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

*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.