Siddharth Singh, Amity University, Kolkata
ABSTRACT
Investing in an Initial Public Offering (IPO) is an exciting opportunity for many investors, especially as popular brands frequently launch IPOs that become oversubscribed within hours. This enthusiasm extends beyond potential profits; it also includes the prestige of securing shares in a competitive market. However, amidst the excitement, the inherent risks of IPOs are often overlooked. Investors can become so captivated by the potential for gains that they neglect essential due diligence. Factors such as market conditions, a company's financial health, and management effectiveness are crucial for informed decision-making. The initial trading phase of an IPO can be highly volatile, with prices surging on the first day but potentially declining sharply afterward. This unpredictability can lead to significant losses for those who invest without a clear strategy. Additionally, psychological factors like the fear of missing out can drive investors to make hasty decisions. Regulatory challenges also add complexity, as companies face stringent reporting requirements that may affect their performance. In conclusion, while IPOs offer exciting prospects, investors must remain aware of the associated risks and engage in thorough research to navigate this complex landscape successfully.
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