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One of the best ways to invest in an IPO is by not investing in an IPO at all.
That’s because investing in IPOs is a coin flip.
One of my favorite flops was the Ferrari IPO flop in 2015.
Here was a $12 billion IPO rolling on to the showroom floor, oversubscribed 10 times over. Investors were excited. Anticipation was high. The press noted it could be a hot runner even though the company had just said net profits fell 34%. Unfortunately, the IPO was a flop. Shares would plummet from $60 to $33 in days. Millions of dollars were wiped out.
Then there’s your Amazon-type IPOs that just explode out of the gate and keep running.
There’s also the potential for Elon Musk’s SpaceX to raise more than $25 billion in 2026, and would reportedly include Starlink, SpaceX’s satellite-based broadband service, and continued progress in its ambitious Starship program aimed at lunar and Mars missions.
Unfortunately, it’s that coin flip that makes IPO investing terrifying for many investors.
While you can always take your chances with a bet on an IPO, there are easier ways.
One, invest in the First Trust US Equity Opportunities ETF (SYM: FPX)
With an expense ratio of 0.61%, the FPX tracks hot IPOs, giving investors access to new stocks during their initial, most crucial days on market. By buying it, not only can you avoid paying gobs of money for IPOs that may or may not work out, but you’re also being exposed to multiple hot IPOs at the same time at lesser cost.
In fact, even with some of the most obnoxious IPO failures, the ETF managed to run from a 2009 low of around $11 to a recent high of $171. It’s a safer alternative than risking your hard-earned money to another potential coin flip.
With the FPX, it doesn’t matter if the stock is hot or a dud, the excitement surrounding IPOs continues to send the FPX to new highs.
Or, you can use the Renaissance IPO ETF (SYM: IPO)
With an expense ratio of 0.6%, the ETF provides “investors with the largest, most liquid US-listed newly public company stocks in one security, reducing the risk of single-stock ownership while avoiding overlap with major core indices for optimal diversification across markets and time,” as noted by Renaissance Capital.
Since November 2023, the ETF rallied from a low of about $30 to its current price of $48. From here, we’d eventually like to see the ETF rally back to $60 a share, which it last tested in 2022.
Must Read Spotlight: Optimus Buy Alert
Now that Elon Musk is racing to launch his Optimus robot masterplan...
...which he claims will be mind blowing and could make him the world's first trillionaire, starting in early 2026...
One of the world's most respected financial research firms just issued its official Optimus Playbook.
All 10 of the biggest money managers in the world have followed this team's work, including professionals from huge names like Goldman Sachs and JP Morgan.
Since the start of last year, you could have doubled your money TWENTY-THREE TIMES by following their buy calls.
And now, they're stepping forward with a dramatic Optimus prediction.
Put simply, the same Wall Street insiders who predicted the 2008 and 2020 crashes say millions of investors are about to miss a huge opportunity to see 1,000%+ gains from the Optimus launch.
But it's not Tesla stock they're pounding the table on today...
It's THIS widely unknown stock.
Just keep in mind...
Elon Musk is rushing ahead with his Optimus plans – ahead of a full scale launch anticipated in 2026.
Which means your window of time to buy this stock is closing fast.
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Written by Ian Cooper
