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. Original Issue Discount - OID

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

    1. The process by which investment bankers raise investment capital ...
  4. Seasoned Issue

    An issue of additional securities from an established company ...
  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 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. Investing

    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 exception to this rule - they sell for whatever price a person is willing ...
  3. Options & Futures

    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 company's charter.The number of authorized shares that is identified ...
  4. 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.
  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. 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.
    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. 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.
    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. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  2. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  3. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  4. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  5. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  6. Law Of Supply And Demand

    A theory explaining the interaction between the supply of a resource and the demand for that resource. The law of supply ...
Trading Center