An initial public offering (IPO) that is introduced in a favorable environment- i.e., in a hot market. A hot market, by definition, is one where the number of IPOs that were introduced in a given month is large, after adjusting for a time trend to account for growth in the broader economy. Hot IPOs, by nature, produce high initial returns. Therefore, hot IPOs are characterized by big interest in IPO shares (oversubscription). More specifically, such IPOs produce high positive returns (e.g., 10%).
October 14, 2022
