What it means
An IPO is when a private company sells equity to public investors for the first time. Underwriters set a price range, conduct a roadshow, and price the deal the night before trading begins. The first-day pop or drop becomes the company's public-market introduction.
Why it matters
IPO markets are leading indicators of risk appetite. Hot IPO markets typically precede market tops; cold IPO markets precede bottoms. The 2021 IPO frenzy and the 2022-2023 freeze illustrate the cycle.
How to use it
Be skeptical of buying at IPO. Insider selling pressure typically arrives at lock-up expiration (180 days). Wait for the post-lockup setup to evaluate fundamentals at a normalized price.
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