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BUSINESS Friday 5 april 2019
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IPWhoa: What to know before joining this year’s IPO parade

By STAN CHOE To be sure, companies go- One ETF focuses specifical-
Associated Press ing public today tend to ly on recent IPOs. The Re-
We use Uber to go places, be much more seasoned. naissance IPO ETF will add
Slack to chat with co-work- Since 2008, the median Lyft shares later this week,
ers and Pinterest to save age for an IPO company and it tracks an index that
our favorite ideas. Why not has been at least 10 years. holds companies that
own a piece of these com- That’s roughly double the have had an IPO within the
panies that increasingly age of the typical compa- last two years, giving more
dominate our daily lives? ny going public in 1999 or weight to the bigger ones.
That’s the question for 2000, at 5 or 6. Its returns have topped
many regular investors as With greater age often the S&P 500 over the last
a parade of well-known comes higher revenue. three years, although it has
technology companies are Last year, the typical tech lagged since its 2013 in-
expected to make their IPO made 10 times more ception.
stocks available to every- in sales than the median in Volatility has become part
one for purchase this year, 2000, even after adjusting of the reputation for IPOs.
not just big pension funds for inflation, according to “I think IPOs are the Rod-
and wealthy people. Lyft In this March 29, 2019, file photo Lyft co-founders John Zimmer, Ritter. ney Dangerfield of asset
was at the head of the line front third from left, and Logan Green, front third from right, cheer “IPOs are risky, but given classes,” said Renaissance
when it had its initial public as they as they ring a ceremonial opening bell in Los Angeles. the track record of tech Capital’s Smith. “Every-
offering of stock, or IPO, on Associated Press over the last 10 years since one who wants to feel like
Friday. price of $72. ter over the long term, no- the recession, they’ve been they’re conservative or
It’s tempting to buy stocks A stumble after a first-day tably those that bring in the shining stars, they’ve smart picks on IPOs, saying
of companies whose prod- pop perhaps should not more revenue. Since 1980, been where the growth ‘Don’t go there.’”
ucts or services we see or have been a surprise, given companies with $1 billion is,” said Karyn Cavanaugh, But she said IPOs today
use so often. But “investing the track record for IPOs. or more in revenue (in 2015 senior markets strategist at are different from 1999
in what you know” doesn’t Here are some consider- dollars) have returned an Voya Investment Manage- and 2000, with more rigor
mean buying Uber be- ations if you want to join average of 42.7% in the ment. around researching them.
cause you request a ride the IPO rush, which may three years following the WHAT IF I DON’T LIKE BUY- “If you want to focus on this
every other day. It means include such companies as IPO. That’s better than the ING INDIVIDUAL STOCKS? and feel you can tolerate
knowing whether Uber will Uber and video-conferenc- market. One of the biggest trends the volatility, you can get
get enough customers at ing service Zoom. Smaller companies, mean- in investing over the last de- outsized returns,” she said.
high-enough prices to be- DO IPOs PERFORM WELL? while, have historically had cade is the move toward Even so, market strategists
come profitable, and at Yes and no. better first-day gains than index funds. Picking stocks say average investors ea-
what level. The first day of trading for their bigger IPO rivals but on one’s own — or trusting ger to snap up shares in the
“Don’t jump in with both an IPO is often a great one, go on to return an aver- a fund manager to do it — latest IPO would do well to
feet just because you use when enthusiasm is surging. age 20.2% over three years. can be risky and expensive. skip the frenzied early days
the product,” said Kathleen IPOs have returned an av- That’s well below the mar- Instead, investors are flock- of trading and buy later, or
Smith, principal at Renais- erage of 17.9% in their first ket. ing to index funds that own wait until the stock makes
sance Capital, which re- day of trading, according WHAT ABOUT THIS CROP OF baskets of many stocks, its way into an index fund.
searches IPOs. “You’re not to data from 1980 to 2016 IPOs? While Lyft, Uber and such as all those in the S&P “If these companies are
going to know the value.” compiled by Jay Ritter, an other upcoming IPOs are 500 index, and generally going to stay around and
Lyft gave investors a les- IPO specialist at the Univer- big names, many of them come with low fees. be good investments, they
son in how quickly a com- sity of Florida’s Warrington lose money. It’s a grow- IPO stocks eventually filter will be in the future,” said
pany’s market value can College of Business. That ing trend. Last year, about into index funds. Dropbox, Tom Martin, senior portfo-
change. The ride-hailing would count as great year eight of every 10 compa- for example, had its IPO lio manager with Globalt
company’s stock surged for an S&P 500 index fund. nies going public were un- last year, and its shares are Investments. “Let the hype
more than 20% from its IPO But IPOs go on to return an profitable, according to already in more than two go out. Be an investor, not
price on Friday. But by the average of 21.9% in the Ritter. That’s the highest dozen ETFs, such as Van- a gambler.”q
first hour of Lyft’s second three years following their percentage since 2000, guard’s Total Stock Mar-
day of trading, the stock IPO, lagging the market. the height of the dot-com ket ETF and the iShares Ex-
had fallen below the IPO Some IPOs tend to do bet- bubble. panded Tech Sector ETF.

Target raises its minimum wage to $13 from $12

By ANNE D’INNOCENZIO and raised its starting hour-
Associated Press ly wage to $11. In March
NEW YORK (AP) — Target is 2018, it boosted hourly
raising the minimum hourly wages to $12 after seeing
wage for its workers for the a bigger and better pool of
third time in less than two candidates.
years. With unemployment near
The discounter said Thurs- rock bottom, retailers are
day it plans to raise the under pressure to find
hourly starting wage to $13 qualified workers. In Octo-
from $12 in June. ber, Amazon announced
The Minneapolis-based re- a minimum hourly wage of
tailer announced in 2017 $15 for its U.S. employees.
In this Nov. 16, 2018, file photo Target employee Lindsay Walker a plan to raise its starting Walmart raised its starting
scans an item as she collects merchandise from shelves to prep
them for an online order at a Target store in Edison, N.J. hourly wages for workers pay to $11 an hour in early
Associated Press to $15 by the end of 2020 2018.q