Hot IPO

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Hot IPO

An IPO that is extremely popular, leading to a dramatic rise in price immediately after the IPO. Hot IPOs are usually overbooked. They were especially popular in the 1990s during the dot-com bubble when it was common for IPOs to occur at, say, $10 per share, and almost instantly spike to $50 or $60 per share. An IPO is a risky investment in general; a hot IPO may be even riskier, especially when the company's earnings are small or non-existent, as was the case in the dot-com bubble. See also: Publicly-traded company.
References in periodicals archive ?
"Real investors," as Bloomberg's Matt Levine put it in an (https://www.bloomberg.com/view/articles/2017-03-01/snapchat-indexes-and-free-research) op-ed Wednesday, "will be much less jazzed about buying non-voting shares in a money-losing company" than "IPO investors," who "buy hot IPOs just for the first-day pop."
further, in the case of "hot IPOs" (those where demand exceeds
Excluding AIG and settlements over laddering in initial public offerings -- where underwriters inflate prices by handing out shares of hot IPOs to buyers who promise to buy more later -- the average settlement was $41 million, and the median was $7.9 million, NERA said.
Extra-cold IPOs are defined as offers with initial return equal or less than zero; Cold IPOs are offers with initial return more than zero but equal or less than 10%; Hot IPOs are offers with initial return great than 10% but less or equal 60%; and Extra-hot IPOs are offers with initial return more than 60%.
Read the February issue of Business Review Canada for a list of the hot IPOs on the horizon.
As discussed earlier, retail investors should be more influential in setting prices for hot IPOs when they are subject to sentiment.
The Market for "Hot IPOs." In an IPO, a company issues shares to the public for the first time.
The idea behind Google using a Dutch Auction IPO was to help prevent underpricing that traditionally occurs in hot IPOs and also allow small investors the ability to buy shares.
Further, they argue that in the later periods there was less focus on maximizing IPO proceeds due to both an increased emphasis on research coverage and allocations of hot IPOs to the personal brokerage accounts of issuing firm executives.
Of course, as already noted, with hot IPOs, few investors have access to the bargain stocks anyway.
Those probes focused on whether the CFSB had received kickbacks in the form of excessive commissions from hedge funds in exchange for hot IPOs.
"With Citigroup, the concern is with the perception of them giving allocations in hot IPOs in exchange for banking business," he said.