Stabilizing Bid

AAA

DEFINITION of 'Stabilizing Bid'

A practice used by underwriters to stabilize the secondary market price of a security after an initial public offering (IPO). The bid is made on behalf of the IPO's underwriters to repurchase shares at the offer price.

INVESTOPEDIA EXPLAINS 'Stabilizing Bid'

Stabilizing bids are one of many methods used by underwriters to support the price of the IPO. Stabilizing bids may be used to support a stock that has high selling pressure from investors looking to "flip" their purchased shares for a quick profit. Any attempt to use a stabilizing bid by an underwriter must be made known to the regulatory body of the market.

RELATED TERMS
  1. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  2. Secondary Market

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

    1. The process by which investment bankers raise investment capital ...
  4. Primary Market

    A market that issues new securities on an exchange. Companies, ...
  5. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
  6. Public Offering Price - POP

    The price at which new issues of stock are offered to the public ...
RELATED FAQS
  1. What are the three phases of a completed initial public offering (IPO) transformation ...

    While some large and successful companies are still privately-owned, many companies aspire toward becoming a publicly-owned ... Read Full Answer >>
  2. How do spinoffs differ from initial public offerings (IPOs)?

    A spinoff is when a public parent company organizes a subsidiary and distributes shares to current stockholders for the new ... Read Full Answer >>
  3. What are some common questions an interviewer may ask during an interview for a position ...

    When interviewing for a job at an investment bank, a candidate is likely to answer questions about his career and education ... Read Full Answer >>
  4. What are the primary differences between a closed end investment and an open end ...

    The primary differences between closed-end funds and open-end funds lie in how they are structured and how they are bought ... Read Full Answer >>
  5. What are some roles of an investment bank?

    Investment banks serve a number of purposes in the financial and investment world, including underwriting of new stock issues, ... Read Full Answer >>
  6. How do I purchase shares of a closed-end investment?

    Unlike open-end mutual funds that sell shares in the fund directly to investors, closed-end funds are traded on an exchange ... Read Full Answer >>
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. Fundamental Analysis

    Interpreting A Company's IPO Prospectus Report

    Learn to decipher the secret language of the IPO prospectus report - it can tell you a lot about a company's future.
  3. Investing

    5 Tips For Investing In IPOs

    Thinking of investing in IPOs? Here are five things to remember before jumping into these murky waters.
  4. 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.
  5. Investing Basics

    Social Media: High Risk, High Potential Returns

    Carefully selecting social media ETFs can provide you with the opportunity to diversify your portfolio and enjoy financial rewards due to user growth.
  6. Investing

    4 Hottest IPOs in 2015

    Where is smart money headed this year? These are the most anticipated IPOs of 2015.
  7. Investing News

    Investing In Social Media Startups? Read This First

    Several new social media startups are attracting large amounts of funding, based on their prospects of retaining a large user base and generating profits.
  8. Fundamental Analysis

    Private vs Public Equity: What's Best?

    What is the better way for a company to attract investors; by making its stock available for sale to whoever wants some, or by petitioning rich people?
  9. Investing

    Additional Paid-In Capital

    Additional paid-in capital is an account in the equity section of a balance sheet. It represents the additional amount paid for the company’s shares over the par value of the shares. Additional ...
  10. Investing

    Top 10 Largest Global IPOs Of All Time

    We have compiled a list of the top 10 largest IPOs of all time. The results may surprise you.

You May Also Like

Hot Definitions
  1. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  2. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  3. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  4. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  5. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  6. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center