When should you sell IPO stocks?
- Asked By
- Updated On:21-Dec-2023
- Replies:1
Short Answer
In order to sell your US IPO stocks, you have to compare the offer price with the listings. If you believe you are making a good percentage of profits, it is time you sell the stocks.
Detailed Answer
Selling IPO stocks is not a very tough task. But when you buy or sell any stocks, the main objective is profit. So, it won’t be fair to ignore gains in the case of US IPO shares.
Here is a simple example to help you understand.
Suppose you bought a share worth $100 before listing. Now you are planning to sell it for $150. It means that the profit percentage is 50. Once the share is listed on the stock exchange for $165, the value you put in for selling becomes less.
Thus, you get the price that is listed i.e. $165. If the case is opposite, your order will be canceled.
Comparing US IPO Stock Prices Before Selling
When you compare the offer price with the list price, check the percentage of gains you are making. Here is what it means.
- Anything around 40-50% means selling half the shares allotted is a viable option.
- If the gains are between 70-80%, it is considered optimum to sell the shares on the listing day only. Getting such a high margin is not seen regularly. Therefore, keep comparing the stock prices.
- Any gain below 30% means that selling some portion for now is fine, but holding those shares up till the future is a better option.
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What if the list price is too low to compare?_ In such cases, don’t think and sell immediately because you never know if the prices might decline even more. The chances of making higher profits are when the IPO is oversubscribed.
Thus, if you are planning to sell your US IPO stocks, analyze the profits before placing the sale order.
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