Is This IPO Tactic Creating the Next Bubble?


The following video is part of our "Motley Fool Conversations" series, in which Motley Fool editors Austin Smith and Andrew Tonner discuss emerging trends in their favorite companies.

In today's edition, Austin and Andrew discuss the recently popular (and dangerous) strategy newly public tech companies are using called the "low float" strategy. Under this strategy, companies release a low percentage of their company to the market, which can easily result in a highly inflated market cap. As evidence, consider that 20 of the 25 most recent tech IPOs are already below their IPO offer price.

To read about a Motley Fool favorite stock that IPO'd this year and didn't use the low float strategy, check out our special free report: "The Hottest IPO of 2011." In it you'll get a recent IPO we love that's cashing in on the emerging market. You can access your copy today at no cost at all. To get instant access to the IPO we love, click here -- it's free!

At the time thisarticle was published Neither Austin Smith nor Andrew Tonner owns any shares of the companies mentioned above. The Motley Fool owns shares of Google.Motley Fool newsletter serviceshave recommended buying shares of Google and Zillow. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.