> Moreover, if investors feel that $24 a share is a fair price, why weren't they swooping in before the IPO and, say, offering $20 a share for the whole chunk?

> Moreover, if investors feel that $24 a share is a fair price, why weren't they swooping in before the IPO and, say, offering $20 a share for the whole chunk? Well, they were. When a company IPOs, it doesn't sell its stock directly on the market - it sells it to intermediary bankers, who buy it at a price that they think will lock in profit for them when they sell it at the opening bell. (In addition, the early purchasers are also other bankers and trading firms - as an individual, there's zero chance that you'll get the IPO price unless the stock flatlines when it opens). So, from the company's perspective, the ideal situation is to price that as high as possible, and actually overshoot the market price - that way, they leave no money on the table, and they can raise as much as possible for the number of shares they're selling. In that case, the share price will drop a few minutes after the opening bell, and it'll close trading that day somewhere below the opening price. Note that that's exactly what happened with Facebook ($FB), and the bankers were pissed off. That's why you saw so many articles about the Facebook IPO being a "failure" at the time. It wasn't a failure for Facebook - they made a ton of money! It was a failure for the bankers who wanted to make a profit on the resale, and instead sold those shares at a loss. I'm oversimplifying, because there was a lot of other stuff that went into the Facebook IPO that complicated it[0], but that's the general idea. [0] a lot of people learned the meaning of the "reverse greenshoe" that day!