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Can anyone explain why IPOs are performed as a block of shares instead of trickling shares out into the market over time? Presuming that the aim is to sell sha
by ISL 11y ago
Can anyone explain why IPOs are performed as a block of shares instead of trickling shares out into the market over time?
Presuming that the aim is to sell shares of the company at market-price, it seems like a good idea to slowly establish what that price is rather than be subject to the variance of first-day hoopla.
- dragonwriter 11y agoBecause, by definition, a series of offerings isn't a single offering, initial or otherwise. Beyond that, I suspect the expectation of further releases would depress prices early in the series of releases, making that approach unattractive compared to the initial approach. I also suspect that, while pips get media attention, IPOs are usually fairly well-proceed these days, but if it's not giant and/or wildly mispriced, you don't see much about it in mainstream news sources.
- ISL 11y agoI'd guess that a series of releases (10% of shares each day for two weeks), each at the previous day's average price, as traded among members of the market, would do an okay job of discovering market price. Alternatively, the entire block of shares offered at a slowly-lowering asking price might do it, too. I don't doubt that these things have been thought about a lot...
- joshu 11y agoBecause there would be a huge demand for those initial shares. Probably a better thing to do would have it participate in the open auction, like other stocks do.