Several investors are interested to invest in hot IPOs. Once you have applied for a new & hot IPO, you may or may not receive shares. There are several key things to know about IPO stock allocation to understand the allotment process.
You can’t purchase shares of an IPO as simply & quickly as buying shares of an already registered company. You can’t know in advance about who will get shares & who will not get shares in IPO stock allocation.
According to a post published in Fidelity, every IPO is different & market conditions can play a critical role in how shares are allocated.
Sometimes, your brokerage firm will also determine your possibility to receive shares. Your own long-term relationship with brokerage firm can increase the chances of receiving shares. Here are 10 critical things to determine share distribution in IPO process:
[You can also watch an exciting video on this post at the end page of this post as well as at GetUpWise channel on YouTube.]
(1) IPO Is A Limited Offering & Enrollment Is On First-Come, First-Served Basis
It is one of the most common & key things to know about IPO stock allocation. Every IPO is known to have limited or predetermined number of shares available in an IPO issue.
Investors need to apply for allotment of shares as early as possible before due date & time. Generally, retail investors or traders apply for allotments by responding to media advertisements by company.
Investment bankers & company will allocate shares to small investors. It is usually done depending on availability & first-come first-serve basis.
You may receive less than your requested amount of shares. However, if the issue is oversubscribed, you may not receive even the minimum number of shares.
Thus, investors are advised to act as fast as possible to receive shares of a hot IPO.
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