twtr ipo at $26 but opened at $46... can someone explain that

[amopabila]

Just like the title says. So all the headlines say the IPO price was set at $26 but when it was available for the general public to purchase it was all the way up to $46 at 10am. Can someone explain what happened in layman's terms.

Thanks!

[AnnaDub]

People willing to pay more than $26 on open market so it opened higher. Must be allocated shares from underwriters to get the ipo price, otherwise pay market price like everyone else. In layman's terms = buying greater than selling.... Price is based purely on what people are willing to buy & sell at. Many forget this. This is why chart reading is so important.

[apifxonm85]

I get what you are saying, but who or what purchases at the IPO price? I guess there is a select few that get to purchase the IPO when the market officially opens then it takes awhile for the general public to get their hands on the stock, right? I was not able to purchase twtr until almost 11pm.

[Anthonyfamy]

The underwriters sell to their clients. Every ipo has underwriters who actually do the stock offering. These get sold to their high end clients (hedge funds, mutual funds, banks, high net worth investors, brokers etc) Some brokers like Ameritrade/Etrade (retail) will let you apply for shares of certain ipo's IF they get allocated shares from the underwriter. But it is very hard to get approved for and must be willing to buy a large block.

[arogonoluhi]

Read this:

http://www.bloomberg.com/news/2013-...derwriters-to-make-59-2-million-from-ipo.html

And this:

https://us.etrade.com/e/t/prospectestation/help?id=1301050000