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How Do I Choose the Best Communications IPO?

Geri Terzo
By Geri Terzo
Updated May 17, 2024
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The more that communication products become integrated into the lifestyles of people, the greater the potential for a communications initial public offering (IPO). Investors tend to use many of the devices and services that are offered by the communications industry because this market is often a consumer-driven segment. Uncovering trends in media and mobile communication and spotting businesses with growing revenues could lead to an investment opportunity. Mobile phones, laptop computers, as well as music and entertainment providers, are all products of the communications sector.

Communications stocks are strengthened with the emergence of mobile technology, wireless Internet, and the use of mobile phones for purposes beyond just chatting. Mobile phones are used to send instant text messages and allow a host of other applications. The greater a presence that mobile networking has on society and the more people rely on instant communication, the better the results an investment in this industry, such as a communications IPO, will produce.

Sometimes, the best communications IPO is the one that investors have access to. Stock brokerage firms develop relationships and partnerships with investment banks that underwrite IPO deals. Learning which IPO investments may be available to individual investors is an important step because new issues are often dominated by large, institutional investors.

Investing in a new issue is always a risk. Stock is being issued in the public markets presumably for the first time, and there is no real guarantee of what investor demand will be like. Comparing a communications IPO to competing businesses that already trade in the public markets is one way to set expectations for the type of growth to expect. If there are any known weaknesses in a new issue, read through the public filings to learn what the company may be doing to address those concerns. Reading IPO reviews as set forth by the financial analyst community, opinions that are sometimes available through a stockbroker, business television, or in a financial publication, will add another layer of perspective to a potential investment.

One colossal failure, such as a corporate bankruptcy, that unfolds in an industry could ignite negative sentiment around a group of stocks. Wait until the communications sector is in favor with investors and there appears to be more than one communications IPO coming to market. Once an investment is selected, purchasing shares before the new issue comes to market through a stockbroker that has access to the communications IPO could lead to obtaining shares at a discount before the stock begins trading more expensively.

Not every communications IPO that is worth considering is behind the familiar brand that is marketed with a product. Technology companies are integral in the research and development of mobile devices. Semiconductor companies that make the chips that go inside the hardware of wireless devices may present just as great a new investment opportunity as the companies that design the product. Similarly, networking companies make the Internet possible in mobile devices and can similarly ride any upward momentum in the communications sector.

WiseGEEK is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

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