BizTerm Definition
Broken IPOs
Full Definition

If an IPO trades under its IPO price in the aftermarket, it is said to be a broken IPO. This is not a good thing. Regardless of fundamentals, investors regard breaking issue price as a bad omen. In the old days of Wall Street, syndicates of underwriters would prop up the IPO price with a stabilizing bid, often for days. Due to profit considerations, the lead manager may disband the syndicate even if the IPO is cratering.

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