The distribution giants have always offered juicy markets that many are snapping up. However, are they still the panacea? Are there any hidden nuggets? Here are some considerations to take along on your way to the Gold Rush.
A story of unicorns
This great-looking animal is an auspicious appearance, at least in most cases. A company valued at over $1 billion and not yet listed on the stock market. A unicorn offers unparalleled ROI potential to anyone who is well advised to spot it. The currency to measure this threshold indicates that it happens in dollars: The United States is indeed the country that concentrates nearly half of these small phenomena. It is, therefore, a good practice to follow the strings of the American stock market.
Globally, unicorns are worth more than two trillion dollars. A beautiful cake is divided as follows, based on a graphic from statista.com, as of April 20, 2021.
To maximize your earnings and to stay up to date in the world of finance, you need to know how to keep your eyes open and understand the mechanisms at work that underlie the markets of tomorrow.
More and more, tangible returns on investment come before a company is listed.
In view of some setbacks, such as the once all-powerful Uber, the unicorns are trying to delay their Initial Public Offering (IPO) as much as possible. Lately, it is the British company Deliveroo which, eight years after its creation, failed its IPO at, end of March 2021.
The trend, therefore, widened a good ten years before the plunge into the stormy waters of the Stock Exchange.
Knowing this, how do you identify and invest in promising companies about to open their participation to the general public? There are several methods, including:
The strength of the network, i.e., in-depth knowledge of the market thanks to the information exchanged between financial market players. It still works and also requires an investment of time.
Buy stakes in successful start-ups using funding platforms such as OurCrowd. This option is by far the riskiest and requires extensive research into the organization that will be the chosen one in your portfolio.
Hand over the placement of your money to your banker or broker.
Call on a professional partner with expertise in the field – continued in the next paragraph.
Where the unicorn shares its enclosure
To not put all your eggs in one basket, the best solution to guarantee stability and profit for your investments is to diversify them.
As we saw above, relying on the exponential growth of a newly listed company is equivalent to taking a big risk. Nothing can predict the fall or, on the contrary, the spectacular rise of the first weeks and months of a unicorn entering the stock market.
In this logic, it will always be better to bet your tokens on giants with established roots such as Amazon or LVMH. For the first, the Covid-19 crisis has catapulted its revenues, while the second is going through the crisis unfazed.
You will be able to reserve a proportion of your investment for investments in newly launched companies on the stock market. So how can we have it both ways?
This is possible with retail brokerage experts giving you the opportunity to invest in many companies before going public. Thereby, Freedom Holding Corp. (FRHC), present on the NASDAQ, offers investors engaged in the retail market to buy shares of companies preparing to go public in the following weeks or months.
Other platforms like Fidelity and E * TRADE offer similar services.
To mitigate the risk of a possible route following the IPO, it suffices to resell your securities in the following months to obtain good results in record time. You can only do this by finding unicorns whose billion-dollar valuation is realistic. This is where you will need advice from experts familiar with these specific markets, as there are so many overvalued unicorns.
Of the unicorn who makes ends meet
Expert in the field of distribution, you are already a little by the long-term titles that you hold in this segment. So what could be more natural for you than to also have assets in unicorns in the distribution market?