Timeline for How is initial stock price (IPO) of a stock determined
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| Apr 13, 2017 at 12:25 | history | edited | CommunityBot |
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| Dec 9, 2016 at 3:01 | history | edited | Dheer | CC BY-SA 3.0 |
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| Dec 8, 2016 at 19:53 | comment | added | David Schwartz | @VladislavKrot Typically, no. If the company is huge and powerful and can execute the entire IPO by themselves, they can theoretically set the price anywhere they want, though if it's too high they won't sell any shares. (This might even make sense if they intend to lower it over time to try to get the highest possible price.) But in a typical case, the owners need participation of investment banks, institutional investors, an underwriter, and so on or there's no IPO at all, and those entities won't participate if the price is unreasonable. | |
| Dec 8, 2016 at 16:44 | comment | added | Grade 'Eh' Bacon | @VladislavKrot The key point is - if the price is set too high, it won't be fully invested. This means that the company may not have the cash it needed in the first place [most IPO's are done for basically one of 2 reasons: (1) to pay for a specific company growth plan; or (2) so the current owner can sell part or all of the business]; ie: if you need $1M, and you set your IPO price at $100, you need to sell 10,000 shares to reach that $1M. On the other hand, if you set the price too low, you may lose out on money that you might have otherwise gotten. | |
| Dec 8, 2016 at 16:22 | comment | added | Vladislav Krot | So, could the owners set any price? | |
| Dec 8, 2016 at 14:52 | history | answered | Dheer | CC BY-SA 3.0 |