Initial Public Offerings

I did try and search for the answer to this question but couldn’t find anything so apologies if it’s been asked and resolved before.

Why can we not get access to new stocks at their IPO? For example FROG - JFrog had their IPO today and it was supposed to debut at around $37-$41. By the time it hits 212 it’s valued at $71 and is slowly coming down.

Obviously when you hear about an IPO you want to try and get in on the early trading that sees stock value rise at the IPO, not buy it at the point the buying has cooled off.

Any advise, knowledge around why this occurs would be helpful, especially from the guys running 212.

Cheers

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@Joey_Fantana probably knows the most on it.

As far as I understand the institutions and big players will get it at that price.

Retail investors are bottom of the food chain.

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Yep retail investors (like us on 212) get access last out of everyone so the price is not going to be the same as the IPO price.

When the exchange opens trading for retail investors, they do so at the open price that the exchange has determined by matching incoming orders during a process called price discovery (I believe this happens manually on NYSE but some other exchanges have this process automated).

Price discovery basically involves the exchange identifying the best price to open at that will allow the highest number of trades to be done, by matching incoming sell and buy orders from institutions. So like the SNOW IPO today when people were quoting “looking at opening at $xxx for x million shares”, they are basing that off the price discovery info from the exchange.

Only when the price discovery bit is done does the exchange open up to retail investors (robinhood users, 212 users etc.) and then trading is done as normal.

Hopefully this helps a bit :slight_smile:

P.S. my knowledge on the specifics of the process once the exchange gets involved is pretty patchy and dated so pls anyone correct!

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Hats off to you for having a look around and asking the question and not bleating on like there’s a problem with the app.

Phil’s spot on, it’s preferential. When a company goes public it gives preferential treatment to institutions and private equity backers, who supported the company when they were private. The problem is that when you have these big firms buying shares in the millions, the price gets impacted immediately, so that come time for retail investors to get in, the damage is done.

Take a look at this reply to post yesterday: Add Snowflake (SNOW) IPO

I suggest you do the same thing. IPOs rarely ride up and stay up. You have lock-up periods to think about too, where for a set period after IPO large investors aren’t allowed to sell. Once that period is over you could easily see a large fall.

LMND was the last HUUUUGE IPo that got everyone here in a sweat - go check out those chat threads and look at that chart. I know you can’t really compare companies, but you can compare sentiment.

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Did anyone manage to buy this ipo? I got rejected at 160 to 225. Then gave up, did trading212 even have access this ipo?

Way too rich now. 2028 valuations. Am I missing something with this ipo. Why is it so valuable.

I had exactly the same problem with Sumo Logic that ipo’d the following day. Wasn’t even listed on 212 even though it had clearly launched on the Nasdaq. Raised the issue with 212 - still missed out on the opening price, so not happy… apparently they monitor the new IPO’s closely… clearly not closely enough!!!