What is IPO listing loss?

IPO listing loss is the negative difference between the IPO issue price and the IPO listing price.

The IPO listing loss occurs when shares are listed at a lower price than the issue price. In such cases, the listing of the shares is referred to at a discount.

The IPO Issue Price is the price of the IPO share decided by the Issuing Company at the time of the IPO Offering. The IPO listing price is the price determined by the stock exchange in the pre-open trading session of an IPO on the day of the listing between 9:00 and 10:00 am.

For example, suppose a company issues 10,000 shares at a price of Rs 50 in an initial public offering. Due to high supply and less demand in pre-open trading session, the stock exchanges set the price of the stock at Rs 40.

In this case:

• IPO Issue Price: Rs 50 per share
• IPO Listing Price: Rs 40 per share
• IPO Listing Loss = IPO Issue Price - IPO Listing Price = 50 - 40 = Rs 10 per share.

Note:

• When the shares are listed at a discount, investors generally prefer to hold the stock until it breaks even or reaches the break-even position.
• Investors who have sold their IPO application in grey market usually sell in loss to settle the grey market transaction.
• The price of IPO shares may move in any direction after 10 a.m., when regular trading begins.

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