How to Effectively Read An S-1
Initial Public Offerings (IPOs) are back in business. and with them, come tons of S-1. A Form S-1 is the initial registration form that private companies file with the U.S. Securities and Exchange Commission (SEC) when they intend to file for IPOs.
It looks like this
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| Form S-1 |
Now, whether you invest or not, I totally recommend reading a S-1 because it is a gold mine! It teaches you so much not only about that specific company but also:
1. How much the company intends to raise and how they plan to spend?
2. What do they believe their moat is?
3. What is the risk they see in the future (no matter how hunky-dory the business model looks like from outside)
4. Competitive analysis of not just the company but also the industry they operate in
5. How is the company's financial performance, so that you can tie in the truths and PRs properly
Reading a complete S-1 of a company is extremely time-consuming and to be honest, quite a waste of time. For example, this Asana S-1 is more than 161 pages long!
I have a pretty straight forward framework on how to effectively read an S-1, which I am sharing here. I hope it helps you read more S-1s!
1. Find the Table of Contents in S-1: It looks like this:
2. Now read the sections mentioned below, in the order, they are listed:
- Business
- Selected Consolidated Financial Data
- Management's Discussion and Analysis of Financial Condition and Results of Operations
- Executive Compensation (Optional to read. Will give you material for good zoom call gossips)
- Certain Relationships and Related Party Transactions (Optional to read. Will give you material for good zoom call gossips)
- Risk Factors
Though every S-1 is unique in its own way, this framework will give you an effective and time-efficient way to read S-1s. I hope you enjoy this and sharpen your acumen about various business models by reading S-1s efficiently and making notes off them.
Happy Reading!
