Uber may rise significantly from its IPO price of $45, but the typical retail investor will struggle to buy in at the IPO price.
That said, there are also risks to jumping on the IPO bandwagon. Besides Uber, rival ride-sharing app Lyft isDespite recent market volatility, demand for IPO shares remains strong. For example, Uber's shares were oversubscribed just two days into its investor roadshow, according to aBut with early-stage investors and institutional players having already gobbled up most available shares, many small investors will find it difficult ot get a piece.
Once those requirements are met, those investors must review the company's prospectus — which lays out the risks of the investment — before indicating the maximum number of shares they wish to purchase. The day before an IPO begins trading, investors are given confirmation of their share allocations as well as pricing of the issue.
"Typically, customers with significant, long-term relationships with their brokerage firm will receive higher priority than those with smaller or new relationships,". In other words, the rich get richer while smaller investors may receive no shares at all despite their request. "Historically if my broker called me up and tried to sell me on an IPO, I would say, 'This is not a good idea,' and take a pass," Timothy Loughran, a finance professor at the University of Notre Damein June 2018."The only time they were going to go down to someone like me is if the IPO is having trouble and they're having trouble placing the shares."
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