I never thought I’d have the opportunity to buy into an IPO before it goes public. Why? IPO’s were always reserved for the Wall Street firms’ best (i.e. wealthiest) customers. Not for individual investors like me. Right?
Well, times have changed, and now certain IPOs are available to individual investors like you and me at Loyal3, at the same price as Wall Street.
Last week I was allocated shares of Dave & Buster’s (PLAY) on Thursday night at $16 per share, the day BEFORE the IPO. This is my Loyal3 IPO review for Dave & Buster’s.
Loyal3 IPO Review
I’m not a trader or short-term investor. Most of my pre-tax retirement money is in index funds and ETFs. I also maintain an active dividend growth portfolio as one of my multiple streams of income, along with real estate and P2P lending.
However, I was interested in PLAY to learn about the IPO process.
I opened a Loyal3 account and started buying stocks, fee-free, to get familiar with the interface. I’m also on the IPO email list. Loyal3 is a great investing platform for new investors, and for anyone that wants to accumulate shares at regular intervals using small amounts of money. The popularity of the platform is rising, especially with dividend growth investors. And why not? Dollar cost averaging over time with no fees is an easy strategy for constructing a quality income portfolio.
Once my account was in place and the first three positions initiated, I decided I would attempt to buy into the next IPO to learn the process. So when I received an email from Loyal3 indicating the Dave & Buster’s IPO was open for enrollment, I jumped on the opportunity.
As a source of reference, I’ve dedicated a page on this website to track the history of Loyal3 IPOs. Check it out here.
The Timing of Enrollment
Early in the week of September 29th, I heard some chatter on the financial news networks about the upcoming Dave & Buster’s IPO. I didn’t pay much attention. But later in the week on Thursday October 2nd, I got the email around 11:08 EST saying The Dave & Buster’s IPO is now open. I received the same message in another email account a few minutes later. The announcement was also distributed on Twitter at 11:11 am EST. Luckily, I was able to get to a computer and enroll right away.
I mention the timing specifics because the open enrollment lasted only an hour. Meaning, if you missed these emails and tweets or didn’t act right away, you were left out.
I’ve noticed the timing for IPO communication differs between social media, at the Loyal3 IPO website, and through emails. For the Globant (GLOB) IPO, for example, I saw it available on the website a few hours before it was emailed to me. Since then, I’ve been habitually been looking at the Loyal3 IPO page to see if something new becomes available.
Here’s the email I received:
From the Twitter screenshots below you can see enrollment was closed at 12:05 pm EST (9:05 am PST). From open (according to my email) to close, investors had just 63 minutes to enroll.
Good timing is critical for Loyal3 IPOs. If the window was only an hour for Dave & Buster’s and there wasn’t much hype, other IPOs will surely go faster. Many variables factor in, namely the number of shares available through Loyal3.
The lesson learned here is that you need to find out about the IPO enrollment early and act quickly. If during the open enrollment of an IPO I’m in a meeting or giving my 2 1/2 year-old son a bath, I’ll probably miss out. Luck is unfortunately a big factor with these now.
If you’re not familiar with it, Dave & Buster’s is a restaurant chain that offers food, interactive video games, and sports watching in very large retail spaces. The company operates 69 locations in the US. Many years ago some friends and I spent an afternoon at Dave & Buster’s. We played some video games, drank light beer and ate greasy food. It was fun. But this isn’t the type of stock I’m interested in owning for the long run. The company doesn’t pay a dividend and I don’t see any great growth potential. I enrolled in the IPO purely for the experience.
With that in mind, I requested only $500 worth of stock, knowing that most investors do not get their full requested allocation. Allocation has been a sour point in the past for Loyal3 IPO investors, particularly for the GoPro (GPRO) IPO. Investors often request as much as possible and only get a small fraction of what they requested. How shares are allocated by Loyal3 is a mystery. You get what you get, and that’s better than nothing.
My successful request was immediately acknowledged in my account online. Once the enrollment is complete, they instruct you to hang tight for a week until shares are allocated. Loyal3 has a countdown clock where you can track the timing of the IPO. The price range at this early stage was $16-$18. If in a week the price of the IPO is outside of this range, they give you a two hour window to respond with a yes or no if you want to continue. You can back out at any time. The prospectus is always there for your review.
I received an email a few days after the enrollment telling me I should fund my account with more than $500 since I buy other stocks in my account in addition to the IPO. So I transferred in $1000 to make sure my request was covered. I thought they could have handled that better, as I was informed I could simply use my credit card to fund the IPO. They did say using a bank account was a better option, but this was all unclear. For future reference, it is best to fund these IPOs from a bank account. Overall, the IPO process at Loyal3 was easy to understand and well executed.
On Thursday October 9th, one week after enrollment, I learned that the IPO was priced at the low-end, $16. Saying the low-end is Wall Street vernacular for pouring cold water on this IPO. This was not Alibaba (BABA), so most financial media types were not excited. Since the price was within the original range, no two-hour confirmation period was necessary.
Later on Thursday evening when I logged into my account to look at my current holdings, to my surprise I saw 24.66 Dave & Buster’s shares listed, the day before the stock started trading. The shares cost me $394.56. My allocation came in at 79% of my requested dollar amount. I was very happy with this having assumed I’d be given much less.
The IPO went off without a hitch and shares started trading last Friday October 10th. Shares traded between $15.89 and $18.43 throughout the day and closed at $17.28 for a one day gain of 8%. In the context of the volatile markets we’ve seen during the past month, the IPO managed to close above the issue price. This was an all-around success in my view.
Where Are My Shares Now?
On Monday of this week, on just the second day of trading, I sold out of my entire Dave & Buster’s position. As I said, I don’t have any interest in this company and it doesn’t fit the profile of stock I want to hold for many years. I put a sale order in before 2pm and it executed at $17.51 by the end of the session. My pre-tax profit from the ordeal was $34.24, or 9.44%. Fees were $0.
Is IPO investing a good way to risk money to make a small profit? Probably not for me. But it was fun and I learned a few things.
Are You Interested In IPOs?
Participating in this IPO was easy because I already had an account open with Loyal3. If you want to be a part of future IPOs, you don’t need to have an account to get the IPO email, but having an account open makes it much easier if you want to participate. Opening an account is easy and you can do it by clicking the link below.
You can also just sign up for the IPO email list. Click the banner below to do that. Or simply follow Loyal3 on social media to learn when IPOs are open for enrollment. But you have to be quick.
Thanks for reading this Loyal3 IPO review. Have you participated in any Loyal3 IPOs? Are there any upcoming IPOs you are interested in?
Disclosure: I do not own any stocks mentioned in this article.