Hype and Promotion: Companies create excitement around their IPOs, leading retail investors to buy at inflated prices without proper research, driven by fear of missing out (FOMO).
Overvaluation: Many IPOs are priced high based on optimistic growth projections. If the stock price drops post-IPO, investors may find themselves stuck with losses.
Lock-Up Periods: After the IPO, insiders often can’t sell their shares for a set period. Once this ends, a flood of shares can lead to a price drop, trapping retail investors.
Lack of Exit Options: Investors may hesitate to sell at a loss, hoping for a rebound that might not occur, further entrenching them in losing positions.
Poor Post-IPO Performance: Newly public companies may fail to meet growth expectations, causing share prices to plummet and leaving retail investors feeling misled.
Emotional Decision-Making: Investors often make impulsive decisions based on market excitement rather than analysis, leading to poor investment outcomes.
In summary, the combination of hype, overvaluation, and emotional investing can trap retail investors in unprofitable IPOs. Conducting thorough research and maintaining a disciplined approach is essential to avoid these pitfalls.
By aartimehra184@gmail.com 
