Last year, investors expected one of the best-ever markets for initial public offerings (IPOs). Companies like Airbnb, Pinterest, and Lyft topped the watch list.
In fact, when Lyft went public in March, it traded at a $20.5 billion market cap. That was well above the ride-sharing app’s $15 billion pre-IPO valuation.
It looked like a runaway success. Shares closed 9% up on IPO day.
Yet the celebration didn’t last long. The stock went on to drop 20% in the next two weeks. And today, Lyft is down over 38%. Meanwhile, the Nasdaq is up over 20% in the same timeframe.
But even though investors on IPO day are sitting on losses… early investors have made a killing.
Take venture capital (VC) firm Andreessen Horowitz. In 2013, it invested in Lyft when it was only worth $275 million.
So if you’d been able to invest $1,000 in the company when it was private… you would’ve made 87 times your money on the day it went public.
In the past, these kinds of deals were only available to Wall Street. Now, that’s all changing. Today, I’ll share how everyday investors can get in on them, too.
The Stock Market Is Shrinking
Over the last 23 years, the number of publicly listed U.S. stocks has been nearly chopped in half. According to the World Bank…
In 1986, there were 6,580 U.S. public companies.
In 1996, that number grew to 8,090.
But by 2006, it shrunk to only 5,133.
And at the end of 2019, there were just 4,744 U.S. public companies left.
So since 1996, 3,346 public companies have “vanished.” That’s almost half.
And this trend isn’t set to reverse, either… Global consulting firm McKinsey & Company projects that 75% of S&P 500 companies will “disappear” over the next decade.
Now, there are several reasons for this stock market shrinkage…
Some already-public companies go out of business and get delisted. Others get bought out through mergers and acquisitions (M&A). In fact, 2019 was the fourth-biggest year for M&A activity in the last 40 years.
But there’s also the growth of private markets.
You see, large institutional money continues to flow into the private equity and VC space. For instance, private equity’s net asset value has grown sevenfold since 2002 – twice as fast as global public markets.
So it’s easier and more cost-effective for companies to stay private. There are less regulatory requirements. And public investors’ emotions don’t drive valuation.
This means more companies will be staying private longer – and early investors will benefit…
Get in on This Growing Market
Nowadays, private companies can raise capital easily without going public. And it’s paid off…
Over the last 20 years, the U.S. Venture Capital – Early Stage Index has returned an average of more than 86% per year. Yet most of the well-known stock indexes – like the S&P 500, Nasdaq, and Russell 2000 – have returned an average of less than 7% per year.
That’s not a typo. Early stage, private companies have returned over 12x what public companies have during the past two decades.
And now, new rules from the Securities and Exchange Commission allow ordinary investors to get in the game and invest in private companies before they go public…
They’re called Regulation A+ offerings. And they’re open to the general public – not just accredited investors. In some cases, you can buy into these private deals with minimums of $500 or $1,000.
Here’s what Daily editor Teeka Tiwari recently had to say:
VC firms have used them for years to make 10, 100, and even 1,000 times their money.
Now, you can search for private deals yourself on crowdfunding platforms like SeedInvest and MicroVentures. They list dozens of startup companies raising money from the general public. In some cases, you can start with as little as $100.
For massive gains, it’s essential to have an allocation to the private markets. So consider investing up to 5% of your portfolio in private companies.
But remember, this asset class comes with risk. You only need a small stake for potential gains of 10x, 50x, 100x, or more.
Managing Editor, Palm Beach Daily
P.S. Teeka’s personally amassed a fortune with these types of private market investments. And he believes almost anyone can do the same.
With private deals finally legal, now’s the time to learn how you can get started with something that used to only be set aside for Wall Street insiders.
Now, Teeka’s already found a “sweetheart” deal for the public to get in on. He’s put all the details together in a special report called, The Next Monster. And you can learn how to get your copy right here.
Right now, you can buy shares for pennies. But don’t delay. You see, you only have one more day to get in on this opportunity. The doors to this private deal close tomorrow. So you won’t want to miss out.