The underwriter sets the offering price based on the amount of capital the company wants to raise and the level of demand from investors. The opening price is

The underwriter sets the offering price based on the amount of capital the company wants to raise and the level of demand from investors. The opening price is set by supply and demand. Few investors can buy an IPO at the offering price, because most shares go to the underwriter’s best institutional clients, and some are reserved for the company’s “friends and family.” So most investors' only option is to buy in the open market when the shares start trading. The day an IPO is released, buy and sell orders pile up until they are balanced against each other, determining the opening price. If the demand for shares exceeds the supply, the shares open higher than the offering price; otherwise they open lower.