Buying IPO stocks after they go live?

[HardDrive]

When a stock like zillow.com goes live on the market, does it simply show up in the Nasdaq listings first thing that morning like any other stock?

[LeeH]

And seemingly, that's when you want to start selling it short.

[patssle]

Buy Google when they go public. Trust me!

[gtc]

And microsoft while you're at it!

[HardDrive]

Originally Posted by LeeH

And seemingly, that's when you want to start selling it short.

Ummmm...yeah. Well the folks that tripled their money this morning on the zillow ipo might have a different take.....

[on2wheels52]

How's it go again, seems like it has something to do with the risk/reward ratio?
Jim

[Drisump]

Not knowing anything about this specific IPO, my comments are about IPO's in general. IPO's typically are short term "investments" Price action that you describe off the top is typically a red flag....time it right (purchase/sale) you make money...maybe lots of money, time it wrong and you will eat your original stake in quick order. Everyone knows the success stories but few remember the 10's of thousands of IPO's that have gone down the drain. Some will advise getting the original stake out ASAP (assuming that's possible) and let the rest ride, in my view that's the most prudent way. That's more difficult than it sounds, no doubt all the pundits and the BS that you read pumping the story will convince most investors that the sky's the limit for the stock. This is the true test, selling when everyone is buying. Good luck

[HardDrive]

I watched an IPO go live yesterday morning. It does indeed simply show up as a tradable stock the moment the market opens.

I was simply curious if there was anything preventing me from getting in on that first day mayhem with these tech stocks. I'm not talking about big bets, just little ones for fun.

[jyl]

Typically institutional investors get ipo shares as favors from brokers that they do business with, then sell on the first day pop.

[techweenie]

I've been on the inside on several IPOs.

First, the institutions bringing the company public like to "leave 20% on the table" in their value calculations so their investors make fast money. Second, the vast majority of IPOs bump up through artificial pressure to guarantee the insiders get their 20% (as jyl has said). I believe the majority of IPO'd stocks trade at under initial price within 30 days. Like any investment (or other game of chance), the exceptions to this rule get all the publicity.

In short, the odds are against you buying an IPO stock on the open market unless you have a long horizon and reason to believe the prospects for the company are exceptionally strong.

[techweenie]

Oh, and in some IPOs, there are people "locked in" for 6 months or more in order to prevent folks (primarily angel investors and employees) from crashing the stock.

[trader220]

More often then not if you are able to get IPO shares on the offering not after it starts trading you've committed to holding for X period and not flipping. Of course for that privilege you generally have to commit to buying all the crappy ones that come through the pipeline in order to get the plums.

Most of the dogs in the IPO world the public never hears about. The game with the institutions is to do their DD on the company and support the price until they're allowed to get out on the dogs. The high flyers are not where the risk is but they're the ones the public hears about.

The GOOG IPO was a "dutch auction" and that was a whole lot different.