Describe the IPO process. Compare the short term and long term performance of IPOs.
Describe the IPO process. Compare the short term and long term performance of IPOs.
Homework Answers
The IPO process refers to the process by which a unlisted private company offers its shares for the first time to the public. This allows the comapny to raise funds from the public and also an opportunity for the inverstors to invest. The process of IPO offereing includes the following steps-
1. Select a Investment Bank.
2. Due diligence and filings ( selection of underwriter or underwriters)
3. Pricing of shares that are to be offered.
4.Stabilisation of the market and create a market for the stock issued.
5. Transition to market competition.
Comprison of short termand long term IPOs-
The short term IPO is majorly critisised because of abnormal return and underpricing of the shares. However, in long term the prices stabilises volume.
In short term IPO there is a less chance of getting traditional stock price metrics like moving averages. In longterm stable stock prices are followed by traditional stock price metrices.
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Describe the IPO process. Compare the short term and long term
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