Assimilation

AAA

DEFINITION of 'Assimilation'

The absorption of stock by the public following a new issue. When a company offers shares of its stock for sale to the public for the first time, either through an initial public offering or through an add-on offering, the shares will first be allocated among underwriters. It is then the underwriters' job to assimilate all of the shares sold to investors.

INVESTOPEDIA EXPLAINS 'Assimilation'

Once the new shares belong to investors, they are traded on the secondary markets like any other security. A company that is well known, and sets a reasonable share price, will be more likely to see its new shares assimilated. Lack of assimilation can be a sign that investors are not confident in the company, or think it has overvalued its shares. Sometimes lack of assimilation may result from buyers not being fully aware of the stock offering, which would be reflective of an error on the part of the underwriters.

RELATED TERMS
  1. Issuer

    A legal entity that develops, registers and sells securities ...
  2. Seasoned Issue

    An issue of additional securities from an established company ...
  3. Original Issue Discount - OID

    The discount from par value at the time that a bond or other ...
  4. Underwriting

    1. The process by which investment bankers raise investment capital ...
  5. Break Issue

    A type of stock initial public offering (IPO) that trades below ...
  6. Dog And Pony Show

    A colloquial term that generally refers to a presentation or ...
RELATED FAQS
  1. What is authorized stock?

    Authorized stock represents the maximum number of common shares that can be issued legally by the company as stated in the ... Read Full Answer >>
  2. How does an IPO get valued? What are some good methods for analyzing IPOs?

    The price of a financial asset traded on the market is set by the forces of supply and demand. Newly issued stocks are no ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Understanding Rights Issues

    Not sure what to do if a company invites you to buy more shares at discount? Here are some of your options.
  2. Retirement

    IPO Basics Tutorial

    What's an IPO, and how did everybody get so rich off them during the dotcom boom? We give you the scoop.
  3. Investing

    Additional Paid-In Capital

    Additional paid-in capital is an account in the equity section of a balance sheet. It represents the additional amount paid for the company’s shares over the par value of the shares. Additional ...
  4. Investing

    Top 10 Largest Global IPOs Of All Time

    We have compiled a list of the top 10 largest IPOs of all time. The results may surprise you.
  5. Investing Basics

    How Does Alibaba Make Money? A Simple Guide

    Alibaba broke IPO headlines--but making news and making money are two different things.
  6. Investing News

    5 IPOs That Broke The Markets In 2014

    In 2014, stock markets traded at record levels and the US IPO market enjoyed activity not seen since the 2000 tech bubble. Here is a snapshot of some of the year’s most successful IPOs.
  7. Investing Basics

    Alibaba IPO: Why List In the U.S.?

    For companies like Alibaba, a U.S. listing can provide some benefits that they can't find at the exchanges nearer to home.
  8. Investing News

    IPO Stinkers: The Biggest IPO FAILS of 2014

    Despite a booming market, some IPOs crashed and burned. Sure, going public brings a flood of capital, but it can also expose a company to unpredictable market forces.
  9. Investing News

    What is Alibaba?

    Alibaba might not yet have the name recognition of other ecommerce players like Amazon, but with its record-breaking IPO, it's due to be a global player.
  10. Investing Basics

    The Top Five Alibaba Shareholders

    In addition to the new public shareholders, BABA has several prominent major stakeholders. Here are the top five.

You May Also Like

Hot Definitions
  1. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  2. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  3. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  4. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  5. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center