Why is it good to buy a share during its IPO?

ipo is the initial public offering and it is the price company offeing to public .whereas in open market price depends on various new ,global market ,company fundamentals and its growth prospects etc.

IPO stands for initial public offering, and it is the very first sale of stock made by a company to the public. Doing an IPO is also known as going public. This is because it is the first time the company is offering itself to the public and trading on a stock exchange.

From an investor’ standpoint, when they throw in money into an IPO, they can be guaranteed of decent returns. Since it is the very first time that the company is actually going public, the share price is set to bounce at a good rate and investors can capitalize on huge gains.

One can expect double digit or even triple digit gains in the early IPO days. This is the case with most of the companies where the investment climate is positive.

However, there are chances of the price going down during the initial days after listing mainly due to profit booking. A big chunk of investors choose to book profit immediately within a few days after listing.

If you are a wise investor, and if you are confident of the company’s performance, you will hold on to your position as the chances of bouncing back is very high, and generally a good company’s share price will increase a lot from the list price within a year.

There are also chances of a heavy price slash after listing if the share was overpriced during IPO. Hence, choose the right company to enter at IPO and hold on to your position for at least six months to make good returns.