Initial public offerings (IPOs) allow founders, early investors and investment bankers to capitalize on hype and cash-out by selling shares to the public. Year to date, there have been $163 billion in IPOs in the US. This surpasses the previous IPO record in 1999 (just before tech shares plunged 80% on average between 2000 and 2002).
In addition to selling shares to the public on newly listed companies, insider selling versus insider buying of shares at existing public companies reached a ratio of 58:1 last month. Readings over 20:1 are considered a bearish sign indicating that corporate executives see cash as more valuable than their company shares.
Public appetite to buy companies at non-sensical valuations should cause pause for thinking people today. For some sober assessment watch: Doordash is the ‘most ridiculous of 2020 and holds no value’: Analyst.
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