Hot IPO

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DEFINITION of 'Hot IPO'

An initial public offering that appeals to many investors and for which there is great demand. Hot IPOs are often oversubscribed - meaning market demand far exceeds the supply of shares - which results in the stock price surging as soon as it is offered on the market.

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BREAKING DOWN 'Hot IPO'

The late 1990s saw one of the hottest IPO markets ever. There was so much demand for internet stocks that nearly all of them were oversubscribed, leading to substantial gains during the first days of trading. For example, Priceline.com saw its stock rocket 325% in a single day from an IPO price of $16 to $68/share. Because hot IPOs are in high demand, underwriters usually offer those shares to their most valued clients.

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RELATED FAQS
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    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  3. How does investment banking differ from commercial banking?

    Investment banking and commercial banking are two primary segments of the banking industry. Investment banks facilitate the ... Read Full Answer >>
  4. What kind of assets can be traded on a secondary market?

    Virtually all types of financial assets and investing instruments are traded on secondary markets, including stocks, bonds, ... Read Full Answer >>
  5. Why would a company decide to utilize H-shares over A-shares in its IPO?

    A company would decide to utilize H shares over A shares in its initial public offering (IPO) if that company believes it ... Read Full Answer >>
  6. How do I place a buy limit order if I want to buy a stock during an initial public ...

    During an initial public offering, or IPO, a trader may place a buy limit order by choosing "Buy" and "Limit" in the order ... Read Full Answer >>

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