So If I apply for IPO and I sell it when the market opens for the first time, isn’t it a guaranteed win?
Yolanda asks:
So let’s say I apply to buy 1000 shares of a company that has set its terms and has priced the offering price for let’s say $15.00
And I’m successful, I’m allocated 1000 shares of this offering..
So let’s say I apply to buy 1000 shares of a company that has set its terms and has priced the offering price for let’s say $15.00
And I’m successful, I’m allocated 1000 shares of this offering..
So if the the price on market open price is $20, and I sell it on market open,
I instantly make 30% right??
I’ve noticed that Almost all companies.. their opening price is way higher than their IPO price, I think there’s a term for this, flipping is it? I can’t remember..
Is this allowed?
is it legal?
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Yes, you would make 33.33%. It’s completely legal. In fact, investment banks (who help the company go public) aren’t afraid to price the shares low ($15’s low b/c they could’ve gotten $20) because the stock going up so much on the first day looks great. Nothing wrong with it - just no too many people can get those initial shares.