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You hear a lot about the day 1 pop in share price but I really think the price is just the tip of the iceberg. I'm not sure what the trading volume is but I dou
by jklein11 6y ago
You hear a lot about the day 1 pop in share price but I really think the price is just the tip of the iceberg. I'm not sure what the trading volume is but I doubt that you could fill the entire IPO at the highest price on the IPO date.
From what I understand, supply is constrained as employees typically can't sell shares, and retail investors who were lucky enough to get in on the action are typically locked up for 60 days. Institutional investors are happy to hold on to alot of their shares because they can mark them to market and make their returns look great.
Edit: clarified first paragraph
- maxerickson 6y agoI tripped over your first paragraph a bit, but I got it, you mean the market open price ("IPO price" has a specific meaning, the price that the people participating in the offering get, that is usually set by the bank).
- jklein11 6y agoGood point. I just edited the comment. Hope it is more clear. The point I'm trying to make is if you are trying to sell $100 million worth of share it is going to be at a lower price then selling $10,000 worth of shares. It seems like critics of IPOs just take the number of shares issued and multiply it by the highest price on the IPO date and say "Look at all the money those bankers left on the table!"