US IPO Day-One Surges Driven by ‘Superfan’ Scramble, Study Says

The frequent criticism that initial public offerings are underpriced is exaggerated because the early pop from these offerings is often based on a small number of highly enthusiastic investors, a new study has found.

Going back over 30 years of market data, researchers Joseph Henry and Terry O’Brien found strong evidence that US IPOs are far less underpriced — perhaps by as much as 40% — than commonly believed.