I’m not normally a buyer of IPOs. But there are a couple coming out this month that I think I will throw a bit of money in.
I won’t go into a long discussion on what the companies do and their growth prospects. Their prospectus explains things much better than I could, such as their competitive strengths and risks. I’ll put the links below. I highly encourage you to read them if you are interested. I will just explain why I’m buying.
On my personal reasons for investing in Airbnb, they are disrupting the hotel industry. In effect, they are the largest hotel in the world by number of rooms. They should stand to benefit a great deal when travel reopens. Their business model is also easy to understand, and I have used it myself. While I’m not a huge fan, I know people who are. I’m also impressed by their resilience and out-of-the-box thinking during the pandemic, and it seems to have real staying power.
For C3.AI, it essentially helps enterprises develop AI applications, reducing the need for humans. I worked in corporate planning, and I understand the growing desire for management to replace humans with software and/or robots. Given the choice, my theory is that a CEO is much more likely to choose a robot to do the work over a human. The robot can’t complain, doesn’t take leave, and is cheap when you consider the long-term. The trend towards automation is also something I talked about when I said most people won’t be able to retire. AI and data is like crack for senior managements. They can’t get enough of it.
CS.ai is a bit more under the radar than Airbnb, a plus point in my book. I had hoped Palantir would be like that, but it had a massive pump and dump. Looking back, I would prefer that Palantir had continued to be under the radar for a long while, as I could have continued buying in at a reasonable price.
I won’t be investing too much into Airbnb and C3.ai at first, and I’ll tip toe in. IPOs are riskier and more unpredictable, but the rewards are also higher. The environment seems good for IPOs, and Palantir and Snowflake have tripled since IPO-ing in Sep 2020. I’m also likely to exit my small position in Facebook at about USD $18,000 to raise funds.
This is also just me giving a heads-up on what I’m interested in, and I wouldn’t call this a stock tip. I tend to be hesitant about making stock recommendations. I won’t know how exactly a stock would behave. All I can say is that I’m calculated my risk, and putting my own money in. Like everyone else, I cannot predict the future. My risk tolerance is also probably higher than average, and not everyone is the same. Situations where I make money could be the same ones which lose you money, simply due to arbitrarily timing.
Do your own due diligence and be safe.