Originally Posted by iammatt
Is this another one of your trick questions? The answer is no, it doesn't really rise before it hits the open market. What happens, sometimes, lets not sink into the silliness that says IPOs always open above pricing, is that the original investors get it at the IPO price, and that their sell and the buyers' buy price may be, at the open, above the IPO price, but the price rises at the open, not before it, because before the open there is no market for the security. Also, the answer to your other question is that it depends who you are, and who your broker is. You can get shares at IPO price if they are available to you.
No, it was not a trick question, just genuinely something I didn't understand and I was having trouble with my google-fu in trying to find the answer. And thank you for the answer, because what you said is exactly what I was looking for: to use the example of LNKD, the IPO price was $45, and it opened at $83 (or whatever). I was wondering if some of the investors/institutions participating in the closed part of the IPO were paying $50, $60, etc, all the way up to the opening price of $83. If I've understood you correctly, that's not the case. Everyone who purchases before it hits the open market purchases at the IPO price. That's exactly what I was looking for--thank you for the clear answer. I appreciate it.
And yeah, I understand it's generally fairly difficult to get shares at the IPO price. Out of curiosity, do you know if that's equally true for all IPOs, or is it easier to get shares of small-cap, less-well-known IPOs? Is it not meaningfully different for an individual investor? edit: I ask because I'd be interested in investing in some IPOs if I could -- and not big buzzworthy ones like Zynga -- but I don't know if it's any more realistic to think that as an individual investor (without a great deal of capital) would have an easier time with random small-cap IPOs.