(Total Views: 473)
Posted On: 02/23/2019 3:15:43 PM
Post# of 32973
JR30 posted the following explanation of the process used to set the IPO price.
It is both informative and understandable. Thanks JR30
"The underwriter is usually an investment bank that employs IPO specialists. These bankers ensure that the firm satisfies all regulatory requirements, such as filing with the appropriate bodies and depositing all fees, and makes all mandatory financial data available to the public. Next, and perhaps most importantly, the underwriter contacts large prospective buyers of stock, such as mutual funds and insurance companies who have large sums of money to invest. The underwriter takes the pulse of prospective buyers and then recommends an IPO price to the firm. This is the price at which the shares will be sold. An excessive price may leave the firm with unsold stock, while a price that is too low will mean forgone revenue from the stock sale."
It is both informative and understandable. Thanks JR30
"The underwriter is usually an investment bank that employs IPO specialists. These bankers ensure that the firm satisfies all regulatory requirements, such as filing with the appropriate bodies and depositing all fees, and makes all mandatory financial data available to the public. Next, and perhaps most importantly, the underwriter contacts large prospective buyers of stock, such as mutual funds and insurance companies who have large sums of money to invest. The underwriter takes the pulse of prospective buyers and then recommends an IPO price to the firm. This is the price at which the shares will be sold. An excessive price may leave the firm with unsold stock, while a price that is too low will mean forgone revenue from the stock sale."
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