Finance: What is Oversubscribed?

The term "oversubscribed" typically refers to a hot IPO; it describes a security offering with an incredible or unexpected volume of investing activity.

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Transcript

00:27

presses had to run another 24 hours straight to make up for the huge demand

00:32

well in the land of finance that term oversubscribed is usually ascribed to a

00:38

hot IPO when you subscribe in a securities offering you're essentially

00:43

signing up to buy a given volume of that security at a given price within a

00:46

certain time window that is a given company whatever dot-com offers five

00:50

million shares to the public at ten bucks a share

00:53

but the Roadshow was such a hit that the bankers could raise prices to twelve

00:57

bucks a share and then exercise their greenshoe option and sell a whole trunk [Greenshoe option definition appears]

01:02

full of additional shares to the public making Commission's on all of them more

01:06

shares higher prices and it sounds like a twisted Walmart slogan well the shares [Wal-Mart store appears]

01:10

being over subscribed were all a result of the extremely hot and high demand for

01:15

shares by the investing public so yeah that's over subscribed on Wall

01:20

Street problem we here at shmoop would love to have go ahead and click and buy [Shmoop video appears on webpage]

01:24

we got to keep the rent behavior somewhere