Break Issue

(redirected from Broken IPO)

Break Issue

A new issue of a security that drops below its first offer price very quickly. For example, a company may make an IPO and ask $15 per share. If its price drops to $12 per share that trading day, it is said to be a broken issue (in this particular case, a broken IPO). Broken issues are commonly the result of lack of trust in the company's management, or bad news regarding the company that occurred during or just before the issue was made. Speculators buy broken issues with the hope that the crashed price is too low and that a correction will result in gains.
References in periodicals archive ?
Suggesting that Lyft will no longer be a broken IPO in 12 months isn't as brazen as it may have seemed two months ago when Lyft was bottoming out at $47.17, and a 53% gain away from hitting its March IPO price of $72.
Lyft is unlikely to be a broken IPO a year from now, and it could be trading a lot higher than its market debut price. 
The stock closed the day at its debut price of $45, leaving smaller rival Lyft (NASDAQ:LYFT) as the broken IPO -- for now.
There are a couple of good reasons Uber shed its tag as a broken IPO before Lyft, and we may as well take a break from the recent return to favor of both stocks to explain why Uber made it back to the starting line first.