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How to Determine If a New IPO Is Worth the Risk Phil Town advises to pump the breaks a bit before investing.

By Phil Town

Opinions expressed by Entrepreneur contributors are their own.

In this video, Entrepreneur Network partner Phil Town explains the pros and cons of investing in an initial public offering (IPO). In order to determine if you should invest in an IPO, consider the following:

  1. Is it worth the price?
  2. Will the price plummet? Uber and Lyft's stock prices took extreme dips after they went public in 2019.
  3. Are you prepared to bet on the unknown, considering there is no background information on the new company?

At the end of the day, Town says there is no harm in keeping a new IPO on your watchlist, but you should exercise logic and reason before you invest in it.

Click the video to hear more.

Related: Why Millionaires Don't Invest in These Things

Entrepreneur Network is a premium video network providing entertainment, ewitducation and inspiration from successful entrepreneurs and thought leaders. We provide expertise and opportunities to accelerate brand growth and effectively monetize video and audio content distributed across all digital platforms for the business genre.

EN is partnered with hundreds of top YouTube channels in the business vertical. Watch video from our network partners on demand on Roku, Apple TV and the Entrepreneur App available on iOS and Android devices.
Phil Town is an Investment Advisor, Hedge Fund Manager, 2x New York Times Best-Selling Author of Rule #1 & Payback Time, and Ex-Grand Canyon River Rafting Guide. Rule #1 Investing is Warren Buffett style investing, teaching you how to buy businesses on sale, with little risk and 15 percent returns. In fact, Rule #1 investing is practically immune to the ups and downs of the stock market.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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