Hot IPO

Posted in Finance, Accounting and Economics Terms, Total Reads: 249
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Definition: Hot IPO

Hot IPO is an initial public offering of a company, the demand for whose shares is far greater than the supply. So when these companies are first time traded in the market the prices rise more than their actual value. In hot IPO, the stock prices of the companies rise steeply because of the excessive demand from investors.

Normally in a HOT Initial Public Offering the scenario is of high demand and less supply leading to the more price than the value estimated. This is the scenario of over-subscription.


Benefits:

HOT IPO shows the sentiment of the investors.it shows that the investors are positive about the company and this kind of sentiments towards a company also provide free publicity to the company


Example:

ABC co. pvt ltd has come with breakthrough innovation in technology industry & now they are coming with an IPO of $100 million. Investors are very interested, which has now lead to over-subscription of shares, which increases the share price by 120%.

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