After the IPO: How Stocks Perform in the Post-Listing Period?

If you are a newcomer to investing, you need to learn about the IPO. IPO stands for Initial Public Offering. This is the first step when a company offers its shares to the public. This is a very important step for the company owners and shareholders. But if you are a newcomer, you need to know what happens after this IPO stage, too! In this article, we will discuss the same.

What Is an IPO?

IPO is the stage when the company goes public and sells shares. In this way, the company earns capital and invests that capital to increase its business. Now the shares of the company will be traded in the Stock Market.

Steps of IPO

• The company should come up with a prospectus that includes its business plan, brief, vision, financial situation, etc.
• The company will find potential customers and showcase its project with the help of the prospectus.
• Upon finalizing the amount of each share and how many shares they want to sell, the company will start trading in the Stock Market.

By far you understand what an IPO is and all the steps involved in it. Now let’s discuss what happens post-IPO listing.

What Happens to Shares Post IPO Listing?

Once the IPO listing is done, investors start buying and selling the shares. Let’s check what happens to shares post-IPO and how the share prices get affected.

Volatile Share Price

Once going public, the directors of the company cannot control the share prices. Now the share value will be controlled as per SEBI rules and the market graphs. Lots of factors can affect the share prices.

Any positive or negative news of the company will affect the share prices. Any addition and deletion to the directorship of the company will directly affect the share prices.

Deep Scrutiny

Once the IPO listing is done, the company must disclose its business operations, financials, and other information to the public. The analysts go for an in-depth analysis of the company’s behavior and depending on their analysis, the shareholder behavior changes. The company must abide by the SEBI guidelines for disclosing information.

Corporate Governance Practices

Once going public, the directors must work in favor of the investors. Every negative social media review can affect the company’s reputation and also the share prices.

Shareholders avoid investing in a company that doesn’t have goodwill in the market. Hence, practicing good corporate governance is important to keep the share prices going up.

Liquidity

Once the IPO is done, the shareholders can sell their shares in the stock market. The shareholders can start selling the share from 10 am on the date of IPO listing. The anchor investors on the other hand have a lock-up period for IPO shares.

The shareholders can also place a sell order during the pre-open session. The deadline in that case will be 9:45 am.

Conclusion

The first and foremost reason for going public is to raise more funds. The company gains enough funds to execute its further projects. Sometimes going in public can force the directors to take drastic steps in favor of the shareholders. Every move has an impact on the shareholders and as a result on the share price.

To invest in MF or shares, you can open an account with Dhan and start your journey.