Why You have to Pay Attention to the IPO Bubble
According to Mark Hawtin of GAM Investments, the prices recently reached by companies on their stock market debut are very high, but in the next wave of innovations there could be value…
The IPO rush did not stop in December with Doordash and Airbnb being the latest high-profile names to defy gravity with a price set at higher than expected levels, which was however eclipsed by trading on the first day of trading, able to register a peak greater than + 100%. There have been many comments that drew on the 2000 dot-com bubble, but while there are clear signs of irrational exuberance, unlike the unjustifiable valuations back then, today IPO-related and work-from-home stocks are a subset that fits into a much more rational assessment framework.
Mark Hawtin, Investment Director and manager of GAM Investments’ GAM Star Disruptive Growth, notes that the current landscape in this segment could prove particularly suitable for alpha generation in the next 12 months. The euphoria for IPOs, according to Hawtin, stems from the craze fueled by the digitization of everything, including online trading. Many are chasing the “hot” names that grow more and more, with little or no consideration for ratings. IPOs are an important part of this group and according to the GAM expert