In 1999, I worked at a firm that flipped IPOs.
It was a side business, and it was simple. Any tech company going public back then shot up out of the gate. If the offering price was $80, the stock opened at $120.
We got the stock at $80 because we had the connections and a huge pool of capital from a wealthy individual behind us. The stock opened at $120, and we sold. We never had to hold it for any period of time.
The Retail Client Gets Whatever’s Left
Now Anthropic is coming public. Pricing is expected next week, at a reported valuation around $1.5 trillion. It would be only the second IPO ever valued at more than a trillion dollars.
And I’m going to tell you something about this deal. Everybody’s in on it.
Goldman Sachs and Morgan Stanley are leading it, and JPMorgan is reportedly running the U.S. retail side. Pretty much every venture capital and private equity firm out there owns a chunk. The whole tech world is in on it.
In every big IPO, one of the banks acts as what’s called the stabilization agent. If the stock starts to fall, its job is to step in and buy so it doesn’t fall too far.
You’re like, wait a second, isn’t that propping it up? Yes. It’s exactly what they’re there to do.
So there’s not a single firm in this deal that’s ever going to come out and tell you to short it. Everybody’s on the same side of the trade.
I’m not hugely bullish or bearish on Anthropic. I don’t want skin in that one.
But I want you to understand where you sit. You’re not getting the pre-IPO price.
Say it prices at $80 and the first trade is $95. The people who got it at $80 can sell for a quick $15. You’re the one buying it from them.
Don’t listen to anything but what you believe. In an IPO, there’s no conversation.
Wait For The Scare
Most retail traders buy when it feels safe, when the headlines are loud and the stock looks great. You’re paying full price right there.
Funny enough, my guest tomorrow spent 14 years on a J.P. Morgan trading desk, rising to vice president. And she does the opposite. She waits for what she calls the dunk, the scary drop most traders run from, and it’s when she starts paying attention.
Tomorrow, Thursday, November 12 at 2 p.m. ET, she’s joining me for a free live training. She’ll walk through every one of her dunk trades from June through October, 12 winners and 4 losers, plus one setup she passed on and why.
To your success,
Don Kaufman
