this post was submitted on 21 Feb 2024
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118
Reddit plans to reserve shares for its big users in IPO, WSJ reports (www.reuters.com)
submitted 8 months ago by [email protected] to c/[email protected]
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[–] [email protected] 5 points 8 months ago (1 children)

How is buying at IPO price a “privilege”? I get that options are a privilege, and gifted stocks are, too.

[–] [email protected] 4 points 8 months ago

The theory is that the issue price is less than what the stock will be at shortly after IPO. That's why principals get excited about IPOs. You're issued some vested shares and often have the privilege of purchasing more shares at the issue price before launch, then it goes up, you profit.

Of course, sometimes that goes hilariously wrong, see Facebook.