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. Secondary Market

    A market where investors purchase securities or assets from other ...
  4. Underwriting

    1. The process by which investment bankers raise investment capital ...
  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. Investing Basics

    A Look At Primary And Secondary Markets

    Knowing how the primary and secondary markets work is key to understanding how stocks trade.
  2. Professionals

    Wanna Be A Bigwig? Try Investment Banking

    A career in this high-stress field can be very rewarding for the right person. Find out if you have what it takes.
  3. Investing Basics

    IPO Lock-Ups Stop Insider Selling

    Ownership plays a key role when companies go public. Find out how.
  4. Entrepreneurship

    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. Businesses usually go public to raise capital in hopes of expanding; ...
  5. 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 ...
  6. 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.
  7. Investing Basics

    When is it beneficial for underwriters to sell stock below the minimum rate?

    Learn when selling stock below the minimum rate can be beneficial. Find out how the 1987 market crash affected an offering of British Petroleum shares.
  8. Mutual Funds & ETFs

    What are the risks involved in keeping my money in a money market account?

    Setting aside funds in a money market account can be a safe investment strategy, but investors should be aware of the risks inherent to money market options.
  9. Fundamental Analysis

    Why would I need to know how many outstanding shares the shareholders have?

    Find out why shareholders should know how many outstanding shares have been issued by a corporation, and learn what happens when more shares are issued.
  10. Mutual Funds & ETFs

    How much of my total assets should I be keeping in my money market account?

    Investing a portion of total assets in a cash position such as a money market account provides investors access to funds in the case of an emergency.

You May Also Like

Hot Definitions
  1. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  2. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  3. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  4. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  5. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  6. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
Trading Center