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

What Opportunities are Investors from Other ASEAN Countries Seeing in the Philippines?

A look at the biggest projects registered by Southeast Asian firms with the gov't in the last 6...

byPauline Macaraeg | November 19, 2017 09:00:00

10 Commandments of Successfully Managing a Business Crisis

Commandment number one is beginning preparing before anything has gone wrong

byTor Constantino | November 19, 2017 08:00:00

Help Is on the Way! (for 5 Common Obstacles Every Entrepreneur Faces)

A little creative thinking can solve big problems

byThomas Smale | November 19, 2017 06:00:00

10 Ways You're Being Tracked Without You Knowing It

Everything we do online and with technology leaves a footprint

byNina Zipkin | November 19, 2017 02:00:00

How to Teach Your Daughter Girl Power, According to This Self-Made Billionaire

Teach these lessons to your girls so they can grow up to be strong, confident and happy

byKitty Elicay for SmartParenting.com.ph | November 19, 2017 00:00:00

How Much Does it Cost to Review for the Bar Exams in the Philippines?

The fees vary but are roughly equivalent to new college graduates’ average starting monthly salary

byElyssa Christine Lopez | November 18, 2017 09:00:00

The 3 Types of People at Work Who Waste Your Time and How to Deal With Them

Do any of these time suckers work at your company? Here's how you can avoid them

byDan S. Kennedy | November 18, 2017 08:00:00

by |

5 Big Mistakes Young Entrepreneurs Just Keep Making

The reality of running a high-growth startup is that the company is your boss

byDeep Patel | November 18, 2017 06:00:00

Entrepreneurs Aren't Risk-Seekers -- They Just Handle Risk Better

Managing risk is in entrepreneurs' DNA

byJohn Suh | November 18, 2017 02:00:00

Billionaires Are Teaching Their Kids Mandarin and You Probably Should, Too

There's a reason Mark Zuckerberg learned Mandarin

byYsa Singson for Cosmo.ph | November 18, 2017 00:00:00

Hershey Hilado, Homeless Ilongga Turned Aussie Millionaire, Topbills Speakers at Nov. 18 Entrepreneurship Conference

Event in Miriam College Quezon City is part of Global Entrepreneurship Week celebration in the...

byPauline Macaraeg | November 17, 2017 10:00:00