In a recent article in MarketWatch, Reena Aggarwal, Robert E. McDonough Professor of Business Administration and professor of finance at Georgetown McDonough, shares her thoughts on Blue Apron’s initial public offering:
Typically, the underwriters on an offering work to stabilize the stock price, keeping it above or at least around its issue price. The underwriters tend to do this for a couple of days, said Reena Aggarwal, a professor at Georgetown’s McDonough School of Business. They can dip into the company’s overallotment, or a provision in the company’s prospectus, that allows the underwriters to buy more shares, to stabilize the stock.
At some point, however, Aggarwal said the underwriters have to let the stock go if demand is particularly weak. This was likely the case with Blue Apron, she said, but the stock declines aren’t a death sentence.
“It can certainly bounce back,” Aggarwal said.
To read the full article, visit http://www.marketwatch.com/story/blue-aprons-stock-falls-below-ipo-price-but-all-isnt-lost-2017-06-30?mg=prod/accounts-mw.