Your Investment Queries

Investment Queries

A question by J.H., from Los Angeles, stated how he read about the shares of Beyond Meat going down due to its “IPO lockup period”, and asked what it was.

The answer read how it is usual in initial public offerings (when firms initially issue stock to investors) for investors in possession of shares to not be permitted to sell the stock for a particular time period following the IPO. This time period ranges from 3 to 6 months. This period is known as the lockup period, and its purpose is to ensure share prices are constant or increasing. Usually, after the end of the lockup period, stock prices fall and a couple of insiders begin selling.

Referring to Beyond Meat, when it reached the end of its lockup period, nearly 80% of the firm’s shares became open for trading. One day before its expiration, the firm released sturdy Q3 results. However, shares fell nearly 20% upon expiration.

A smart move would be to stay away, at least for the first year, from IPOs, and to allow shares to settle down by giving them time.

A question posted by D.L., Coventry, R.I asked what it means if a firm is said to be growing at a pace to fast to be profitable.

The answer read how a firm’s revenues are just what it is left following the subtraction of its expenses from its profits. However, it added, the expenses land, somewhat, under the firm management’s control.

For instance, if a firm wishes to grow speedily, it may spend most of its money on recruiting more employees and its marketing. The firm may even lessen its prices to attract more number of clients. Doing so will cause its profits to diminish and may pave way for losses.

 

 

 

Shreyas Tanna

About Shreyas Tanna

The winner of Mr. Pune 2009 Pageant, Mr. Shreyas Tanna is currently the young, dashing, and dynamic CEO of a market research company called Research N Reports in Pune. Fondly known as RNR, the company specializes in market research as well as industry analysis, and is closely associated with its parent company Absolute Markets Insights (AMI). Mr. Shreyas Tanna began his corporate journey as the Head of Corporate sales & PR at RED Entertainment while pursuing his degree for MMS (Marketing) from the MGM College of Management, Mumbai. After accomplishing the tedious task of balancing his work and education, he further polished his skills in Corporate Sales, Public Relations, Channel Development, Global Client Engagement, Strategic Consulting, and Brand Development by working with HDFC Life and ResearchMoz Global Pvt. Ltd. His dedication towards his work has even won him accolades such as the National Level Performer 2013 – HDFC Life and Mr. ResearchMoz 2015. A disciplined individual with a loving heart, he is often seen taking crisp walks with an engrossed look and a gentle smile within the premises of his company to interact with the various departments. And he will be usually followed by an adorable trail of his beloved trio of Shih Tzu babies proudly known as Gucci, Drake, and Paris. The most enticing thing that you will notice about this content and proud pet parent is his infectious positivity and the firm belief in his eyes, a reflection of his favorite quote, “LIFE IS BEAUTIFUL!”

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