Hi,
Is it good to buy an IPO after a couple of days it is released..or is it better to wait for 21 days so that the price of the IPO becomes stable and then buy it.. I heard this 21 days wait period somewhere but I'm not sure in which context ...I assume it was related to the IPO.
Thanks for ur help
2006-12-04 03:43:41 · 5 answers · asked by Anonymous in Business & Finance ➔ Investing
The biggest bump in price comes between the closing of the deal and the opening of the first day of trading. On average it is best to buy the IPO from the syndicate rather than in the aftermarket.
Academic studies show that on average, IPOs do not outperform the market (even adjusted for risk) after they go public.
Not all IPOs have that first day jump in prices. If the IPO price is above the expected IPO price that was published in the prospectus, then it will almost certainly get a first day jump. For example, if the prospectus says "We expect the offer price to be between $10 and $12" and then they go publis at $15 -- there will almost surely be a first day jump in prices. On the other hand, if the price is below the range (e.g., $7.00) then there is rarely a jump up in prices.
Another indication of underpricing is employee stock options. If there are more employee stock options than shares being sold in the IPO, expect a big increase in price on the first day.
2006-12-04 05:26:23 · answer #1 · answered by Ranto 7 · 0⤊ 0⤋
Everyone has their own strategy when it comes to buying a newly issued shares (IPO). Some wait and other jumped in. To fully understand how things work, I'd recommend reading up on how the IPO process works, see http://ibooyah.com/blog-mt/mt-search.fcgi?IncludeBlogs=1&search=IPO
The article outlines the entire IPO process which should help you gain a better understanding of the IPO market. Now, my personal strategy is to wait at least 30 days before I buy a newly issued stock. Good Luck!
2006-12-04 13:16:37 · answer #2 · answered by buklao 3 · 0⤊ 0⤋
The moment the IPO starts trading on the open market it is no longer an IPO. It's just a public company like the rest.
IPO Shares are bought BEFORE THAT TIME.
2006-12-04 15:19:57 · answer #3 · answered by Anonymous · 0⤊ 1⤋
The question is not when to invest in IPOs. Its about what should be kept in mind while investing. First research about the company's background and what is its future strategy and also you must atleast have a glimpse of the market particularly the industry which comprises the company which you are going to subscribe the IPO of.
2006-12-04 14:00:30 · answer #4 · answered by juvenile_jack 1 · 1⤊ 0⤋
Its good if your broker gives you shares at the offer price. You will only get that if you are a huge investor or institution. Other than that, never buy IPOs. The private equity guys are putting lipstick on pigs and selling them to people like you. If you want new issue action, look at buying spin offs (ex WU recently spun from FDC).
2006-12-04 11:55:45 · answer #5 · answered by marknmpls 1 · 0⤊ 0⤋