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When does an IPO fail?
If the share price on listing falls below the issue price, it indicates weak demand. The price may recover in subsequent trading sessions if buying interest emerges, but it can also decline further or remain under pressure depending on market sentiment and the company’s fundamentals.
An IPO is often considered unsuccessful if the share price fails to reach or sustain the original issue price, signalling that the market does not value the company as expected. Low trading volumes also indicate weak investor interest, as a successful IPO typically shows strong participation and active trading.
Negative market sentiment, such as unfavourable media coverage, weak analyst views, or low investor enthusiasm can also lead to an IPO’s failure. Moreover, a company may be considered unsuccessful even after listing if it fails to meet its financial targets or achieve profitability, causing investors to lose confidence in the offering.
In some cases, an IPO is considered a failure if the company decides to abandon the process entirely due to internal issues or weak investor interest identified during the roadshow.
