Buying Lending Club Stock come IPO time

[thezfunk]

Hey Guys,

I am thinking about picking up some of their stock when they do their IPO.  I have an account on Sharebuilder but I have never tried to buy stock from an IPO.  I stayed far away from Facebook and Twitter.  Do I need to do anything special the day it comes out to buy it?  Can I just log into my Sharebuilder account and put in my order for their ticker symbol?

[Rob L]

Nothing special to do, but if you must buy it on the first day I'd suggest using a "market on open" order or "limit" order if later in the day.
If limit later in the day, best to buy when the price action is quiet rather than rapidly moving.

[Fred93]

Normally, in order to be eligible to purchase IPO shares, you need to sign some paperwork with your broker to get your account approved for IPOs.  Not a big deal, but best done well in advance.

[Bohb Daishi]

I am thinking about picking up some of their stock when they do their IPO.  I have an account on Sharebuilder but I have never tried to buy stock from an IPO.  Do I need to do anything special the day it comes out to buy it?  Can I just log into my Sharebuilder account and put in my order for their ticker symbol?

If you want to purchase stock on the IPO day, it's no different than buying stock in any other company.

However, if you want to be part of the actual IPO, you need to have a couple hundred million dollars in an account with Goldman Sachs. Even then, good luck getting a sizable amount of shares.

[GS]

Exactly ... the institutional investors who get shares at a fixed price before hand try to create buzz around IPOs so they can sell into a first day "pop".  There is very little advantage for a regular Joe with an online brokerage account to rush into buying a stock on the first day of trading, unless you are day trader and counting on a stock to build momentum through out the day, and then sell for a quick profit.  If you are a long term investor, I'd rather buy a stock with a good track record than an unknown. 

[yojoakak]

Exactly ... the institutional investors who get shares at a fixed price before hand try to create buzz around IPOs so they can sell into a first day "pop".  There is very little advantage for a regular Joe with an online brokerage account to rush into buying a stock on the first day of trading, unless you are day trader and counting on a stock to build momentum through out the day, and then sell for a quick profit.  If you are a long term investor, I'd rather buy a stock with a good track record than an unknown.

I know right! Those suckers who bought Facebook on Day One are probably STILL kicking themselves.

[GS]

At least Facebook is up now from it's IPO price, but as we know, they could have bought in few weeks after the IPO at 1/2 price.  Google is one of the few stocks I can think of that never offered a better buy-in price than opening day.  Google is interesting too in that, IIRC, they actually made their IPO available to common investors, and rather than pricing the stock, they allowed anyone to bid on stock to set the opening price. 

Google opened with a pop and went up for the next 3 years.... I missed that boat.  But I mostly invest in ETFs anyway, and own Google and Facebook through ETFs.

[pd103kid]

I've been "in the market" since the 60's - stay away from IPO's! The vast majority are very over priced in relation to their possible growth. There are exceptions, of course, like Google, Apple and even IBM. That said, normally only the 'whales' get access to an IPO so I say 'F'em; this fool has only been fooled a thousand times!
 
Should a unique on line site like loyal3.com offer it as a IPO look closely at the prospectus and if it rocks your boat go for an allocation. No whining permitted though if it slowly falls well below the IPO price, however!
 
Joe
 

Hey Guys,

I am thinking about picking up some of their stock when they do their IPO.  I have an account on Sharebuilder but I have never tried to buy stock from an IPO.  I stayed far away from Facebook and Twitter.  Do I need to do anything special the day it comes out to buy it?  Can I just log into my Sharebuilder account and put in my order for their ticker symbol?

[RT45]

Peter, any chance LA can help advocate for investors in LendingClub to get in on Pre-IPO Lending Club stock for investment?

[SeanMCA]

why buy the stock when you can just invest in the loans on their platform?

[Bohb Daishi]

Exactly ... the institutional investors who get shares at a fixed price before hand try to create buzz around IPOs so they can sell into a first day "pop".  There is very little advantage for a regular Joe with an online brokerage account to rush into buying a stock on the first day of trading, unless you are day trader and counting on a stock to build momentum through out the day, and then sell for a quick profit.  If you are a long term investor, I'd rather buy a stock with a good track record than an unknown.

I know right! Those suckers who bought Facebook on Day One are probably STILL kicking themselves.

You forget that, unlike most IPO's, Facebook wasn't limited to investment banks and their clients. Anyone could get into that IPO. Heck, an old brokerage account I had with Etrade that has had a $0 balance for the last 5 years even got an IPO offer.

[GS]

I didn't know that about Facebook and Etrade, but it appears that Facebook did give Etrade a small allotment to sell to their retail customers pre-IPO.  I'm not sure if any other online brokers were included.  The article I found did not mention other brokers.

[Fred93]

Tried to figure some valuation for LC.  Difficult, because the numbers are changing so rapidly.

2013 was the year they crossed over into profit, but  2014 will be the year that their profit increases drastically.  Could be 10x year over year.  This is a natural result of having just crossed over into positive numbers, and having a small profit in 2013.   ...and presuming revenue continues to grow.  Its almost a divide by zero situation.

Therefore, it seems to me that there is a strategic advantage to having the IPO later in 2014, after they can report a couple of quarters of radically increasing profit.  Those numbers would look quite dramatic in the red herring, and would justify a much higher price.

I had been expecting an IPO in early 2014, but now I'm thinking later.  An early 2014 IPO might get a valuation of $3B, but one later in the year could be $6B or something.

PS: I'm not an IPO pricing expert. 

[bobeubanks]

E*Trade has offered IPOs to retail investors since at least the dot com bubble days. You apply and there is a lottery to see who gets the shares. There isn't any restriction on account size to be eligible. Number of shares is limited; certainly the big boys still have an advantage through the normal exclusive channels. I get occasional invites, usually the offerings aren't too exciting to me. I have no idea if Etrade will participate in LCs IPO.

[Fred93]

Article in the Financial Times today about Lending Club valuation.
http://www.ft.com/intl/cms/s/0/fe75cbd6-c651-11e3-9839-00144feabdc0.html

They took in some more private money at a higher valuation, so to set the stage for IPO at an even higher value.  My goodness...

April 17, 2014 6:26 pm
Lending Club valuation rises to $3.76bn

By Arash Massoudi in New York and Richard Waters in San Francisco

Lending Club, the largest peer-to-peer loans company by volume, has reached a valuation of $3.76bn after raising new funds to make its first acquisition of a more traditional finance company.

The San Francisco-based start-up paid $140m in cash and stock to purchase Springstone, which provides offline financing for elective medical procedures and private school education, as it races to expand into new markets ahead of an initial public offering.

The latest escalation in Lending Club’s valuation, up from a reported $2.3bn in November and $1.6bn when it raised money a year ago, puts it among a group of fast-growing internet companies that have seen their values soar in recent months as mutual fund groups, hedge funds and private equity firms crowd into the venture capital market ahead of expected IPOs.
...