Initial public offerings (IPOs), and tech IPOs in particular, seem to garner a disproportionate share of financial media attention. Maybe it's simply the novelty of the new, or maybe it's because hot tech IPOs are often associated with companies that are just coming into their own and getting the attention of the public, but many of these IPOs tend to be real events for the market.
History shows that not all of that attention is well-deserved. The process of bringing a company to the public markets inevitably involves a lot of promotion and hype; bankers profit directly from investor interest in IPOs and almost every company wants to have a hot IPO. In that process, then, it's entirely common for excitement and hope to take the place of reason and prudence, and many of these deals go off at poor prices. What follows is as predictable as Tuesday following Monday - the stocks go out at too high a price and ultimately fade in the after-market, leaving investors who bought into the hype holding losses.
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