The theory is that the issue price is less than what the stock will be at shortly after IPO. That’s why principals get excited about IPOs. You’re issued some vested shares and often have the privilege of purchasing more shares at the issue price before launch, then it goes up, you profit.
Of course, sometimes that goes hilariously wrong, see Facebook.
How is buying at IPO price a “privilege”? I get that options are a privilege, and gifted stocks are, too.
The theory is that the issue price is less than what the stock will be at shortly after IPO. That’s why principals get excited about IPOs. You’re issued some vested shares and often have the privilege of purchasing more shares at the issue price before launch, then it goes up, you profit.
Of course, sometimes that goes hilariously wrong, see Facebook.