The End of The First day of Trading
Probably one of the most exciting yet dangerous opportunities in the stock market is new issues, the initial public offerings (IPOs) of former privately held companies. Such companies usually “go public” with great fanfare and hype, which can make their stock prices soar immediately after they begin trading.
In the most famous case, when Genentech, the first biotechnology company to go public, made its offering at $35 a share in the early 1980s, its stock soared to more than $80 a share by the end of the first day of trading.
The new issues market is extremely sensitive to the general direction of the stock market. When stock prices are high and rising and investors are enthusiastic, many new issues go public. When prices are low and depressed and no one wants to hear about stocks, it is almost impossible to sell a new issue.
