Is It Better to Invest in Tech Unicorns Before They Go Public? ICYMI
Many want to get a piece of the latest hot tech stock, but the best time to invest may be before they go public.
Private Tech Growth Outperformed Dow Jones Tech
Late stage, venture capital-backed private tech companies outperformed not only the S&P 500, but also the Dow Jones Tech index in the fourth quarter of 2018, according to SharesPost, a liquidity provider for investors in hot private companies. The SharesPost U.S. Private Growth Index rose 10.9% in the fourth quarter of 2018, while the S&P 500 fell 14% and the Dow Jones Tech Index fell 17%.
Of course, the global equity market saw a tremendous correction during that time, so outperforming those indices wasn't exactly difficult, but the private index still smoked the public markets. And of course, the S&P 500 and big public tech companies can be incredibly volatile, as public and highly liquid markets are extremely reactive to news, events and changes.
Related.Lyft's Valuation Is Huge -- How Tech Stocks Soon to Go Public Are Valued
"This wide variance in performance and the uncorrelated, double-digit returns are a reason capital is flowing into this asset class," wrote SharesPost analyst Alejandro Ortiz in a note Wednesday.
Many of these unicorns see their share prices pop immediately upon their debut but now always after. Lyft (LYFT) - Get Report rose to $87 on its first trade, well above its offer price of $72 but now stands at just under $60. Snap (SNAP) - Get Report rose to $27 on its first day of trading in March of 2017, from its offer price of $17, but now trades at under $12. Pinterest and Zoom go public on Thursday, and Uber hits the public market soon this year.
Related. Real Money Stock of the Day: A Primer on Pinterest
One caveat, though -- you need to be an accredited investor to buy and sell assets on SharesPost, meaning you have at least $1 million in assets, or $200,000 in annual income.
Qualcomm and Apple
Qualcomm (QCOM) - Get Report , RealMoney's stock of the day, and (AAPL) - Get Report have agreed to settle their bitter royalty dispute and initiate a new six-year deal for Qualcomm to supply chips for Apple's iPhones. RealMoney's Kevin Curran points out that Qualcomm supplying Apple's iPhones makes 5G a surer bet, since it was unclear if Intel (INTC) - Get Report would have been able to supply the necessary chipsets in time for a 5G iPhone in 2020.
Related.Apple Can Accelerate 5G Shift, Share Growth With Qualcomm
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