The ride-hailing IPOs race is on, and online CFD brokers are again using the opportunity to get their traders excited about the so-called grey market, in which they can make bets ahead of a float.
As Uber is preparing for its initial public offering (IPO), kick-starting a race to list with rival firm Lyft, Markets.com today sent out a message to its clients reminding them that it offers grey markets in advance of these listings on stock markets.
The CySEC-regulated broker says its traders can speculate on the valuation of a company before it becomes publicly traded. This is an opportunity only spread betting and CFDs providers can offer over traditional stockbrokers, allowing clients to get ahead of the game.
The two high-profile floats could raise billions for both firms, with some valuations at investment houses are pegging Uber with a potential market cap of around $120 billion.
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Difficulties in making bets on IPOs
Markets.com also expects upcoming grey markets such as Airbnb and Pinterest to be particularly popular among its clients. The company typically begins operating a grey market one trading day before the debut.
Investors who choose the right direction can profit from a rise, or a drop if they go short, in a company’s share price following an IPO. But the lack of major IPOs in recent years makes it more difficult for retail traders to draw conclusions about trends. This means that instead of judging how a company may perform by looking at how its rivals have fared, traders must make their decisions based on other factors.
Markets.com is operated by Safecap, a subsidiary of LSE-listed Playtech, the world’s largest supplier of online gaming and sports betting software.
Commenting on the news, CEO Markets.com Joe Rundle said: “We’re leaders in offering IPO grey markets and are proud to be the first to offer a market on Uber and Lyft. We think this offers clients a genuine opportunity to participate in the most exciting market events of 2019 and take a position long before other retail traders or investors have access to the stock.”