Aftermarket Report

What Is an Aftermarket Report?

An aftermarket report refers primarily to a summary of the performance of a newly-issued stock in the period immediately following the stock’s initial public offering (IPO). These reports can vary significantly in the depth of the information they provide, and the period covered by an aftermarket report is not mandated by any regulatory body.

No standard ending time period is considered, but after-market performance begins on the first day the IPO shares trade publicly. Typically after-market performance will be measured through the lock-up period which can be anywhere from several days to three, six, nine months, or longer after the IPO date. This allows time for the market price of the stock potentially to even out before the potential sales of insider shares that might be sold quickly after the lock-up period ends.

An aftermarket report can also refer to an analysis of the secondary market in replacement parts for consumer items. Common among these products are automobiles and personal computers.

Key Takeaways

  • An aftermarket report summarizes the performance of a newly issued stock in the period following its IPO.
  • This report is used to understand the demand and liquidity landscape of newly issued shares, often through the end of the lock-up period, at which time insiders may sell their IPO shares.
  • An aftermarket report may also refer to a document used to understand the market for replacement parts on durable goods.

Understanding Aftermarket Reports

An aftermarket report analyzes a newly issued stock's price performance during its initial period on the secondary market, or the days and weeks immediately following its initial public offering. This report is not bound by strict guidelines concerning its content. It can stick to basics such as the stock’s ticker symbol, the exchange on which it trades, and perhaps the bid and ask price at the close of the previous day’s trading period. These rudimentary points are not far from the data that were printed for many years in the business section of major newspapers.

A more robust aftermarket report might expand upon the stock’s early financial performance to evaluate the firm’s businesses as well as financial results from the earliest period of the company’s time on the secondary market. A detailed evaluation would include information taken from investment bank analysts with extensive knowledge of the industries relevant to the company’s performance. Information such as the competitive landscape, strategic advantages or disadvantages, regulatory issues, and any other threats to the company’s future prospects would be relevant.

Financial results might be a bit incomplete, as recently public firms may not have issued much public information at this early stage. The U.S. Securities and Exchange Commission (SEC) does not require privately held firms to release such information.

By looking at the after-market performance of all IPOs over a certain period (as in a calendar year), analysts and investment bankers can estimate the overall market demand for new issues and may move up or delay a scheduled IPO as a result.

Consumer Replacement Parts: the Aftermarket Report

A secondary meaning of aftermarket report comes from the market for replacement parts for durable goods. These goods range from major household purchases such as automobiles to niche products like medical equipment used in hospital emergency rooms.

An example of such a report is published annually by the Specialty Equipment Market Association (SEMA). SEMA’s report collects consumer and manufacturer data about the automotive aftermarket industry, which reports about $40 billion in annual activity. The report contains data primarily intended for producers of equipment to use in marketing to segments of the consumer population. In particular, the report allows retailers to identify the most profitable vehicle and customer classes.

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