IPO Wrap: Debunking some common myths of IPO investing, and upcoming listings on the ASX

An IPO could be an excellent way to get in early and make profits
But here’s some mythbusters of investing in IPOs
We also look at the best performing IPO recently, and what’s in the pipeline

Investing in an IPO can be an excellent way to potentially maximise your chances of lucrative returns.

But just because there’s significant media buildup around an IPO stock, it doesn’t mean that it will translate into a favourable investment.

Some experts say that an IPO may actually be better suited for investors with longer-term horizons who are willing to hold their shares, rather than those who flip them for a quick buck.

What’s really important then is for long-term investors to fully understand the misconceptions, as well as the opportunities, around investing in IPOs before buying the stock.

“Not all IPOs are proven to be long-term winners. In fact, while many IPOs have flourished, the company path toward financial greatness is littered with failed IPOs,” said Terry Sandven, chief equity strategist at US Bancorp.

US Bancorp has released a report dipping into some of the common myths surrounding IPOs that investors should be aware of:

Myth 1: If the public is excited about an IPO, I should invest

According to US Bancorp, this is the biggest mistake for most IPO investors.

“You shouldn’t invest in an IPO just because the company is garnering positive attention,” said the bank.

“Investors should keep in mind a company issuing an IPO lacks a proven track record of operating publicly.”

Further, the bank said competitive landscape of the market could affect an IPO’s performance.

“These factors, and others, could negatively affect the success of an IPO and complicate an investor’s decision.”

Myth 2: Investing early into an IPO will give me higher returns than waiting

Not always, said Bancorp, adding that newly public companies are often categorised as high risk and volatile, as they lack a proven record of operating in the public domain.

Historically, financial results from investing in IPOs are mixed and not all IPOs are proven to be long-term winners.

Myth 3: If a company is going public, it must be financially stable

The future is filled with uncertainties, and the future stability and predictability of any company is always uncertain.

“A company’s fortunes are often contingent on factors beyond its control,” said Bancorp.

“For example, many factors — such as the pace of global growth, tariffs, government regulation and stage in the economic cycle — could work against a company.”

Myth 4: Investing in an IPO gets me in on the ground floor

This is only partially true, because in reality, before going public, companies have likely gone through a few rounds of private investment.

“This means IPO investors aren’t the first to have access. Rather, they are among the first public owners of a company,” said Bancorp.

It’s important to note that there will likely be a difference between the IPO offering price, and the price an individual investor will pay for the stock once the shares start trading on an exchange.

“The offering price, announced ahead of the IPO, is a fixed price only reserved for institutional investors, employees and investors who meet certain eligibility requirements,” said Bancorp.

On to the ASX…

Here’s how the 2023 ASX IPOs are performing

Swipe or scroll to reveal the full table. Click headings to sort.

Code Name IPO Price Current Price Return Market cap Listing date JBY James Bay Minerals 0.2 0.4 100% $12,978,000 12/9/2023 GHY Gold Hydrogen 0.5 0.925 85% $48,384,570 13/1/2023 CC9 Chariot Corporation 0.45 0.7 56% $51,332,098 30/10/2023 GDM Great Divide Mining 0.2 0.28 40% $7,630,000 18/10/2023 PLN Pioneer Lithium 0.2 0.28 40% $7,390,500 28/9/2023 GR8 Great Dirt Resources 0.2 0.25 25% $7,034,690 10/11/2023 NVO Novo Resources Corp 0.2 0.215 7% $8,325,846 11/9/2023 TOK Tolu Minerals 0.5 0.52 4% $30,555,639 10/11/2023 DYM Dynamic Metals 0.2 0.2 0% $7,000,000 16/1/2023 ACM Aus Critical Mineral 0.2 0.195 -3% $10,703,250 3/7/2023 RDX Redox Limited 2.55 2.46 -4% $1,281,198,684 3/7/2023 NDO Nido Education 1 0.96 -4% $210,720,003 16/10/2023 HTM High-Tech Metals 0.2 0.19 -5% $4,702,783 23/1/2023 LM1 Leeuwin Metals 0.25 0.235 -6% $10,524,475 29/3/2023 COV Cleo Diagnostics 0.2 0.18 -10% $13,299,750 22/8/2023 ILT Iltani Resources 0.2 0.17 -15% $6,121,891 30/6/2023 CHW Chilwaminerals 0.2 0.165 -18% $7,798,750 5/7/2023 NGX NGX 0.2 0.16 -20% $14,497,894 16/6/2023 EG1 Evergreen Lithium 0.25 0.19 -24% $10,683,700 11/4/2023 ASK Abacus Storage King 1.41 1.05 -26% $1,379,808,110 1/8/2023 PL3 Patagonia Lithium 0.2 0.14 -30% $6,860,490 31/3/2023 CVB Curvebeam Ai Limited 0.48 0.335 -30% $61,259,438 23/8/2023 SQX SQX Resources Ltd 0.2 0.13 -35% $3,250,000 20/2/2023 CGR CGN Resources 0.25 0.16 -36% $14,978,402 18/10/2023 AUG Augustus Minerals 0.2 0.125 -38% $10,255,625 25/5/2023 DY6 Dy6 Metals 0.2 0.095 -53% $3,663,437 29/6/2023 VHM VHM 1.35 0.55 -59% $84,653,869 9/1/2023 ADC Acdc Metals Ltd 0.2 0.078 -61% $3,534,188 17/1/2023 ACE Acusensus Limited 4 0.76 -81% $95,873,981 12/1/2023

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*Note: there was a 5:1 stock split for ACE

The best IPO this year has been that of James Bay Minerals (ASX:JBY), with its share price doubling since debut.

James Bay recently announced further elevated lithium readings using LIBS detectors identified at the prospective Aero property at its flagship La Grande project in Canada. Assays were sent to the lab for confirmation, and exploration is ongoing to understand the full extend of the pegmatite system.

Meanwhile, there were two new IPO listings over the last couple of weeks.

Great Dirt Resources (ASX:GR8) made its debut on November 10, and its shares closed the day 10% higher.

GR8 is set to tap manganese potential at its historical Doherty and Basin projects in NSW.

The company’s 168km2 exploration licence has produced both battery (74.3%) and metallurgical grade (46%) manganese oxide for two decades from 1940 to 1960.

The demand for manganese is expected to grow as it is steadily split between the more traditional steel industry, and the emerging battery sector, a trend market analysts see growing ninefold by 2030.

Now read: ASX newcomer Great Dirt Resources has projects with historical battery grade manganese production

Tolu Minerals (ASX:TOK) also made its debut on November 10, with its share price also rising by 10% on its first day as a public company.

The Papua New Guinea-focused Tolu is about to explore potential of the high-grade Tolukuma gold mine.

The Tempest Minerals (ASX:TEM)-backed company says it’s strategically positioned to participate in the renaissance of the PNG mining sector.

Upcoming ASX IPO listings

All dates are sourced from the ASX website. They could change without notice.

Far Northern Resources (ASX:FNR)

Expected listing: November 24
IPO: $10m at $0.20

North Queensland gold and copper play FNR is planning to drill down into the Empire Gold Project 34km west of Chillagoe inland from Cairns.

Explored privately by FNR since 2018, the project already has a resource of 820,000t at 0.85g/t for 22,500oz, 16,890oz of those in the indicated category.

Drilling is planned to upgrade indicated and inferred resources to measured and indicated levels and extend Empire both along strike and at depth 50-100m below surface. But the big prize could be if FNR can identify a large copper-gold porphyry.

Freedom Care Group (ASX:FCG)

Expected listing: November 30
IPO: $3.2m at $0.20

Freedom Care is a National Disability Insurance Scheme (NDIS) services provider head-quartered in Western Sydney that provides a full suite of allied health and care services to individuals accepted into the NDIS, predominantly in the greater Sydney area.

The Freedom Care business is now looking to expand both organically and by acquiring other NDIS providers.

The company says an ASX listing will allow it to pursue additional growth opportunities, including geographic expansion to areas outside of New South Wales and by expanding its current offerings.

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