As with any investing, buying shares in an IPO comes with risks (and benefits). During an IPO, you're buying a slice of a company before it's had a chance to hit the market. This means the share price hasn't been subject to market valuation and because share prices are driven by supply and demand, you won't know if there's low or high demand for shares in the company.
It can be difficult to predict the share price on its initial day of trading or near future because there's often little historical data to analyse the company. Also, most IPOs are for companies going through growth periods (which is why many are raising money through an IPO in the first place!), and there can be uncertainty about their future value. And there are plenty of IPO examples where companies traded below their IPO price. (note: you may not be able to sell any shares you buy during the IPO for up to 5 business days after a company is listed on the US share markets - but you will be able to buy more shares).
While a company’s prospectus can make for intense nighttime reading (some coming in at around 200+ pages!), to fully understand all of the risks, you'll want to have a look, do your own research and have an IPO plan before committing a significant amount of your hard-earned money.
Note: One risk we do know about is the risk that Hatch will run out of our IPO share allocation and close share requests early. Due to strict IPO laws, we’ll only email you updates (and let you know as soon as IPO share requests open) once you’ve signed up to Hatch and added an upcoming IPO to your watchlist.
Learn more about IPOs
How to participate in IPOs with Hatch