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. Understanding Rights Issues
    Options & Futures

    Understanding Rights Issues

  2. How does an IPO get valued? What are ...
    Investing

    How does an IPO get valued? What are ...

  3. What is authorized stock?
    Options & Futures

    What is authorized stock?

  4. IPO Basics Tutorial
    Retirement

    IPO Basics Tutorial

comments powered by Disqus
Hot Definitions
  1. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  2. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
Trading Center