I don't understand - IPO ABNB

[Blackbc 3]

Hi Guys

This was my first time trading an IPO on the open ...so the ABNB ticker was available before it started trading so I clicked BUY 100 shares on the DAS montage, it was filled and my unrealized capital shot up to 8500 $$ ...I waited and when trading started I sold for 8k profit?

My question is? Can we buy before an IPO trades like this? ...or is this a glitch and trading has to start before any trades can be made ...

I was in SIM (in reality would I have been filled?)  so nothing gained or last apart from curiosity...

Cheers

 

Chris

[bobinla 1]

When IPOs are priced, the underwriters, or market makers who are participating in the IPO, sell shares at the IPO price.  For ABNB, the IPO price was $68.  To get in on an IPO, you have to be an accredited investor, and for the big IPOs, you have to have many, MANY millions in assets.  I heard an interview with a hedge fund manager with $77 million under management who couldn't get in on the ABNB IPO.  So if you don't get in on the IPO, once the stock starts trading, the market makers trade the stock until they take it public.  For ABNB, it didn't open to the public until $145 per share.  Huge gain for anyone who got in on the IPO at $68, but many retail traders like us jumped in at $145, $155, and even $165.  Then it flushed down and closed at $139.25 on Friday.

IPOs are usually a great deal for accredited investors who get in on the initial offering, but if you buy once it opens on the market, it's truly a "buyer beware" situation.  I'm really glad you made a hefty profit from ABNB.  Many people blew up their accounts.  I just recommend anyone jumping in on an IPO really understand your risk/reward profile on the trade, just like any other trade.

Happy trading!

[Blackbc 3]

11 hours ago, bobinla said:

When IPOs are priced, the underwriters, or market makers who are participating in the IPO, sell shares at the IPO price.  For ABNB, the IPO price was $68.  To get in on an IPO, you have to be an accredited investor, and for the big IPOs, you have to have many, MANY millions in assets.  I heard an interview with a hedge fund manager with $77 million under management who couldn't get in on the ABNB IPO.  So if you don't get in on the IPO, once the stock starts trading, the market makers trade the stock until they take it public.  For ABNB, it didn't open to the public until $145 per share.  Huge gain for anyone who got in on the IPO at $68, but many retail traders like us jumped in at $145, $155, and even $165.  Then it flushed down and closed at $139.25 on Friday.

IPOs are usually a great deal for accredited investors who get in on the initial offering, but if you buy once it opens on the market, it's truly a "buyer beware" situation.  I'm really glad you made a hefty profit from ABNB.  Many people blew up their accounts.  I just recommend anyone jumping in on an IPO really understand your risk/reward profile on the trade, just like any other trade.

Happy trading!

Brilliant! Thank you - educates and confirms my suspicions - I got in (on sim) at 68 which must have been an anomaly - I will endeavour to be cautious with an IPO in the future ...