th images menu user export search eye clock list list2 arrow-left untitled twitter facebook googleplus instagram cross photos entrep-logo-svg

Is it Better to Buy IPO Stocks Before or After Listing?

A look at how newly listed stocks did on their first trading day in the past five years
By Lorenzo Kyle Subido |

 

 

 

For those keen to buy stocks that are going through an initial public offering (IPO), a question that often crops up is whether it is better to buy the shares before or after they are listed.

 

Some stocks fall on the day they’re listed. If that’s the case, you’d be better off buying the shares afterwards rather than before. On the other hand, some stocks climb shortly after listing, which suggests it’s better to buy them during the offer period.

 

 

Related story: Buying New IPOs? Check Out How New Listings in 2016 are Doing 

 

 

To shed some light on the record of newly listed stocks at the Philippine Stock Exchange, we looked at the 22 IPOs in the last five years and compared how the stocks did on the first trading day with the offer price.

 

What we found is that an overwhelming majority of the IPOs went up on the first trading day after listing: 17 of the last 22 IPOs saw their stock price increase compared to the offer price. On average, the 17 IPOs experienced a 19.3-percent increase from their offer prices to their first-day closing prices. Five of the 17 IPOs even climbed 50 percent, which meant a significant return on investment for those who bought shares during the offer period.

 

Four of the five remaining IPOs experienced a decline from their offer price, averaging at 3.1 percent. Interestingly, all four of these IPOs listed on November 2013, the month when Super Typhoon Yolanda (or Typhoon Haiyan as it is known internationally) ravaged the country. The last remaining IPO closed its listing date with its shares valued the same as its offer price.

 

Of course, past performance is no guarantee the trend will continue in the future. Would-be investors in IPOs should still look at each and every stock on its own merit and decide whether the potential returns outweigh the corresponding risks.

 

 

 

Related story: 5 Things to Know Before Investing in IPO Stocks 

 

 

*****

 

 

Lorenzo Kyle Subido is a staff writer of Entrepreneur PH

Latest Articles

The Luxuries People Can't Live Without (Infographic)

A recent study found that more people would give up Spotify for Netflix.

byRose Leadem | September 20, 2017 08:00:00

The 3-Step Approach for Testing Out Your Business Idea

Here's how to learn the most from your potential customers and get honest feedback

byVanessa Van Edwards | September 20, 2017 04:00:00

How 6 Business Titans Created a Thriving Team

As the host of podcast Masters of Scale, Reid Hoffman asks everyone from Mark Zuckerberg to Sara...

byEntrepreneur US Staff | September 20, 2017 02:00:00

Financial Adviser: 5 Ways to Make Money from Freelance Consulting Without Losing Your Day Job

Long experience and deep knowledge in a field are key ingredients of a consulting career

byHenry Ong | September 19, 2017 12:00:00

Ex-BlackBerry PH Manager Raises Php32-M for Online Store Selling Electronic Gadgets

Poundit wants to be the top-of-mind for consumer tech products in the country

byLorenzo Kyle Subido | September 19, 2017 11:00:00

Franchise Talk: Wholesale Franchising With the Area Development Franchise

Area development franchises allow accelerated expansion for both franchisor and franchisee

byManuel Siggaoat | September 19, 2017 09:00:00

20 Outstanding Filipino Businessmen and Entrepreneurs You Should Know

Taken from Town and Country's 2017 list of 101 People You Must Meet Right Now, here are exceptional...

byPierre A. Calasanz for TownandCountry.ph | September 19, 2017 08:00:00

Why Achieving Your Goal Should Not Be the Most Important Thing

Everyone has the will to win. It's having the will to prepare to win and enjoying it that is much...

byDavid Meltzer | September 19, 2017 08:00:00

How to Make Meaningful Connections With People Who Are More Successful Than You

If you're always the most successful person in the room, you're hanging out in the wrong rooms.

byIvan Misner | September 19, 2017 08:00:00

5 Things You Need to Do When Bootstrapping Your Startup

Finance your own business and keep 100 percent

byJonathan Long | September 19, 2017 07:00:00

What Are the Country's Highest Paying Jobs in 2016?

Here are the top 50 out of over 400 jobs across 51 industries, according to the PSA

byLorenzo Kyle Subido | September 18, 2017 18:00:00

(Video) Who are the Entrepreneurs Behind the Deliciously Addicting Frankie’s New York Buffalo Wings?

Here’s the story of how the owners found their niche in the chicken food business

byEntrepreneur Staff | September 18, 2017 16:00:00