Hot IPO

Loading the player...

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.

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.

RELATED TERMS
  1. Oversubscribed

    A situation in which the demand for an initial public offering ...
  2. Stabilizing Bid

    A practice used by underwriters to stabilize the secondary market ...
  3. Demand

    An economic principle that describes a consumer's desire and ...
  4. IPO ETF

    An exchange-traded fund that focuses on stocks that have recently ...
  5. Law Of Supply And Demand

    A theory explaining the interaction between the supply of a resource ...
  6. Offering

    The issue or sale of a security by a company. It is often used ...
Related Articles
  1. Investing

    Why Are Companies Taking Longer To Go Public?

    Learn why private companies are waiting longer to have their IPOs. Understand why it may be more advantageous for a company to stay private.
  2. Managing Wealth

    Five Must-Ask Questions Before Taking The IPO Bait

    IPOs often make great discussion but lousy investments. Learn how to avoid getting burned.
  3. Markets

    How To Track Upcoming IPOs

    Interested in investing through IPOs? Here is the list of free sources for information on upcoming IPOs.
  4. Investing

    The Road To Creating An IPO

    Through an Initial Public Offering, or IPO, a company raises capital by issuing shares of stock, or equity in a public market. Generally, this refers to when a company issues stock for the first ...
  5. Investing

    IPO Basics: Don't Just Jump In

    Let's say you do get in on an IPO. Here are a few things to look out for. No History It's hard enough to analyze the stock of an established company. An IPO company is even trickier to analyze ...
  6. Investing

    Stocks Basics: What Causes Stock Prices To Change?

    Stock prices change every day as a result of market forces. By this we mean that share prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), ...
  7. ETFs & Mutual Funds

    The Safest Way To Profit From The Smoking-Hot IPO Market

    IPOs -- initial public offerings of stock -- are the financial world's Super Bowl. The enthusiasm, anticipation, and chance to make millions out of seemingly nothing are what drive investor's ...
  8. Investing

    Famously Disappointing IPOs

    IPOs may seem like an enticing and exciting investment, but history suggests that IPOs are far from a sure thing.
  9. Markets

    Economics Basics: Supply and Demand

    Investopedia explains: The Law of Demand, The Law of Supply, Supply and Demand Relationship, Equilibrium, Disequilibrium, and Shifts vs. Movement
  10. Managing Wealth

    Top 6 Performing IPOs of 2015 (ONCE, GBT)

    2015 has produced a mixed year for initial public offerings, with small biotechs overcrowding the winner’s list.
RELATED FAQS
  1. 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 Answer >>
  2. How does an underwriter syndicate work together on an initial public offering (IPO)?

    Learn how underwriting syndicates work together when helping a company undertake an initial public offering, and learn about ... Read Answer >>
  3. Can mutual funds invest in IPOs?

    Learn whether mutual funds can invest in IPOs. IPO investing is appealing because there is a big upside, but there is considerable ... Read Answer >>
  4. What are the different types of IPO issued?

    Learn about the two ways for a company to go public: fixed price and book building. Under fixed price, the share price is ... Read Answer >>
  5. What is "hot money"?

    "Hot money" refers to funds that are controlled by investors who actively seek short-term returns. These investors scan the ... Read Answer >>
  6. What does 'going public' mean?

    Going public refers to a private company's initial public offering (IPO), thus becoming a publicly traded and owned entity. ... Read Answer >>
Hot Definitions
  1. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  2. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  3. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  4. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  5. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  6. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
Trading Center