Initial Offering Date

AAA

DEFINITION of 'Initial Offering Date '

1. The date at which a security is first made available for public purchase. The initial offering date is set during the underwriting process. For stocks, this marks the date of the initial public offering and the beginning of a quiet period, when insiders and underwriters cannot issue earnings forecasts or research reports on the company. This term also refers to the initial offering of shares in other assets, such as mutual funds and unit investment trusts (UITs).


INVESTOPEDIA EXPLAINS 'Initial Offering Date '

Historically, stocks have been underpriced leading up to the initial offering date. This can create pent-up demand for shares on the first day of trading, and creates profit potential for those who can subscribe to the issue before the initial offering date. However, buying on the date of offering can be very risky. Because only a small percentage of the outstanding shares (typically less than 25%) are eligible to trade on the first day, share prices can become volatile and more difficult to anticipate.

This same problem does not typically occur with shares of most other assets. Mutual fund or UIT shares are based on a portfolio of established securities with values that are already known in the market.

RELATED TERMS
  1. Investment Bank - IB

    A financial intermediary that performs a variety of services. ...
  2. Window Of Opportunity

    A window of opportunity is a short time period during which an ...
  3. Unsubscribed

    Newly issued securities that have not seen much interest, or ...
  4. Underpricing

    The pricing of an initial public offering (IPO) below its market ...
  5. Intrinsic Value

    1. The actual value of a company or an asset based on an underlying ...
  6. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
Related Articles
  1. A Look At Primary And Secondary Markets
    Investing Basics

    A Look At Primary And Secondary Markets

  2. Wanna Be A Bigwig? Try Investment Banking
    Professionals

    Wanna Be A Bigwig? Try Investment Banking

  3. IPO Lock-Ups Stop Insider Selling
    Investing Basics

    IPO Lock-Ups Stop Insider Selling

  4. What does 'going public' mean?
    Entrepreneurship

    What does 'going public' mean?

Hot Definitions
  1. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  3. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center