Comment Re:Someone lost out (not) (Score 1) 14
That's
IPO price is decided between the company and the underwriters. Too high and there's risk to the underwriters/investors losing money facilitating the IPO. Too low and the company leaves money on the table. This process guarantees the company an immediate cash return of a specific dollar amount in return for the shares tendered.
Then you have the opening cross match that determines the initial *market* price based on pre-open, pending orders aka demand. Those orders get processed, the stock priced, and trading commences in a fraction of a second. A point of clarity: all tendered shares are NOT immediately available on the open market.
A company will price as high as they can, within the range that underwriting will allow for. It's not risk-free money for investors either - they can't just dump all their shares on the market post-IPO without tanking the price. There's a lot that goes into how deciding how many shares are held vs sold, when, and at what price. You may have underwriting that will help support pricing on an IPO with open large buy orders - to prevent a stock from falling below certain price targets. In the end it means those 'insiders' get paid to hold a much bigger nut when a company goes public.
There's a direct listing IPO, but it's much less common for reasons not worth getting into.
Reference: I work for one of the stock markets.