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Definition: Death Star IPO
Death Star IPO is an IPO that has huge expectations from the stock market and from the retail and institutional investors as well. Hence, it generates a huge demand in the market. This kid of IPO is much talked about in media as well. This happens because the market expects that once an IPO for such companies happens, their stock prices are going to explode or increase tremendously on the first day of their trading on stock exchanges. It is basically an offering worth multi billion dollars. The term “explosion” of stock price is generally being used for a death star IPO. However, such kind of IPO’s is rare in nature. These kinds of stocks have the ability to affect other players of the market.
The term death star IPO is actually taken from the Star Wars movie in which the Orbital Death Star battle station of Darth Vader had the ability to destroy all other interfering planets with a single beam of laser light.
The best example of such kind of IPO is of Google. It went public in the year 2004. IPO of Yahoo in 1996 is also an example of death star IPO. IPO of both these companies were highly anticipated and the prices of their shares exploded as soon as they were listed on the exchanges.
The possibility of death star IPO usually arises for companies which come out with innovations that are assumed to be widely accepted by society. For example: If a company comes out with any lifesaving drug, that was not there in the market earlier and it could not be avoided by the customers in the near future. Then, the market discounts that factor and it leads to more probability of a death star IPO. It also depends upon the ability of the company to diversify into various other segments or the research and development work that is expected to be done by the company.