IPO Risk Factors & Investment Safety
Understanding and managing IPO investment risks
IPO investing involves several key risk factors. Market risk occurs when overall market conditions decline, affecting stock prices. Company-specific risk includes execution risk if company fails to meet growth projections. Liquidity risk means newly listed stocks may have trading volume volatility initially. Regulatory risk involves unfavorable regulatory changes impacting business. Competitive risk occurs if company faces increased competition or market share loss. Technology risk applies to tech companies facing disruption. Valuation risk means the IPO price may be overvalued relative to peers. Lock-in expiry risk causes selling pressure when promoter/employee lock-in periods expire. Sector cyclicality affects cyclical businesses during downturns. Read RHP risk factors section carefully. Diversify IPO investments across sectors. Invest only amounts you can afford to lose. Use fundamental analysis before bidding. Monitor quarterly financial results after listing.