New Issue

  

Categories: IPO

See: IPO. See: Primary Market.

It's like the financial market equivalent of a new kid in school...or that up-and-coming singer who just released her first single. A new issue is just what it sounds like: a stock (or other security) getting sold to the public for the first time. Or, you could say: newly issued.

Companies raise money in various ways. They can borrow from a bank or other source (which doesn't really play a role here). Or they can bring in cash by selling bonds or stock. Bonds represent debt; the company selling them is borrowing money that they will pay back at interest. Meanwhile, shares of stock equate to tiny ownership stakes in the company. Either of these can become new issues when they're made public for the first time.

Related or Semi-related Video

Finance: What is a hot issue?2 Views

00:00

Finance allah shmoop What is ah hot issue All right

00:07

Well it's one that has demanded more than it is

00:09

supplied One that is loved more than it is hated

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One that is hot more thin it's gold Well the

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most common hot issue in the press You read about

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all the time Yeah It's an aipo that everybody wants

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Why Well it's basically free money to the investors Price

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talk has been ten to twelve dollars a share And

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well then it looks like it's moved twelve to fifteen

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and out price doc's fifteen to eighteen a share And

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traders are mumbling that the first actual traded print will

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be something like forty dollars a share So anyone who

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buys at that eighteen dollars price or really any price

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upto thirty thirty two thirty five something like that Well

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they'll make a massive return for one day's work just

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flipping their stock Tio you no longer term holders I

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think about the real estate show where they flip houses

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you know Well they have to do a whole lot

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of work to flip a house on stocks are a

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lot easier Well why do hot issues even happen Well

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often banks purposely underprice i pose to quote pay the

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street unquote for taking risk and buying that aipo handsomely

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like they price it low Lots of people are going

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to buy it have a low cost basis and remember

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it fondly Well cos generally play along instead of selling

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say thirty forty fifty percent of themselves to the public

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in there i po well they only sell ten percent

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and later on they'll sell more when the stock is

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popped and traded and settled and has a buying public

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and all the other good things that go with it

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so and only a tiny amount of shares out there

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trading even modest demand can drive prices to the sky

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and this phenomenon happens Ah lot ebay snap facebook A

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whole bunch of others essentially created hot issues by offering

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very tiny fractions of ownership of themselves to the public

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in there i po so that the enormous buyer interest

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almost guarantees more demand than supply of the security being

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sold and hot issues as you guess our great well 00:02:03.51 --> [endTime] until they're not

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