DEFINITION of 'Death Star IPO'

Death Star IPO is a company's highly anticipated initial public offering (IPO) that becomes a blockbuster with investors. The Death Star IPO is a reference to the DS-1 Orbital Battle Station, also more popularly know as the "Death Star," from the movie "Star Wars." This planetary weapon had the ability to destroy entire planets with a single beam, resulting in a massive explosion. In the stock market, stocks that have the ability to explode out of the gate are usually highly anticipated tech stocks, although stocks from other sectors can also fit the bill.

BREAKING DOWN 'Death Star IPO'

Broadly speaking, to be considered a Death Star IPO, the IPO would have to be a multi-billion dollar offering that is also in very high demand with investors. Some examples of Death Star IPOs include Google's IPO in 2004 and Yahoo! in 1996. Both IPOs were highly anticipated events and both stocks exploded on stock markets once the shares became publicly available.

Blockbuster IPOs

An initial public offering (IPO) is when a private company or corporation raises investment capital by offering its stock to the public for the first time. Initial public offerings are often issued by growing companies seeking capital to expand, but they can also be done by large privately owned companies or corporations looking to become publicly traded. In an initial public offering, the issuer, or company raising capital, procures the assistance of an underwriting firm or investment bank, to help determine the best type of security to issue, offering price, amount of shares and timeframe for the market offering.

Blockbuster IPOs are fewer and further between since the high-flying days of Amazon's debut. Companies are waiting longer to seek public investors and private equity firms have taken many companies out of circulation. In the late 1990s, there were 9,000 public companies and by 2017 there were ony 6,000 as the size of the U.S. economy roughly doubled.

Spotify was the rare large IPO in 2018, valued at $29 billion. But the company went an unusual route; rather than hiring underwriters to sell new shares to the public, it went public on the NYSE in what known as a "direct listing." 

A direct public offering (DPO) is a type of offering where the company offers its securities directly to the public to raise capital. An issuing company using a DPO eliminates the middlemen – investment banks, broker-dealers, and underwriters –  that are typical in initial public offerings (IPO), and self-underwrites its securities.

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