The real question is, “Should I buy a stock during its Initial Public Offering (‘IPO’)?”

Two factors are issues which any investor should consider.  

First, the price of a stock tends to be high at its IPO.  Plenty of investors will bid on the stock.  Those investors will include a larger than normal group of people whose investing decisions are driven more by emotion than with regard to any financial analysis.  Those neophytes will drive up the price of a stock.

Second, the initial IPO price at which the stock is offered is based on a financial analysis of the company’s current and historic income statements and balance sheets (if you do not understand the value and importance of those two financial reports, learn them).  Once the stock is available for purchase on the open market, the thousands of investors who might buy the stock each do their own personal financial analysis, and based on that will then decide whether to purchase the stock.  

The graph shows the first week’s history of SpaceX stock trading.  On the first day of trading, June 12th, an initial spike occurred in the first hour of trading; then the stock declined.  A second, larger spike occurred in late morning, followed by a dip in the afternoon, before finishing the day with a reasonable gain.  That is a fairly reasonable progression of a stock’s pricing, with no real surprises.  Given the level of excitement surrounding SpaceX, that is almost surprising in itself.

The remainder of the stock’s first week, the 15th through the 18th, was pretty much a repeat of the trending on the 12th; albeit at a slightly higher price.

But none of that pricing trend is knowable at the moment you consider actually purchasing a stock. There is no way you can know whether all the little jiggles up are down are really just squiggles, or are just the beginning of a more radical price change.  

Sooner or later an investor has to just bite the bullet and buy (or sell).  

One option is to split your purchase (or sale).  Make half your purchase (or sale) at what seems an opportune moment, and then wait – hours, days, or even weeks, as appropriate – before making the purchase (or sale) of the remaining stock.  

One part of your buy (or sale) will be the best you could do, and the other half will be not as good.  

This is a very conservative practice, but it will reduce the tension and likelihood of ulcers without severely impacting your profits.  

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