bitcoin CAD

    91,064.94
    +851.55 (+0.94%)
     
  • CMC Crypto 200

    1,434.69
    +19.93 (+1.41%)
     
  • GOLD FUTURES

    2,336.30
    -10.10 (-0.43%)
     
  • RUSSELL 2000

    2,003.22
    +35.75 (+1.82%)
     
  • 10-Yr Bond

    4.5900
    -0.0330 (-0.71%)
     
  • NASDAQ

    15,678.38
    +227.08 (+1.47%)
     
  • VOLATILITY

    16.26
    -0.68 (-4.02%)
     
  • FTSE

    8,044.41
    +20.54 (+0.26%)
     
  • NIKKEI 225

    37,552.16
    +113.55 (+0.30%)
     
  • CAD/EUR

    0.6832
    -0.0018 (-0.26%)
     

Zacks Investment Ideas feature highlights: Lyft, Dutch Bros, Airbnb, Meta Platforms and Tesla

For Immediate Release

Chicago, IL – January 31, 2023 – Today, Zacks Investment Ideas feature highlights Lyft Inc LYFT, Dutch Bros Inc BROS, Airbnb ABNB, Meta Platforms Inc META and Tesla Inc TSLA.

Can the IPO Market Produce New Leaders? 3 Attributes to Look For

IPOs, the Lifeblood of the Stock Market

Initial Public Offerings (IPOs) are the lifeblood of the stock market. Companies that opt to go public reap the benefits of cheaper access to capital, the ability to attract top-tier employees, and a more diverse shareholder base. Though older companies may provide more stability, newly public companies often offer investors innovative products and services, an opportunity to invest earlier in the company’s trajectory, and faster growth.

ADVERTISEMENT

Unfortunately, in 2022, the number of firms going public plummeted due to higher interest rates, inflation, and a risk-off environment. However, in the past few years, several of America’s most innovative companies have debuted, including ridesharing giant Lyft Inc, the trendy coffee chain Dutch Bros Inc and short-term homestay operator Airbnb.

Keep your Eye on the Ball

All three of the stocks mentioned above sport double-digit EPS and revenue growth, were profitable last year, and have tremendous liquidity and institutional backers. Nevertheless, all three are down since coming public in the past few years.

Picutred: Big name IPOs like LYFT, ABNB, and BROS are down since going public

Should investors give up? To answer this question, it is helpful to look at two past true market leaders over the past 15 years. While history does not always repeat itself, it does tend to rhyme. Despite recent pullbacks in the stocks, Meta Platforms Inc and Tesla Inc are some of the strongest performers since inception. What do the two have in common? Both took more than a year to begin trending above their IPO prices.

Stocks sometimes take time to take off because of factors such as:

·      Exit liquidity: Some early investors use the liquidity of going public to exit shares, thus increasing supply.

·      Supply/Demand Equilibrium: Since going IPOing is not a perfect science, it usually takes time for the stock to find the proper supply/demand equilibrium.

·      Market Environment: Most stocks follow the direction of the market. For example, in 2022, the S&P 500 struggled. Therefore, most of the underlying stocks did as well.

Because of the above reasons, it is too early to give up on these stocks.

What Should I Look For?

1.   Trend Change: The first signal that a stock’s trend is changing is a price move back above the 200-day moving average.

2.   A Massive Price Gap on Volume: In 2013, Tesla and Meta started their price moves with a bang. Tesla gapped higher by 16% on volume 570% above the norm, while Meta launched higher by 30% on volume 750% higher than the norm.

3.   Rising Consensus Estimates: Like any stock, the magic ingredient for IPOs is rising consensus estimates. (You can use Zacks.com to track this)

Conclusion

Recently, the IPO market has been frustrating for investors. However, by studying history, one finds that it sometimes takes time before IPOs become true market leaders due to exit liquidity, supply/demand equilibrium, and the market environment. Investors should monitor recent IPOs for trend changes, price gaps on volume, and rising consensus estimates to catch the next big winners.

Why Haven’t You Looked at Zacks' Top Stocks?

Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.

See Stocks Free >>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Tesla, Inc. (TSLA) : Free Stock Analysis Report

Lyft, Inc. (LYFT) : Free Stock Analysis Report

Airbnb, Inc. (ABNB) : Free Stock Analysis Report

Meta Platforms, Inc. (META) : Free Stock Analysis Report

Dutch Bros Inc. (BROS) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research