The Mysterious and Volatile World of IPOs

You could say that Twitter had a good first day on the market, gaining nearly 75% from its IPO offering price. While the offer priced at $26 the previous night, shares opened the next day above $45. Individual investors hoping to get in at that offer price would have had to go through much more legwork to participate in the primary market, which is when investors buy shares directly from the company.

After that, shares will begin trading in the secondary market, and the price will be determined entirely by supply and demand. In this case, the market decided it was willing to pay nearly $20 more than IPO price.

In this segment of Tech Teardown, Erin Kennedy discusses the mechanics of Twitter's public debut with Evan Niu, CFA, our tech and telecom bureau chief.

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The article The Mysterious and Volatile World of IPOs originally appeared on Fool.com.

Erin Kennedy and Evan Niu, CFA, both own shares of Apple. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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