Stabilizing Bid


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.

BREAKING DOWN '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.

  1. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  2. Public Offering Price - POP

    The price at which new issues of stock are offered to the public ...
  3. Primary Market

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

    The first sale of stock by a private company to the public. IPOs ...
  5. Underwriting

    1. The process by which investment bankers raise investment capital ...
  6. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
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  2. When did Facebook go public?

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  3. Can mutual funds invest in IPOs?

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  4. What kind of assets can be traded on a secondary market?

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  5. Why would a company decide to utilize H-shares over A-shares in its IPO?

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