Every year in the United States, hundreds of companies go public and file IPO registration forms with the Securities and Exchange Commission (SEC).
The sheer amount of IPO filings can confuse and intimidate potential investors because they may not even know where to begin or how to find the best IPO filings. This is especially true when the economy is thriving due to the dramatic increase of companies going public, demonstrated with 1,035 going public in the US in 2021, but when the economy was suffering, that number dropped to 134 in 2022.
When analyzing companies that are currently being publicly traded, there are 2 forms that the SEC requires to be filed before an IPO can occur, depending on whether the company is nationally based or not.
If the company is based in the U.S. and wishes to be listed on an American stock exchange, then it must only file a Form S-1, which contains a Prospectus with information about the company including:
- Financials
- Risk factors
- Business model
- Legal issues/proceedings
If an international company wishes to be listed on an American stock exchange then it must file a Form F-1 in addition to a Preliminary Prospectus. A Form F-1 is extremely similar to a Form S-1, but instead, it is designed for foreign issuers.
A List of IPO filings can be found and researched by investors. The IPO filing process can be very tedious and is only beneficial if a potential investor knows exactly what company will be going public soon. Knowing every company that will soon be publicly traded by looking through the EDGAR database is extremely unlikely, which is why there have been new and better ways to discover this information.
This blog post will walk you through step by step one of the most efficient processes available to find the best IPO Filings that hit the market.
1. Discover What Companies Have Recently Filed IPO Forms
Most often companies will begin trading 1 day after their Form S-1 Registration Statement, has been deemed effective by the SEC. The process to file the S-1 and make adequate preparations with investment banks typically takes 6-9 months after its first initial filing, meaning it has undergone multiple rounds of comments and changes. This is a quick turnaround for the company, which is why it is very important to know right away what companies are about to be publicly listed.
Utilizing finance-specific and filing websites, like SECFilingData.com is very beneficial for keeping up to date with recent changes and potential additions to new IPOs on Nasdaq and NYSE. Additionally, news sources like Yahoo Finance, CBS Finance, and Google Finance News publish articles about exciting companies that are expected soon to be listed.
It is important to note that most times, these companies will only alert the public and write articles if a large or recognizable company is having an IPO; therefore, the information regarding IPO filings that the news agencies would provide to a potential investor are extremely limited.
For a more comprehensive list of each company that has filed an IPO Registration Statement, there are dedicated platforms such as SECFilingData.com. SECFilingData.com includes all of the company’s filings and states the name of any company, what the company does, a list of insiders, and the location of its headquarters that have recently filed a Form S-1 or Form F-1 as well as the date it was filed.
2. Analyze All IPO Related Filings For The Selected Company
Once you have learned about what companies have filed their registration statement and are planning to soon go public, it is now necessary to perform an in-depth analysis of the IPO-related forms the company has filed. These forms include the Preliminary Prospectus and Form S-1. These filings will allow a potential investor a brief insight into a company’s overall position both operationally and financially, as well as its standing in the marketplace.
All of the IPO-related filings can be found on the SEC’s database EDGAR. Once the potential investor knows exactly what company is soon to be public, they can find the necessary documents by entering the company’s name in EDGAR’s search bar and clicking on the Preliminary Prospectus and S-1.
Once an investor has pulled up the selected filings, they now can begin to perform analysis and look for the desired traits within the registration statement. This includes:
- A minimal risk factor section
- Company’s legal proceedings
- Consistent and strong financial performance
- Detailed description of the intended use of proceeds gathered from the IPO
All of these metrics can be discovered in Form S-1 and they are typically a good indicator of a company’s potential future success and should be looked for by possible investors.
3. Perform Research Beyond The Information Stated In The Filings
The information included in IPO-related filings is the minimal amount required by the SEC. Oftentimes, companies only share with the public the information that they are required to share. This means that the information provided does not depict the entire story of the company and the market it is currently located in.
Beyond performing an analysis of the IPO registration statement and the Preliminary Prospectus, individual research needs to be performed by looking at the industry breakdown, public perception, and market size.
All of these metrics can drastically influence a company’s stock price, especially at an IPO where the stock price is at one of its most volatile points. None of this information is included within IPO filings, yet it is extremely necessary for a potential investor to be aware of it in order to make a correct decision and identify which ones are the best IPO filings.
Takeaways
Finding and identifying which of the hundreds of IPO filings are the best ones is a very difficult task. The best IPO filings are ones that alert potential investors of a company in strong financial standing that is posed to take the market by storm with the possible dramatic increase in capital. These great filings allow the public to determine whether or not the company’s share price is more likely to increase after the IPO launch.
Determining whether or not a company’s IPO filings are good goes far beyond just the information that is included in the Form S-1 and Preliminary Prospectus. Instead, what makes a good IPO filing is when in conjunction with positive financial performance demonstrated within the SEC filings, there is a positive public perception of the company, market control, and a limited number of competitors.
All of these things can only be discovered through expanding the focus of analysis past the files.
Ultimately, keeping up to date with all the new companies that will be publicly traded is the most important step of the process. Understanding the relationship between the information in SEC filings as well as beyond them is vital to comprehending how good filings are identified.
The best IPOs typically contain minimal debt and expenses, high and consistent revenue, minimal competitors, a great business model and products, market control, and a high public perception.