Hot IPO

A Hot IPO refers to a private company’s initial public offering (IPO, the first time it sells shares to the public) where demand for shares is expected to be very strong. A hot prospective IPO does not guarantee that investors who are allocated shares will see the share price rise when they open for trading on the stock market. That will depend on a range of market factors, including the IPO price and the state of the underlying market. But on the basis that they are over-subscribed during marketing, they will tend to ‘pop’ on debut as investors who were not allocated during the IPO seek to gain exposure and investors who were under-allocated relative to their orders seek to top up.