Should You Buy Anthropic's IPO on Day 1? - Yahoo Finance
By Google News AI ·
Anthropic's upcoming initial public offering (IPO) is sure to pique investor interest over the next few weeks. While management has not yet made public the exact date it has in mind, most expect the stock's debut to occur before Thanksgiving. So, investors need to start thinking about whether they want to buy the stock on Day 1, or if they'd be better off to stay patient.
I think there's a clear answer, and it's best to look at a prior IPO to see why.
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When a company goes public, its management team sets an initial price for the stock, based on a specific target value for the whole company. However, that's the price that institutions and high-net-worth investors are able to get by buying at the start. For the rest of us, that share price is rarely available on the first day because usually, none of those early buyers are willing to sell at that price. Instead, the stock usually rises a fair bit until a market on both sides can be found, which results in a Day 1 pop. There are normally a few days of strong buying. Then short-term traders look to take their gains, start selling, and the price tumbles.
This pattern has been seen time and time again, most recently with the Space Exploration Technologies (NASDAQ: SPCX) IPO.
SpaceX went public at $135 per share, and its first trading price of its opening day was $150. It got up to an intraday high of just over $225 in the days that followed, then began an extended tumble that took it to a low of around $108. Then, a well-received earnings report caused the stock to rally…
Originally published by Google News AI
