Do I sell my IPO shares if they aren’t rising much?
How to take advantage of higher prices after a company lists and cash out at a profit
Dubai: Investors in the UAE and GCC are increasingly participating in IPOs, drawn by their potential for significant gains. However, IPOs also come with risks, as newly listed companies often lack a public track record. So when should you sell your IPO shares?
Some investors opt to sell their IPO shares on the listing day, taking advantage of typically higher prices. Pre-market trading sessions can help gauge stock performance, and substantial gains (70-80%) often indicate a good time to sell. Others hold shares long-term, eyeing benefits from its growth or dividends.
To manage risks, consider selling shares incrementally. Start with 10-20% of your holdings or sell 50% upfront and the rest in instalments after reviewing quarterly reports. This strategy helps recover initial investments while allowing for further growth opportunities.
What to know before you sell your IPO?
Note that IPO shares may have a lock-up period restricting sales to stabilise market value. Understand these terms before planning your exit strategy. Holding shares can yield dividends, offering a steady income even if stock prices plateau. Over time, dividends may surpass your initial investment, making long-term holding a valuable strategy.
Bottom line? Analyse market conditions, your risk tolerance, and financial objectives to decide when and how to sell. Whether for immediate profits or sustained growth, tailor your strategy to suit your goals. There’s no one-size-fits-all approach to selling IPO shares.