Stay away for at least 2 years from newly listed IPO stocks
Read news here , hereand here
Even though this is back by strong players like Walmart and JD.com, from a technical perspective, it lacks historical price action patterns to "fortell" the next market direction, so to speak.
It is better (imo) to wait for 1-2 years for it to stabilise, analyse a bit about the company's performance, match it to see if it fulfils what it says it would do (judge the actions not the words said) and then make a decision.
Yes, by then, the price may have moved quite a lot but at least you are more certain of buying into a fundamentally strong stock.
I know of many friends and retail traders who loved to gamble on IPO shares, believing in the story that if they capture a few of these stocks and if it jump 50-80% within the next few days of listing, they are going to make a killing.
That is a strong IF. Of course, if you are skilful, have the experience in trading IPO shares, understand the risk and rewards involved, then it is fine. Else, if the shares do not perform as you wanted it to be, then you are stuck with it . That means, your capital is tied up until the share price recovers back to the IPO price. As evidenced in many IPO stocks, this may take months to years . And that to an investor is opportunity costs.
Are you prepared for it ? If yes, carry on. If not, hold your fire and not let temptation or hearsay about people making tons of money from IPO stocks. For every winner announced, there are many dead ones not declared, probably too embarrassed to share their story.
My take :
It is still burning cash, operating at loss and the IPO price is too high for a start. Strong competitors in this food delivery service includes Meituan and late entrant, DIDI.
Now that China has lifted its lockdown status for Covid-19, would the majority of the buyers still go online to buy groceries ? Will this habit be sticky throughout for DADA to thrive on ?
With social distancing measures lifted off and plenty of large scale hypermarkets, supermarkets, food stalls along roadside to cater to daily groceries, would the online buying trend for food groceries remain strong ?
I would need more time to do research and thus would not be looking at this counter for a while....
Even though this is back by strong players like Walmart and JD.com, from a technical perspective, it lacks historical price action patterns to "fortell" the next market direction, so to speak.
It is better (imo) to wait for 1-2 years for it to stabilise, analyse a bit about the company's performance, match it to see if it fulfils what it says it would do (judge the actions not the words said) and then make a decision.
Yes, by then, the price may have moved quite a lot but at least you are more certain of buying into a fundamentally strong stock.
I know of many friends and retail traders who loved to gamble on IPO shares, believing in the story that if they capture a few of these stocks and if it jump 50-80% within the next few days of listing, they are going to make a killing.
That is a strong IF. Of course, if you are skilful, have the experience in trading IPO shares, understand the risk and rewards involved, then it is fine. Else, if the shares do not perform as you wanted it to be, then you are stuck with it . That means, your capital is tied up until the share price recovers back to the IPO price. As evidenced in many IPO stocks, this may take months to years . And that to an investor is opportunity costs.
Are you prepared for it ? If yes, carry on. If not, hold your fire and not let temptation or hearsay about people making tons of money from IPO stocks. For every winner announced, there are many dead ones not declared, probably too embarrassed to share their story.
My take :
It is still burning cash, operating at loss and the IPO price is too high for a start. Strong competitors in this food delivery service includes Meituan and late entrant, DIDI.
Now that China has lifted its lockdown status for Covid-19, would the majority of the buyers still go online to buy groceries ? Will this habit be sticky throughout for DADA to thrive on ?
With social distancing measures lifted off and plenty of large scale hypermarkets, supermarkets, food stalls along roadside to cater to daily groceries, would the online buying trend for food groceries remain strong ?
I would need more time to do research and thus would not be looking at this counter for a while....
Views here should be taken as a reference point , offers you a different perspective and not paralyse your own actions. On a side note, I find reading one too many author's views in the past cloud my own judgement and have since ceased following any and trust my own instinct and charting experience. Again, this is my own strategy, it works for me but you have to ask yourself , if it suits you as well.